Real estate commissions are changing and buyers, sellers, and even some agents, are confused on what it means for the real estate market here in Utah, as well as nationally.
Historically, both buyer and seller agent commissions were considered within the closing costs of a home, which are based on the purchase price—unless negotiated otherwise.
Why are these changes occurring? Recent lawsuits against several large brokerages argued that by advertising commissions, buyer's agents may be more likely to bring their clients to properties where sellers offer the highest commissions. A federal jury found that the NAR, RE/MAX, Keller Williams, and HomeServices of America were conspiring to inflate commissions.
How will these changes to the BAC (Buyer Agent Commission) impact different home buying populations, do you still need a buyer's agent, and what will this mean for the future housing market in Utah?
Come along as Mountain Luxury answers the biggest questions home buyers and sellers have about the BAC.
Is the Buyer's Agent Commission going away?
The common perception has been that the seller "pays" the entire commission which is then split between agents when in fact, the buyer has always paid the buyer's agent commission because it is included in the price of the home.
While this fee will now be negotiated separately between the buyer and buyer's agent, and no longer specified on the MLS (Multiple Listing Service), the Buyer's Agent Commission isn't going away. However, it is going in a new direction and will now be called the Buyer Broker Commission.
According to the NAR, beginning in August 2024, an MLS participant "working with" a buyer will be required to enter into a written agreement with the buyer prior to touring a home, including both personal and live virtual tours.
This change could create different commission rates for different levels of service in the future, giving buyers freedom to only pay for services they need.
Do homebuyers still need a buyer's agent?
With the new Buyer Broker Commission (BBC), homebuyers will still benefit from having a buyer's agent.
One of the primary benefits of changing the BAC to the BBC is increased transparency in commission structures. Buyers and sellers now have more information about what they are paying for, which can lead to more informed decision-making. This openness helps demystify the real estate transaction process, potentially increasing trust in the industry.
You may see friends and family members attempting to represent themselves, but a buyer's agent provides invaluable guidance and can help make purchasing one of the biggest financial investments of your life less stressful.
A buyer's agent is skilled at negotiating and can potentially save you thousands of dollars, help you navigate challenging situations with sellers, and brings years of experience to helping you find the best home for your lifestyle and financial goals.
Who benefits from the new BBC — Utah home sellers or homebuyers?
The BBC changes could impact different home-buying populations disproportionately, like first-time homebuyers or veterans, who may already have limited finances.
Changes to agent commissions will shift more costs to homebuyers and increase price competition for services. This could benefit home sellers, but increase challenges for buyers.
In a buyer's market, a seller may still want to cover buyer agent fees. Home buyers might request a seller’s concession or credit to help cover the Buyer Broker Commission, but in a hot market, the seller has a bit more leverage.
Advertising the BBC on the MLS is prohibited. However, a brokerage can advertise this commission on their website, which in theory could help sell a home faster, especially in a competitive market.
Buying or selling a home in Northern Utah?
Along the Wasatch Mountain Range homes are in high demand, as nature lovers and adventure sports enthusiasts flock to this top outdoor recreation destination. Realtors will need to adapt quickly to Utah's unique home market to fully leverage the benefits and mitigate the drawbacks of these new rules and the BBC.
Our experienced Mountain Luxury agents can help you navigate all of the changes and negotiations you'll encounter in a real estate transaction, whether you are selling your estate or buying a luxury home in the mountains.
