Move over, Chicken Little. According to many media sources, the sky is falling in the real estate industry. Unless you are the proverbial ostrich, I am certain you have heard the news. Headlines reading, “National Association of Realtors Pays $418 Million in Commission Lawsuit” or “National Association of Realtors Cuts Commissions.” My favorite was the one my friend sent over this morning attached to a podcast he wanted me to hear, “The Bombshell Case That Will Transform the Housing Market.” He prefaced it with this, “Listen to this, and then call me with your thoughts.” He needn’t have worried. I would have called with my thoughts whether he solicited them or not.

After obligatorily listening to the gross misrepresentation and wildly inaccurate podcast from the news “experts” who know nothing about the industry of real estate, nor about the facts surrounding the proposed settlement (which, incidentally, isn’t even fully settled as of this printing), I called my friend. I let him know, in no uncertain terms, what my “thoughts” were. In fact, I ranted, without pause, for about 20 minutes concerning the inept, careless and irresponsible reporting taking place on the subject at hand. He laughed. “That’s why I told you to listen to it,” he said. “I knew you would been passionate in your response.”

Since it is unlikely that I will be chilling from the impassioned rage which has been initiated, I will attempt to educate my little corner of the world as to the facts to prevent misleading and potentially harmful, erroneous information.

The aphoristic elephant in the room that surrounds this case is the discussion of commissions. Commissions are how Realtors get compensated for the 12- to 14-hour workdays we put in. We do get days off, just not days that end in the letter “y.” What is not a fact is the portrayed “set” percentage that we are paid off a sale. There has never been a “standard” commission. Commissions are always negotiated at the time of the listing. I have seen these vary widely over the years. Commissions are not being eliminated either. It has been proposed that the compensation for a buyer’s agent is not listed on the Multiple Listing Service. They can, however, be communicated in other ways (phone calls, for instance, are useful).

Utah state-approved forms, provided by the Utah Association of Realtors, have made the compensation splits clear as there are two separate fields for buyer’s and seller’s agent compensations. Although some larger nation-based brokerages have their own forms that may not separate this, the provided forms are clear.

As a side note, my friend who contacted me this morning has been a client of mine on more than one occasion both as a buyer and a seller. He is also a defense attorney. When I questioned him about going through the process of buying without the assistance of a seasoned Realtor, he said this, “That would be the equivalent of an accused suspect going into court and facing the prosecuting attorney with no representation.” This has actually happened on occasion that a suspected criminal opts to defend him/herself. For the record, this has statistically never worked out well for the suspect.

One other requirement outlined in the proposed settlement would be for a buyer agent to get a signed buyer-broker agreement before showing a house to a prospective buyer. In Utah, this is a practice that was put in place years ago, so it isn’t new for us.

Purchasing a home is likely one of the largest financial decisions that a person will make during a lifetime. Doing this without separate representation of both sides is an incredibly frightening prospect. Imagine sorting through all the homes on the market, scheduling showings, finding a way to get access to the homes, pulling comparisons to come up with an offer price, negotiating the offer back and forth, obtaining all relevant documentation and disclosures from the listing agent, working back and forth with escrow company, scheduling and attending inspections, negotiating repairs, dealing with appraisers and handling potential appraisal gaps, as well as working full time and having time for family or friends.

This is why we would not expect you to do this. The media has painted a picture that this is exactly what we are asking you to do. We are not.

Here is what I am asking you to do: Refrain from relying on the media to get your “information.” Any educated, seasoned Realtor who is passionate about the career field and takes the time to become correctly informed can help you, the consumer, become correctly informed as well. When the “news” of the settlement came about, an immediate Zoom conference was held by the chief legal officer for the National Association of Realtors, Katie Johnson, to inform us of the “real” story. Of the approximately 18,000 licensed Realtors in Utah, about 2,000 attended. With some definite exceptions, these are the Realtors to ask. Meantime, Chicken Little should go back to doing what chickens do best, because I got a hankering for some scrambled eggs.

Jen Fischer is an associate broker and Realtor. She can be reached at 801-645-2134 or jen@jen-fischer.com.

Newsletter