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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

#161

Post by namibj »

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…

Don't be misleading: capital gains tax is on capital gains, not on capital. The sale fees are effectively on capital when it changes hands.

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

#163

Post by [deleted] »

danielvaughn wrote: post #60
WXLCKNO wrote: post #28

Earlier 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…

[deleted]

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

#164

Post by roland35 »

danielvaughn wrote: post #60
WXLCKNO wrote: post #28

Earlier 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…

Yeah I would replace AI in this case with a legal service which is more or less off the shelf. Although a lot of things can certainly go wrong in real estate deals, purchasing a residential home or condo is an extremely common scenario and I'd imagine almost everyone can use a similar contract (in their state at least).

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

#166

Post by cpncrunch »

RationPhantoms wrote: post #132
WarOnPrivacy wrote: post #67

Earlier quoted context omitted.

Dude. I appreciate the diligence but did you click on either of those links?

This is the first time I've seen WSJ articles not be given full access from archive.

Its been happening to all their articles for the past day.

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

#167

Post by voisin »

koolba wrote: post #45
voisin wrote: post #29

Earlier quoted context omitted.

> 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.

The buyer is paying the agent in the addition to the sale price. The buyer is also paying additional taxes for many years afterward on the higher assessed value (as it includes the commission!).

> The buyer is paying the agent in the addition to the sale price.

Well I guess this gets a bit philosophical. Who pays the cost (the actual payment goes from the buyer to the seller’s lawyer which remits a portion to the agent) differs from who bears the cost (called the “incidence” [0]), which depends on the price elasticity of demand versus the price elasticity of supply, and this burden obviously shifts depending on the cycle of the housing market. You are correct that the incidence would fall to the buyer for quite some time now but perhaps this is shifting now.

[0] https://en.m.wikipedia.org/wiki/Tax_incidence

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

#168

Post by [deleted] »

pb7 wrote: post #157
ghusto wrote: post #96

Earlier quoted context omitted.

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"

[deleted]

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

#169

Post by j4yav »

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,…

Are buyer agents also paid at a % of the closing price? If so they also have an incentive to get their clients to pay more for the house.

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

#170

Post by johngladtj »

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…

That's why Germany has some of the highest homeownership rates in the world!

Oh wait...

Turns out encouraging illiquidity, high entry costs, and limiting people's options when it comes to selling without paying extortionate amounts of taxes doesn't actually do that.

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