In Canada, it's usually 5%.
Almost no one pays a 6% real-estate commission except Americans
71–80 of 360 posts
Re: Almost no one pays a 6% real-estate commission except Americans
#72Earlier quoted context omitted.
In Brazil it is 6%, some agents used to charge even 8% or 10% but the trend is towards 5% (since real estate became expensive here as well in the last 12 years).
Brazil is pretty cheap in that regard, what is expensive there are property taxes.
A friend of mine used to live in Brazil and he payed close to half a percent.
Re: Almost no one pays a 6% real-estate commission except Americans
#73Wrong. In Germany the Maklerprovision (comission for the Real State agent) is 7%. Typically, the seller pays half of it, but there are cases where the buyer pays it all. You also need to pay a notary, government taxes, making the cost of buying a property over 12%+. Furthermore, you shouldn't sell that property for around 10 years, otherwise, you'll need to pay Capital gains taxes. The good part is that you don't pay…
I was about to say the same. I'm currently buying a place in Germany and the fees are 3.57% per broker. So if you just use the seller's agent then it's 3.57, but if you have your own then it's about 7% total.
Re: Almost no one pays a 6% real-estate commission except Americans
#74Earlier quoted context omitted.
The extra value is not there. Anyone can do this job, it's literally filling out boilerplate documents, you can ask gpt 4 vision to do it for you.
I agree and disagree with this. Contracts (which is what I assume you're talking about) are only "boilerplate" in fair-weather deals. But if literally anything goes wrong during the escrow period, then the wording of that contract suddenly becomes critical. When tens of thousands of dollars are at stake, I'd never rely on AI-generated output. That being said, I also agree with you as for the value of agents, because…
why would i want a real estate agent to help me with a contract problem instead of a lawyer?
Re: Almost no one pays a 6% real-estate commission except Americans
#75I don't know how much value agents added over the past few years, navigating bidding wars, pocket listing access, etc. but I've never understood the justification for spending so much money on these fees. The last time I sold a house was 2011, when the housing market was still down from the 2008/09 crash. I talked with multiple agents and never got a sense of them doing much to push the house other than listing it on…
>I said "good riddance" to the agents and did an MLS self-list for like $400. [...] So back to my original point -- where is that seller value coming from?
It's a puzzle to you because you had the personality & motivation to do the work of marketing+showing+negotiating the house yourself. You have inadvertently projected your DIY savvy onto other homeowners to do the same thing. But, a lot of home sellers don't want to DIY a home listing.
- some homeowners don't want to deal directly with potential buyers (pre-qualify buyer's bank financials, show them around the property, etc). Some homeowners are uncomfortable wearing a "salesmen" hat.
- some homeowners are not savvy about how to present and market their home. Sure there are endless books and youtube videos on jazzing up "curb appeal" but some people simply want a "professional" to advise them.
- some homeowners feel uncomfortable with legal aspects and even hiring an attorney specializing in real estate feels "weird". It's just more "normal and easier" to use a real estate agent.
Analogous situation in people selling things on ebay. What's the value in a service like iSoldIt[1] charging a commission for ebaying on sellers behalf when the seller can save money by DIY by taking own photos, using ebay website to upload the photos and list the item, and then pack & ship the item themselves?!? The value is that some people don't want to DIY certain tasks. I had a friend sell his camera via iSoldIt. I sell stuff myself on ebay all the time and thought he was crazy for paying the iSoldIt commission. He was a young programmer so he's not an old grandfather that would find ebay's website intimidating. He simply didn't want to deal with the whole ebay workflow and wanted some cash as quickly as possible. Consider that ebaying a camera is way simpler than selling a house and yet some still offload it to a service to handle it for them.
EDIT to replies:
>, but I don't think most people would be willing to spend 12k just to be more comfortable,
>Agents provide value. [...] Do agents provide tens of thousands of dollars of value?
To be clear, I wasn't trying to justify their 6% commission rate. I was explaining why most homeowners don't go the DIY route to save money which seemed more "logical" to the gp.
For decades, I saw endless commercials on tv for FSBO (For Sale Buy Owner) services trying to educate viewers on "don't pay seller commissions and pocket the thousands in savings yourself!" And yet, real estate agents persist. People are already aware of "selling by owner"; they just don't want to do it and would rather pay a commission.
