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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

#151

Post by scrlk »

mytailorisrich wrote: post #109
scrlk wrote: post #100

Earlier quoted context omitted.

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.

Well, it is simple and cheap. "Chains" are not 'the system' they are a fact of life. Many people sell one property to buy their next one and need the money from the sale to finance the purchase (and also don't want to end up on the street) so they want contracts on both sides to be entered into at the same time. It adds a level of complication but no additional costs. This is an issue that exists everywhere though so…

Apparently 1/3 of property chains fall apart before completion - that's a lot of wasted money on searches and solicitors.

> I don't see how reforming (how?) a system that is simple and cheap would help solve the "housing crisis".

Is there effective utilisation of the existing housing stock? Encourage people to move to ensure that their home meets their current needs. E.g. retired couple, children have left, so their current house is oversized.

Making property transactions less stressful for people would assist with this. I'm certain that there are people out there who would be open to moving, but CBA with dealing with the stress of being stuck in a property chain.

How? Just look up north to Scotland. Not a perfect system (e.g. "offers over"), but ahead of what England has to deal with when it comes to transactions.

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

#152

Post by WirelessGigabit »

stephencanon wrote: post #59
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…

We’ve bought two houses, sold one, bought a lot to built a house for my parents. We’ve never hired a real estate agent. The seller had an agent for the first transaction, none of the other counterparties had an agent. Paying a lawyer by the hour to handle things is simpler, cheaper, and a random lawyer is dramatically more competent than a random agent (the most complex transaction ended up costing us maybe $4k in la…

The problem in this case is that the seller's agent takes the whole 6%. It's not that they only take 3% (which is the most disgusting part here).

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

#153

Post by WoodenChair »

mgaunard wrote: post #130
WoodenChair wrote: post #8

Earlier quoted context omitted.

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.

Actually the article has statistics and sourced infographics backing up its point. You can’t challenge those because by not reading it you haven’t seen them…

So I’m left either trusting the Wall Street Journal or the anecdote of someone who didn’t read the article. Gonna go with the former in this case.

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

#154

Post by compiler-guy »

PopAlongKid wrote: post #122
Ajay-p wrote: post #79

Earlier quoted context omitted.

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/counte…

And maintenance itself is never a cause for reassessment. New roof? No reassessment. New windows? No reassessment.

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

#155

Post by corethree »

AnimalMuppet wrote: post #104
danielvaughn wrote: post #87

Earlier quoted context omitted.

^ this is good advice. There are really two things you need to rely on in real estate deals. The first is the legal aspect, which 100% absolutely should be handled by a lawyer. The second is negotiations, assuming you yourself aren't a skilled negotiator. Neither of these things require an agent, and neither are worth $40K.

Negotiations could easily be worth $40K. It could easily be worth 6%. Or it may not. Worse: If I use the agent, I don't know whether the agent gained me 6% of the price in the negotiations. If I don't use the agent, I don't know if I cost myself 6% of the price (or more!) in the negotiations. Someone could do a study, looking at sale prices of "for sale by owner" versus sale prices of comparable sales through agents,…

True. But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold. So logically only sellers would benefit from this.

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

#156

Post by mytailorisrich »

scrlk wrote: post #151
mytailorisrich wrote: post #109

Earlier quoted context omitted.

Well, it is simple and cheap. "Chains" are not 'the system' they are a fact of life. Many people sell one property to buy their next one and need the money from the sale to finance the purchase (and also don't want to end up on the street) so they want contracts on both sides to be entered into at the same time. It adds a level of complication but no additional costs. This is an issue that exists everywhere though so…

Apparently 1/3 of property chains fall apart before completion - that's a lot of wasted money on searches and solicitors. > I don't see how reforming (how?) a system that is simple and cheap would help solve the "housing crisis". Is there effective utilisation of the existing housing stock? Encourage people to move to ensure that their home meets their current needs. E.g. retired couple, children have left, so their…

> Encourage people to move to ensure that their home meets their current needs. E.g. retired couple, children have left, so their current house is oversized.

I'd wager that no-one has been put off moving house because of the legal procedure or over-stressed about it.

Now, the actual moving day is stressful but that's the way it is...

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

#157

Post by pb7 »

ghusto wrote: post #96
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_

Except it is wrong. It’s not “except Americans”, it’s “except Germans” and "except Japanese" and hundreds of millions of others. It’s not about the exact number because the whole premise is that it’s too high.

"Almost No One is Poor in the United States–Except Lazy People"

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

#158

Post by harel »

enlyth wrote: post #46
benjaminwootton wrote: post #5

Earlier quoted context omitted.

In the UK, the market rate 1.5% paid by the seller on completion. Nothing to the buyer and rarely any fees for a failed transaction. Then approximately £1000 in legal fees when buying or selling. Then the big one which is stamp duty (a government tax) which is between 0 and 12% of the purchase price. Typically the lower end of that scale though. ( https://www.gov.uk/stamp-duty-land-tax/residential-property-... )

In the UK we also have one of the worst systems for buying and selling property which on average takes 3 months or more for a single transaction and everyone can walk away at any point until exchange of contracts for whatever dumb reason. As a buyer you will spend thousands on legal and survey fees before you even know if there is anything wrong with the property. Legal fees are more like 2k+ these days (source: buyi…

I hear complaints about it a lot, and I've nearly been burned by that system myself. However, it protects the people in the chain from becoming homeless or obligated to a sale if their buyer/seller falls through for example.

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

#160

Post by jcranmer »

debacle wrote: post #19
hef19898 wrote: post #15

Earlier quoted context omitted.

A nortary makes sure the sale ia properly exevuted and titles properly transferred, he is certifying the transaction and takes on some legal riks dor doing so. This provides legal security for seller and buyer, a service woth paying for in transactions most people only do once in their life (we talk about Germany here). For all others, it is just coat of doing business. No idea why it is always everybody else who sho…

Might be a different meaning of the term notary. In the US, you can become a notary public for $35 and an online course in many instances.

In the US (and I think most common law jurisdictions), a notary public is basically Certificate Transparency for legal documents. The notary records that so-and-so signed such-and-such on this date in their log, and if you have any doubts about that, they can produce that log for you to prove to that they witnessed it.

By contrast, civil law notaries are generally full-on lawyers who are trained and intended to perform several legal tasks.

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