ST. GEORGE — Local realtors are reacting to a move by the National Association of Realtors that some experts say could lower the cost of buying and selling a home in Southern Utah.
On Friday, the National Association of Realtors announced it is doing away with the mandatory 6% commission for real estate agents in home purchase transactions. According to the Associated Press, the move was made to resolve several lawsuits against the association and its members by home sellers who say that rule and others have artificially increased the cost of homes.
The group representing most realtors in Washington County says it supports the action but adds that, in their opinion, it will have little effect locally because they have already been “pro-consumer.”
“Utah may not see substantial changes as a result of the settlement. Utah real estate agents have been operating in an open and transparent fashion due to our forms and contracts and professional customs,” the Washington County Board of Realtors and Multiple Listing Service said in a joint statement provided to St. George News. “This means that the WCBR and its members are well-equipped and prepared to continue.”
Ivins Mayor Chris Hart has mentioned the need to lower housing prices and is himself a homebuilder. While he says his work to build custom homes is not as reliant on real estate brokers, he said he thinks the change will bring down home prices.
“Every percent reduction in cost regardless of its source is, in fact, a savings,” Hart told St. George News. “Production builders have their sales teams in-house precisely to minimize their marketing costs. It strikes me as an open market move that could prove to be effective in lowering home purchase prices in strong markets at least a little.”
While the effect of the change may take months to take hold, experts say it will likely be a profound change to the real estate market toward lower prices, including in Southern Utah, where the high price of homes has been an ongoing issue.
Until now, the standard model enforced by the national association on most realtors has been for those selling a home to pay at least a 6% commission to a listing agent and the buyer’s agent. For example, someone selling a $300,000 home has had to pay an additional $18,000 to sell that home and that additional cost is added to the price of the home.
According to experts who talked with The Associated Press, the change will likely result in increased competition in the real estate market where realtors will need to lower their commissions to remain competitive. One expert told the AP that commission fees might go down 30% as a result and that it would be “one of the most significant transformations in the market in the past century” as far as driving down home prices.
However, in their statement, the local board of realtors said such a forced commission structure is nonexistent locally.
“The Utah and Washington County real estate landscape holds many options for home buyers and sellers, which offer both agent representation or no representation at all,” the Washington County Board of Realtors said in their statement. “No set commission structure exists, allowing brokerages, along with their clients, to negotiate and determine fees for the real estate services provided.”
Utah Gov. Spencer Cox has said bringing down the cost of housing in the state is one of his top priorities, and the high cost of homes in places like Southern Utah keeps him up at night.
Additional changes will also affect realtors, including one that will allow any real estate agent to sell a home as long as they are licensed in a state, whether or not they are involved in using the Multiple Listing Service.
Brokers advertising a home for sale on MLS.com are also no longer required to offer any upfront compensation to a buyer’s agent, leaving it open for individual home sellers to negotiate offers with a buyer’s agent outside of the MLS platforms.
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