Re: Almost no one pays a 6% real-estate commission except Americans
#76I don't know how much value agents added over the past few years, navigating bidding wars, pocket listing access, etc. but I've never understood the justification for spending so much money on these fees. The last time I sold a house was 2011, when the housing market was still down from the 2008/09 crash. I talked with multiple agents and never got a sense of them doing much to push the house other than listing it on…
> The buyer doesn't bear the cost at all This is the issue. If both sides had to pay their own agent, significantly fewer agents would be used. Instead the buyer externalizes the cost, and many sellers aren’t confident enough to deal with the buyer’s agent directly so they arm themselves with an agent.
Is there not U.S. states where both the buyer and seller pay commission fees? A quick search provided this:
The seller’s agent collects a listing fee for marketing and selling the home. The buyer’s agent collects the buyer’s agent fee for bringing a qualified buyer to purchase the home.
In my understanding there is costs borne by both the buyer and seller for the services of a real estate agent.
Re: Almost no one pays a 6% real-estate commission except Americans
#77I don't know how much value agents added over the past few years, navigating bidding wars, pocket listing access, etc. but I've never understood the justification for spending so much money on these fees. The last time I sold a house was 2011, when the housing market was still down from the 2008/09 crash. I talked with multiple agents and never got a sense of them doing much to push the house other than listing it on…
Where I live (Denmark), the real estate guild has captured the market by building the de-facto listing portal and only making it available to registered brokers. Sounds great if the US portal (MLS?) is available to all listings. For selling a small plot of land I got so angry about the fees for nothing that I paid an obviously rogue broker to proxy-list the thing. This guy was charging half of what the other brokers…
The MLSes in the US are all under the Realtor group. The selling agent has to agree to pay the buyer agent's fee in order to list. This is one of the main points of the trial. Sellers cannot list a house in the most popular (only?) listing system without committing to the buyer's-agent fee.
Re: Almost no one pays a 6% real-estate commission except Americans
#78Earlier quoted context omitted.
I agree and disagree with this. Contracts (which is what I assume you're talking about) are only "boilerplate" in fair-weather deals. But if literally anything goes wrong during the escrow period, then the wording of that contract suddenly becomes critical. When tens of thousands of dollars are at stake, I'd never rely on AI-generated output. That being said, I also agree with you as for the value of agents, because…
why would i want a real estate agent to help me with a contract problem instead of a lawyer?
That's my point - I'm saying a real estate lawyer should be the ones handling these things, not agents. But by some kind of weird historical convention, agents are typically the ones that draft up the contracts, and they usually rely on a template.
Re: Almost no one pays a 6% real-estate commission except Americans
#79Wrong. In Germany the Maklerprovision (comission for the Real State agent) is 7%. Typically, the seller pays half of it, but there are cases where the buyer pays it all. You also need to pay a notary, government taxes, making the cost of buying a property over 12%+. Furthermore, you shouldn't sell that property for around 10 years, otherwise, you'll need to pay Capital gains taxes. The good part is that you don't pay…
That sounds like some great tax policies in favor of long term home owners. I was surprised that taxes ended up being over 50% of the total cost of home ownership, at least in New York (not NYC). Bought my first house in 2021. My mortgage payment is less than my annual school + property taxes. It’s quite insane. A big problem is my town’s property assessments arent done fairly. Anyone who hasn’t bought or sold their…
In California, if you make improvements to your home you are forced into a reassessment and higher taxes. Many homes in California are not maintained and updated for this very reason, since the taxes are set from when the home was purchased.
https://www.sccassessor.org/faq/understanding-proposition-13
Re: Almost no one pays a 6% real-estate commission except Americans
#80Earlier quoted context omitted.
The tax man gets his one way or another. Imagine the shock of an American living without sales tax when they go to Germany and everything has a 20% government markup... In Germany, the net average tax rate on a worker is 37.4%, in America it is 24.8%. That's a dramatic difference in taxation!
Anyone living in California or NYC and making mid six figures and up is easily paying more than German tax rates then. You’re paying almost 50% around high six figure range. I’ve never quite understood why people think the US is a low tax country.
I used "net average tax rate" from the OECD as an apples to apples comparison.
Your reply is "what about the 1%ers who live in two of the most expensive cities in the world? What about THEM?"
What about the 99.9% of Americans who don't make six figures in one of those two cities?
I've never quite understood why people think America is a few million people living in 2 cities. You know there's 320,000,000 more us of right?