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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

#301

Post by bilsbie »

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 got overrun by phone calls when I tried this. 10+ per day with 90% being agents trying to scam me into listing with them.

How did you handle that?

I finally got a traditional agent just to field the phone calls.

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

#302

Post by bilsbie »

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.

But if the buyers see your property on Zillow wouldn’t they insist on seeing it?

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

#303

Post by jerich »

I think AirBNB has the infrastructure to upend the Realtor market. If they just add an “AirBNB listings” buyers can search and scroll through pictures. They’d have to show exact location, but otherwise pretty much the same as what’s there. Seller pays an upfront listing fee, gets referrals for staging and photos if they want to stand out.

Simply add a “30 minute viewing” rental for $25-$50 (AirBNB keeps $10-25), available to registered users (with already-verified ID). Maybe rent the homeowner a bundle of cams for viewings for extra security.

If a buyer is really interested, have an above-market-rate nightly rental—I’d love to spend a night in a house before paying a million+ dollars for it (without the cams, of course). Maybe half refunded with an offer made thru AirBNB Listings; full refund with an accepted offer (again, less AirBNB fees). Maybe partner with Redfin or Zillow to set prices, provide school and property info, and finish the deals. Do it all cheap enough to make it worth sellers forgoing an MLS listing; should be a flat fee, a tiny fraction of 6% in most cases.

A startup couldn’t do it, but AirBNB has the name recognition, and the pieces already there, right? I’m available for consulting, or send me a fruit basket if it all works out, a nice one, without a lot of melon.

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

#304

Post by eldavido »

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.

The problem with licensure is that there are many markets where the number of licensed professionals is zero. My wife reminds me of this--she grew up in rural Idaho, where many things I take for granted (e.g. electricians, medical care) growing up in the Chicago suburbs, weren't available.

Let's consider the choices of a homeowner in this market, who needs electrical work done: (a) pay a licensed professional to travel into their market (expensive), (b) have someone unlicensed do the work (or DIY it), or (c) just don't do it.

This is why I think certification (not mandatory licensing) is the way to go. It's not clear that criminalizing economic activity when it's someone's only real choice--and there may be major health/safety hazards if the work isn't done--is beneficial.

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

#305

Post by poulsbohemian »

MarkusWandel wrote: post #241
j45 wrote: post #214

Earlier quoted context omitted.

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?

Here's an example: I've got a house under contract and in the title report it shows that in 1906 (!!) the then owner of the land (prior to the house being built in 1946) signed away mineral and timber rights. Unclear at this point who those rights belong to, but doesn't appear to be the homeowner. In another case, I had a seller client who had been a victim of title fraud on a piece of scrub land. Title insurance is something you hope to never need, and admittedly it mostly involves family esoteric scenarios, but it really is there to protect buyer and seller in their ability to convey property.

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

#306

Post by no_wizard »

lotsofpulp wrote: post #290
no_wizard wrote: post #279

Earlier quoted context omitted.

I have routinely found more homes by looking around the neighborhoods I wanted to buy in than what I found on Zillow. They don't seem to capture all data sources well (or something else may be afoot, I'm not sure)

I presume their data source is MLS. Perhaps the homes you are finding are not listed in MLS?

Its possible, but I don't think thats the only thing, the reason being that they are listed via Realtors (usually) and I can sometimes find them on other websites (e.g. Redfin) or in the local real estate flyer booklet, but it simply isn't on Zillow for some reason.

I wish I had a recent example, but I tested this theory multiple times when I was house hunting, and I don't think I'm hallucinating the issue.

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

#307

Post by poulsbohemian »

arcticgeek wrote: post #205
WirelessGigabit wrote: post #152

Earlier quoted context omitted.

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).

It is customary, at least in some locales (US-AK), that the commission is split evenly between the agents.

I would caution against assuming that anything related to commissions is actually customary, including an even split. All of this really is negotiable, and when I think about the past year, I've seen multiple occasions where different splits were offered. For example - I referred some business to an agent in Tennessee, who in order to pay my referral* convinced seller to offer a lesser split to the buyer's agent. I know of at least one agent in my market who does similar. I know of another agent who charges at least 10% on any land deal, while others are flat-fee.

* If I were a member of the public, I'd be more upset about referral fees than commissions. This is a far more grey / nebulous area of real estate compensation. We have to disclose and discuss commissions up front, but referral fees are often in the shadows and definitely can cause buyers / sellers to pay more.

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

#308

Post by eldavido »

PopAlongKid wrote: post #143
tempsy wrote: post #34

Earlier quoted context omitted.

Anyone living in California or NYC and making mid six figures and up is easily paying more than German tax rates then. You’re paying almost 50% around high six figure range. I’ve never quite understood why people think the US is a low tax country.

>You’re paying almost 50% around high six figure range. That's a gross oversimplification and thus very misleading. While your marginal tax rate on taxable income (not gross income) might be close to 50%, if you are married filing joint, a homeowner, and have children, you are not paying anywhere near 50% effective tax rate[0] on your total income, due to deductions and exemptions, credits, tax-deferred retirement co…

Not really. 20-30% effective on income including CA's 9.4% at ~40k, plus 10-20k in property taxes, 10%+ in sales taxes, excise taxes on everything from gasoline to alcohol, and various "fees" that are really taxes including auto registration, building permit fees, DMV charges, ride share fees, motor oil and battery disposal charges. Also, some cities (e.g. NYC) have a personal income tax.

Obviously you're right that marginal != effective, but Americans really do pay a LOT in taxes, when you add it up, for a relatively middling level of services (e.g. no public healthcare, no subsidized daycares, marginal-quality public schools)

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

#309

Post by poulsbohemian »

Spooky23 wrote: post #282
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…

Like any sales profession, the median salesperson is a moron. Many of the listing agents just try to sign as many as possible to get the shared commission. They’re easy to find because theirs is a volume game and they market heavily. If you don’t ask for what you want or know what you want, you get those guys. If you do, you pay for the big leagues. You’re not going to find their business card at the coffee shop bull…

>Like any profession, the median is a moron.

Fixed that for you. I wish when real estate comes up on HN, as it seems to weekly, that more members of this community would reflect upon the 10x programmer conversation. In any given profession, there are going to be skilled people and less skilled people, in the same way that Pareto's principle tells us that 20% of the people are doing 80% of the work. So I appreciate you making this observation.

May I ask - why did you feel like a horrible person? Sounds to me like you had a good sense of what you wanted to accomplish and you found someone who could help you reach your goals.

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

#310

Post by poulsbohemian »

cgh wrote: post #203
koolba wrote: post #45

Earlier quoted context omitted.

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!).

Correct. There’s only one party putting money on the table here. “The seller pays the commission” is real estate agent doublespeak.

Um - for years now real estate agents have been specifically told by their lawyers to not use that language, because it's been well-established that it is not true. If you've heard that language from an agent, it's a good sign they were either new to the business or dropping soundbites to sound knowledgable.
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