Almost no one pays a 6% real-estate commission except Americans • Hacker News Board

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

#181

Post by PaulDavisThe1st » Fri, Nov 17, 2023, 3:46 PM UTC

Multiplayer wrote: post #172

In coastal California the commission situation becomes ludicrously lucrative to the top agents. This week a home in my community sold for $25,0000,000. One of my friends had the buy side, another had the sell side. The buy side agent will be involved in ~200,000,000 in transactions this year, a down year. In this community there are plenty of transactions north of $20,000,000. He just did another and had both sides o…

AFAIK, there is zero regulatory capture associated with realtor associations. They have no special priviledge under the law, and are not required for real estate transactions.

The one thing they do have is control over access to the MLS, plus social inertia.

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

#182

Post by amluto » Fri, Nov 17, 2023, 3:46 PM UTC

walthamstow wrote: post #62

CPLX wrote: post #37

Earlier quoted context omitted.

> Occupational licensing was originally developed to prevent black people from being employed. You’ll need to cite some evidence for this. Occupational guilds and membership associations stretch back a lot further into the Middle Ages in Europe versus the timeline you’re suggesting here. There are also some very common sense public policy issues at play like making sure people who say they can cut hair or fix your te…

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.

Having been injured (not particularly badly) by a hairdresser who didn’t know what they were doing, I’m not entire sure I agree with you.

I’m not saying that the actual licensing regime makes sense (I don’t know much about it), but requiring that one demonstrate knowledge of the rules before professionally cutting hair seems fine. At least California does this for restaurants, too.

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

#183

Post by judge2020 » Fri, Nov 17, 2023, 3:47 PM UTC

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.

Agents must use a template approved by their broker (who has their own lawyers who drafted that contract, of course). Typically they can't do anything custom.

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

#184

Post by tempodox » Fri, Nov 17, 2023, 3:47 PM UTC

pavlov wrote: post #89

The North American middleman is one of the most successful organisms on the planet. Just look at the healthcare system.

And standardized bribes are The American Way™

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

#185

Post by DOSUser67 » Fri, Nov 17, 2023, 3:48 PM UTC

foogazi wrote: post #137

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 buyer doesn't bear the cost at all The buyer is the only one bringing money into the deal so they pay for both agents

That's not true, the agent fees come from the seller's money.

It's only true if you consider your employer to be paying for everything you have in your house, because they gave you the money you used to pay for your stuff.

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

#186

Post by scarface_74 » Fri, Nov 17, 2023, 3:51 PM UTC

corethree wrote: post #155

AnimalMuppet wrote: post #104

Earlier quoted context omitted.

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.

Actually they are. It’s about volume not the few extra pennies they get on a sale - especially once you consider the brokerage takes some of that money.

The Freakonomics book went into this in detail.

https://freakonomics.com/2008/02/real-estate-agents-revisite...

If your house sales for $50K more, each agent gets $1500 more and the brokerage gets 20-40% of that. Let’s say 30%. That means the agent will get a little over $1000 extra.

They would much rather sell your house for $50K less and move on than convincing you to hold out for $50K more.

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

#187

Post by PaulDavisThe1st » Fri, Nov 17, 2023, 3:52 PM UTC

walthamstow wrote: post #94

underseacables wrote: post #84

Earlier quoted context omitted.

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.

Imagine living in Dover, and deciding to move just 26 miles to Calais. Quelle horror! You will need to do the licensing all over again!

(at least, you certainly will post-Brexit; not 100% sure what the pre-Brexit story was on that, but I have a feeling it may have similar)

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

#188

Post by judge2020 » Fri, Nov 17, 2023, 3:52 PM UTC

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.

Most states require some years of experience before you can become an independent broker, in Florida it's 2 years of active work / 5 years in the system.

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

#189

Post by DOSUser67 » Fri, Nov 17, 2023, 3:52 PM UTC

dkjaudyeqooe wrote: post #141

UncleMeat wrote: post #93

Earlier quoted context omitted.

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?

They can do. If they market your house well you can maybe get another $100,000 (5-10%). At around 1-2% they're generally profitable to the seller.

The problem is their fee is also that much. So it doesn't benefit you to get 6% higher price if you have to pay it to agents. It's just more tax and fees you have to pay on a higher house price.

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

#190

Post by lawlessone » Fri, Nov 17, 2023, 3:52 PM UTC

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…

>navigating bidding wars,

A lot of anecdotal evidence they encourage this.