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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

#241

Post by MarkusWandel »

j45 wrote: post #214
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.

There is insurance on real estate transactions for a reason. Not exclusive to realtors. Many realtors works take a consulting fee too navigate things. Try.

I never understood Title Insurance. Isn't the whole point of a lawyer handling the transaction to look for potential gotchas? As opposed to just rubber stamp it and let the insurance handle it if something does come up?

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

#242

Post by kelnos »

ineptech wrote: post #217
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…

For the buyer, the value is clear: someone to go out with you to house after house, let you in, walk around with you, talk about whether you could fit a king-sized bed in that room, etc. It's a lot of work and the buyer gets a lot of value from it. But for the seller, who pays the tab, the only value is that some buyers' agents will steer their clients away from you unless you offer a large commission. The individual…

I don't agree on the buyer side. I've been involved in purchasing three homes, and while I did find my realtor's help valuable, most of the work to narrow down listings fell to me. Even when my agent pro-actively pushed listings at me, most of them I had already found on Redfin or Zillow.

The offer process can be a little confusing, but ultimately it's a bunch of standardized forms that everyone should be allowed to download from some government agency or whatever.

The negotiation process is in some ways more frustrating when having to go through intermediaries. The only value the realtor provides there is frankly pretty shady: often the two realtors (who usually know each other and have a cordial relationship) will share information about their client that they really shouldn't. I've benefited from that type of information, but have felt dirty about it.

Ultimately all the legal stuff is handled by a title company (and/or a lawyer), and the realtor isn't involved there.

I think the main places where you can get a better outcome with a realtor are due to industry protectionism, not anything inherently difficult about the process that requires a trained, licensed agent with insider information.

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

#243

Post by aftbit »

Tangurena2 wrote: post #25
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…

[flagged]

Vagrancy is not a particularly American crime.

https://en.wikipedia.org/wiki/Vagrancy_Act_1824

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

#244

Post by kelnos »

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!).

This pisses me off quite a bit. A simple fix could be to have the realtors bill for their services outside the purchase contract (which could still spell out those fees in a legally binding manner). The closing costs we pay to the title company aren't included in the purchase price, so it doesn't make sense that the realtor fees should be either.

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

#246

Post by tverbeure »

jperras wrote: post #210
stephencanon wrote: post #59

Earlier quoted context omitted.

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…

Canadian here. Sadly, it's common practice around these parts for buyer agents to completely ignore listings that don't have a selling agent attached; it's their form of industry protectionism. As a result you end up losing out on a large surface area of buyers who rely on their buying agent to find properties, which puts you at a disadvantage.

Whenever we’ve bought a house, we told the agent to not bother sending us listings or set up viewings. We simply checked open houses on Redfin and Zillow ourselves, and if we liked a house, we’d ask the agent to prepare an offer, at a price we set. It is not to figure out what a house will sell for if there are enough other sales in that neighborhood.

For their reduced work, we’d ask a reduction of their commission.

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

#247

Post by kelnos »

PaulDavisThe1st wrote: post #171
jaywalk wrote: post #142

Earlier quoted context omitted.

No, the seller pays the 6% commission to their agent and then their agent gives the buyer's agent half of it. That's how it works everywhere in the US.

Except in a for-sale-by-owner scenario, where the seller is not using an agent. In those scenarios, it may be necessary to agree to a fee paid directly by the seller to a buyer's agent. 2-3% is typical. This is not always necessary - some buyers will not be using an agent either, but it is not rare.

The thing that's excessively dumb about even that approach is that the buyer almost certainly would prefer to pay their realtor directly, outside of the purchase price. Since property tax assessments usually just follow the purchase price directly, I'd much rather purchase the house for $485k and give my agent $15k separately, than have my tax assessment be based on a $500k purchase price where the seller immediately turns around and gives $15k of that to my realtor.

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

#248

Post by gitfan86 »

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 worst part of an agent is that they will not show you a house that is for sale by owner. They are actively limiting your options and you are paying them for that service

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

#249

Post by kelnos »

closeparen wrote: post #225
ineptech wrote: post #217

Earlier quoted context omitted.

For the buyer, the value is clear: someone to go out with you to house after house, let you in, walk around with you, talk about whether you could fit a king-sized bed in that room, etc. It's a lot of work and the buyer gets a lot of value from it. But for the seller, who pays the tab, the only value is that some buyers' agents will steer their clients away from you unless you offer a large commission. The individual…

My realtor was incredibly helpful with my purchase, even knowing some insider details like this HOA is in litigation or that warehouse is becoming a high rise. I would have gladly paid him the $200-300/hour I pay for other professional services. Given the size of the transaction though, his effective hourly rate was well over $1500.

And that's the thing. We should be paying realtors by the hour, or some fixed fee unrelated to the eventual purchase price. The link between purchase price and the effort made by the realtor is weak at best, and often completely nonexistent.
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