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Almost no one pays a 6% real-estate commission except Americans

wsj.com

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Re: Almost no one pays a 6% real-estate commission except Americans

#91

Post by jacobsimon »

jasode wrote: post #75
ssharp wrote: post #21

I 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…

Not OP but I think both perspectives are valid. Real estate agents are not incentivized to increase your house price at the margin as much as the owner, they would rather just keep their fee high and sell your house at an ok price.

Maybe real estate agents should structure their commission more like M&A bankers and account executives, which often have tiered or ramped fees that encourage the best prices, e.g. if the selling price is below X you get 5%, everything above X you get 10%, etc

Re: Almost no one pays a 6% real-estate commission except Americans

#93

Post by UncleMeat »

jasode wrote: post #75
ssharp wrote: post #21

I 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…

Agents provide value. They do things that many homeowners can't or don't want to do. My electrician also does that.

Do agents provide tens of thousands of dollars of value?

Re: Almost no one pays a 6% real-estate commission except Americans

#94

Post by walthamstow »

underseacables wrote: post #84
walthamstow wrote: post #62

Earlier quoted context omitted.

Fix teeth, yes, cut hair, absolutely not. How can you conflate those two things? It is utterly bizarre for the state to license barbers and hairdressers, especially in the so-called land o' the free.

It has gotten much worse. Flower arrangement, interior decorators, every profession wants in on the licensure monopoly. There are definitely things where you want the state to make sure that someone has a minimum level of education and training. Medicine, law, engineering, but some things are not really necessary anymore, such as the dietetics license. Certainly not a license to be an interior decorator, or arrange f…

I remember the John Oliver segment from a few years ago

The added layer that blew my tiny British mind was that the licensing is done by states (because somehow licensing barbers was omitted from the constitution)

The consequence of this is that if you want to move or if you live in a state border city like KCMO, you have to do the licensing all over again with another state. Bonkers, as we say here.

Re: Almost no one pays a 6% real-estate commission except Americans

#95

Post by mytailorisrich »

Here (England) people like to complain about the system, mostly because either party can walk away for free until the actual contracts are exchanged, but overall it is simple and cheap.

Technically, estate agents are not required, lawyers are not required, etc. Seller and/or buyer could do everything themselves if they wished (unwise but they could) as long as no mortgage is involved (the lenders are the ones requiring that the buyer uses a lawyer). Lawyers are cheap, estate agents' commissions (paid in full by seller since agent works for them) are low, maybe 3%+VAT max.

Personally I prefer this than the rip off that is going on in many other countries where both sides are taken to the cleaners.

Re: Almost no one pays a 6% real-estate commission except Americans

#96

Post by ghusto »

thiago_fm wrote: post #44

Wrong. 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 don't normally nitpick in this way, but the single line "Wrong." rubbed me up the wrong way. The claim was:

> Almost No One Pays a 6% Real-Estate Commission–Except Americans (wsj.com)

and you've cited an example which fits neatly into the word "almost", _right there as the first worth in the sentence_

Re: Almost no one pays a 6% real-estate commission except Americans

#97

Post by salamandersss »

WXLCKNO wrote: post #28
ssharp wrote: post #21

I 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 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.

It was worth it for me when buying cheap land. Since it's percentage based the amount was quite low; cheaper than a lawyer and I had a license to use the realtor association buyer contracts and connections to helpful people in the title office etc without having to hunt down and get these myself. When I calculate all the time I would have spent hunting down the right people, contracts etc it was a bargain against the buyer commission.

I wouldn't want to use a realtor for land worth more than 50k though. Use the percentage commission to work for you not against you.

Re: Almost no one pays a 6% real-estate commission except Americans

#98

Post by foobarian »

ssharp wrote: post #21

I 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 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 question that this raises is even more puzzling: why hasn't there arisen agents that undercut the status quo? Are there guild or cartel effects at play?

Re: Almost no one pays a 6% real-estate commission except Americans

#99

Post by jjoonathan »

underseacables wrote: post #6

I think something that is partly to blame is the expansive licensure scheme, and how those licenses have become a monopolistic edge to protect and expand. Many professions have required a license, and it is the responsibility of the organization that issue those license to protect an expand their authority, preventing competition, and pushing up prices higher. The license requirement creates a perpetuating lobby, whi…

We should always have several competing licensing bodies.

1 licensing body: never considers the cost of gatekeeping, only the self-benefit.

2 licensing bodies: they are forced to weigh the cost of gatekeeping against the self-benefit, but you might get a race to the bottom.

3 licensing bodies: they are forced to weigh the cost of gatekeeping against the self-benefit, and if they race to the bottom too hard we can decertify one and retain competition until we can bud off a replacement.

Re: Almost no one pays a 6% real-estate commission except Americans

#100

Post by scrlk »

mytailorisrich wrote: post #95

Here (England) people like to complain about the system, mostly because either party can walk away for free until the actual contracts are exchanged, but overall it is simple and cheap. Technically, estate agents are not required, lawyers are not required, etc. Seller and/or buyer could do everything themselves if they wished (unwise but they could) as long as no mortgage is involved (the lenders are the ones requiri…

The chain system is absolutely ludicrous, I wouldn't call it "simple and cheap".

IMO the whole system needs reform, I would wager it would go some way in fixing the housing crisis in the country.

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