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

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

#121

Post by semiquaver »

danielvaughn wrote: post #78
mnky9800n wrote: post #74

Earlier quoted context omitted.

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.

The bizarre thing is that real estate lawyers are quite cheap since transactions are so standardized. I’ve always used one for home sales. The fee has always been between $500-650 regardless of the home price.

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

#122

Post by PopAlongKid »

Ajay-p wrote: post #79
cj wrote: post #61

Earlier quoted context omitted.

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

You have mis-stated the situation. It is absolutely not true that "Many homes in California are not maintained and updated for this very reason [reassessment]".

Only the cost of the improvement, such as an addition to the building, is added to the existing assessed value. The entire property is not reassessed. And if the update is just a remodel (such as new flooring and tile in your bathroom, or new cabinets/countertops in your kitchen), there is no reassessement.

Example: a house was purchased 30 years ago for $200K, so that is the base year value (goes up 2% per year per Prop 13). If you build an additional bedroom onto the house for $50K, then only $50K is added to your assessed value.

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

#123

Post by mytailorisrich »

onlyrealcuzzo wrote: post #11
mcntsh wrote: post #3

Closing costs in Germany are quite high... about 12%. - 3.57% RE commission - 2.00% notary - 6% for the land transfer tax And the seller also pays 3.57% of the RE commission. So over 6% at the end of the day :)

Why is the notary making 2%?! Is that including all legal fees? Even still that seems like a much bigger rip off than a buyer's agent in the US.

Because they have a captive market: In general the use of a notary is mandated by law, and being a notary can be extremely regulated with limited numbers of notaries/licenses.

They could open this to competition and let lawers do the job as well, but that would go down badly with the notaries who make a fortune.

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

#124

Post by brianwawok »

mnky9800n wrote: post #74
danielvaughn wrote: post #60

Earlier 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?

It varies by state. In IL both sides must have a lawyer. In IN everyone has the agent do boilerplate. I can say the IN way saved me a few thousand bucks…

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

#125

Post by sokoloff »

cj wrote: post #61
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…

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…

Just the property taxes were about 30% of the rent I paid at the place I rented before buying our house. Property taxes are paying for local services; renters are paying them as well, but the landlord handles the money in between.

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

#126

Post by philips »

DennisP wrote: post #83
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…

A real estate license mostly teaches what you need to know about the laws around real estate transactions. It's pretty easy to get. Take the courses, pass the test, and you're in, there's no restricted access. You can set up your own brokerage and everything. But if you want your brokerage to have access to the MLS system, you have to join the Realtor organization. That's where the monopolistic behavior creeps in.

Except in Oregon you also have to have a minimum number of transactions per year or have a “senior broker” sign off on all your deals (for a price).

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

#127

Post by sokoloff »

Terretta wrote: post #58
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…

[flagged]

It wasn't an anecdote of one person who paid that/more; it was a note that the fourth largest economy in the world has such a typical arrangement.

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

#128

Post by Navarr »

yesimahuman wrote: post #116
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 just sold a house in the US and the thought of listing it ourselves did cross my mind, but in the end we used an agent and they did _everything_ for us while I was out of the country, and got us a great price. In the end the amount of commission we paid to our agent (3%) didn't feel excessive at all since I barely had to lift a finger (besides moving). Now, 3% for the buyer's agent? _that_ felt excessive.

The buyer's agent fee is basically subsidizing the hard work of buyer's agents (which is taking their clients to multiple properties, discussions about what they want, using time browsing MLS to find houses that meet criteria and arranging tours of them)

When I was looking to buy a house, my agent received no financial compensation from me at any point. Their work was entirely subsidized by the buyer's agent fee - and we looked at a lot of houses trying to find the right one.

The negative effect of that is that they're incentivized to offload us asap.

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

#129

Post by codedokode »

jacobsimon wrote: post #91
jasode wrote: post #75

Earlier quoted context omitted.

>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…

Agents want to close the deal as soon as possible so I assume they will try every trick to persuade the onwer to set the price below the average. Or am I wrong?

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

#130

Post by mgaunard »

WoodenChair wrote: post #8
mgaunard wrote: post #4

[flagged]

If you weren’t able to read the article, it’s probably not helpful to respond to it. Would you review a movie you haven’t seen?

You're speaking as if web journal articles had meaningful content in them beyond the headline -- you must live in a parallel universe.

Anyways, it remains factual that around 6% is standard throughout the developed world. It makes the market illiquid, as you need to wait for the value of the property to increase to make back those costs, which is a main driver of the real estate market inflating so much.

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