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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

#331

Post by poulsbohemian »

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.

Your location may be different, but what you are describing is not universal or even common in my experience working in multiple states. Yes, it is absolutely true that there should be a higher barrier to entry and even after "first renewal" (which is normally a second round of education), there isn't enough training before we let new agents loose into the world. That said - in every state I'm aware of, you work under a licensed broker who has additional licensing, training, and legal responsibility. Until you've reached that level of licensing it is not possible to set up your own brokerage. I've seen a work around where a non-licensed business owner paid someone to be their broker, but that regardless there has to be someone with the right licensing running the business.

Also - whether MLS members must also be Realtors is a rule of the MLS and not a universal requirement. The NAR, nor MLSs, do not set commissions. In fact, much of the MLS rule changes in recent years that I've observed have been about making sure non-Realtor licensees have market access. It's right there in our paperwork that I show clients where we ask permission so that the seller knows who will be entering their home.

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

#332

Post by stephencanon »

briffle wrote: post #253
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…

If you were in the US, most likely the Sellers agent then kept the full 6% fee unless you negotiated it down on that first transaction.

In our case, the agent accepted a lower commission because both they and the seller got more money from our offer then they would have from the competing offer which had a buyer's agent. We didn't negotiate that though, because that's entirely between the seller and their agent.

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

#333

Post by poulsbohemian »

lotsofpulp wrote: post #251
jperras wrote: post #210

Earlier quoted context omitted.

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.

Websites have obviated the utility of a buyer’s agent “finding” houses for 90% of buyers. Setup alerts for the type of house you want, draw the geographic boundaries on Zillow, and spend 2 minutes looking at the listing and maps to find out everything an agent would have been able to tell you.

> find out everything an agent would have been able to tell you

These websites are great and I'm glad the public has the information they have, but they don't tell the whole story - especially for someone coming from outside the market.

I'm thinking here of just the last few of my transactions - flood zone issues, title issues, broken sewer lines, pricing, emblements, water rights - like needing to cure in order to preserve, surveying, sub-division, zoning use, farm tax status. Plus finding all the professionals needed to support the process - I'm spending my day calling plumbers so that I can keep a deal together for buyer and seller, for example. I don't think the public appreciates what life was like before listing services - it's one of the major advantages for consumers that we have in this country over other places, IE: attempting to reduce information asymmetry.

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

#334

Post by matwood »

ryandrake wrote: post #264
HWR_14 wrote: post #235

Earlier quoted context omitted.

That could be true in your case, but for many people that might not be the case.

HN is full of self-professed master negotiators. Just look at any salary thread. I am absolutely willing to pay a realtor to negotiate for me (and in general to have knowledge of the market and know how to find the real market price) because I suck at negotiating and have no idea how to do it.

I don't consider myself to be a master negotiator at all, but I can look at Zillow and know how much I want to spend or how much I want to sell for. The internet has removed a vast majority of the information asymmetry involved in house transactions.

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

#335

Post by kube-system »

dilyevsky wrote: post #329
kube-system wrote: post #263

Earlier quoted context omitted.

In the US, this will severely limit your options. Most houses are posted to MLS first, and don't make it to public sites until later. If you want to get the best deals, you gotta have an agent send you MLS listings daily, swoop in and make an offer on the first day before anyone else sees it. When I bought my last house, my agent was able to send me dozens of listings from MLS for homes that weren't listed on public…

You can pay a flat fee to put your house in mls without an agency - it’s couple hundred bucks

Did you reply to the wrong comment? I am talking about buying a house.

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

#336

Post by thunkshift1 »

This biggest drawback in my opinion is not the commission percentage, it is the gate keeping that realtors do wrt the inventory in market. Only realtors have access to and complete picture of what is on the market and for what price. I think this is the MLS database? Its weird that the person actually shelling out the money has to go through these middle men to even gain an understanding of what his hard earned money can get him.

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

#337

Post by bequanna »

mcntsh wrote: post #3

Closing costs in Germany are quite high... about 12%. - 3.57% RE commission - 2.00% notary - 6% for the land transfer tax And the seller also pays 3.57% of the RE commission. So over 6% at the end of the day :)

Sounds like a tax problem, not a commission problem.

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

#338

Post by RealAgentAI »

rgbrgb wrote: post #312

FWIW in America you can totally ask for a refund on agent commission when looking for an agent to buy with. Not all agents will do it but it is straightforward for them to credit their commission against the closing costs. With online listings, agents today do so much less than they did when those commissions were set and home prices have obviously ballooned faster than inflation. The end-state of our startup, Open L…

Working on a similar product at https://realagent.ai, check us out.

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

#339

Post by RealAgentAI »

triceratops wrote: post #136

Technology has been able to do 80% of the job of a realtor for about 20 years now. The profession has only become more lucrative in that time. Legal action, not market forces, have finally brought it to a point of change. Maybe in the age of AI there are some lessons us software devs can take from the real estate agents.

We are trying at https://realagent.ai, issue is the real estate "cartel" is strong.

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

#340

Post by Diesel555 »

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…

Buying a house in Italy. All fees are much higher than America. Realtor is still 6% - but with the notary, purchase tax, etc I think I will be 10-15%
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