Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

wsj.com

Post reply on HN
Print view View original

191–200 of 360 posts

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

#191

Post by judge2020 »

showerst wrote: post #108

I thought because I literally haven't seen a single "what do real estate agents even do" post on here, I'd post my positive experience -- We bought a house this year in a competitive, expensive market (DC). Our agent found the listing through word of mouth before it went on MLS, and got us lined up for an early tour so we had the chance to look at it before the open house. We liked it enough to get a pre-inspection o…

The pro tip is to become an agent yourself. You'll have to become active with a broker whenever you want to buy, which is 50-100/month in fees, but then you'll get the "buyer's agent" 3% at closing (or after closing, depending on how the brokers negotiate payment).

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

#192

Post by matwood »

I thought the recent court case did not receive as much attention as it should. 6% has been usury for awhile, even if you think you had a 'good' agent. Now it can simply be another negotiated deal point. It will also help remove some of the enormous friction in selling/buying a house.

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

#193

Post by PaulDavisThe1st »

mytailorisrich wrote: post #109
scrlk wrote: post #100

Earlier quoted context omitted.

The chain system is absolutely ludicrous, I wouldn't call it "simple and cheap". IMO the whole system needs reform, I would wager it would go some way in fixing the housing crisis in the country.

Well, it is simple and cheap. "Chains" are not 'the system' they are a fact of life. Many people sell one property to buy their next one and need the money from the sale to finance the purchase (and also don't want to end up on the street) so they want contracts on both sides to be entered into at the same time. It adds a level of complication but no additional costs. This is an issue that exists everywhere though so…

As a Brit-by-birth but Usonian-by-choice, I'm always amazed whenever I go to visit family in the UK how much "chains" feature in real estate listings there. You almost never see anyone refer to this in US sales listings, other than perhaps a vague alusion to "motivated seller". Wandering around RE agent shops in Bath, it seems that 30-50% of every window-displayed listing mentions something about the chain status.

Odd. Interesting. Both.

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

#194

Post by charles_f »

This is one of these cases where I don't see why they collect a % fee except because they could, and they all do.

There's typically very little that they do differently for a more expensive house than for a small condo. Everything is listed on their central system, which serves as an indefferentiated marketing platform - and also informs them pretty well on the state of the market. If they do any staging, repairs, cleaning, it's usually a subcontract that you get charged for.

It's a pretty linear job (not even judging if it's complex or not), so why do they charge a proportional - and typically large - fee? I think that it is one of these psychological caveats where you're already talking about amounts that exceed your day to day understanding, in a stressful context. You only really see that one digit percentage fee, that you can't really negotiate anyway. And the actual amount is displayed in context to the real price tag, so it's looking small in comparison.

The worst consequence, beyond just the relative unfairness of that practice, is the detriment it creates. In Canada (at least where I leave) the commission is split between the agent of both sellers and buyers. Since it's a portion of the selling price, everyone (apart from the buyers themselves) is financially incentivized to maximize the price.

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

#195

Post by TacticalCoder »

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…

100 000 times this. Same in neighboring Belgium and AFAICT same in France. 6% fees and up to 12.5% as a gift to the notary and the state in Belgium although to hide the rip off the seller shall be owned by the real estate fees and the buyer by the state fees. But one buy/sell and it s 18% lost. In France it s 44% tax on added value if you sell but then each year passing by this goes down by 2%. Something like that.

People are insane if they think thevhighly socialist EU doesn't screw people gigantic times on real estate.

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

#196

Post by PaulDavisThe1st »

tecleandor wrote: post #43
hef19898 wrote: post #15

Earlier quoted context omitted.

A nortary makes sure the sale ia properly exevuted and titles properly transferred, he is certifying the transaction and takes on some legal riks dor doing so. This provides legal security for seller and buyer, a service woth paying for in transactions most people only do once in their life (we talk about Germany here). For all others, it is just coat of doing business. No idea why it is always everybody else who sho…

Sounds more like a lawyer or several competencies at the same time. In Spain the notary "just" works through the signature of the contract: - Checks the identities of the parties and their legal status - Makes "sure" both parties understand the contract - Verifies that the property can be sold (checks for legal issues in the national registry) - Serves as a legal witness to the signature - Sends a copy of the contrac…

In the US, this can be done by a title & escrow service. They hold the deposit money (assuming there is some, which is normal), and then at closing they will do all of the above, as well as receiving and distributing funds from the buyer/mortgage company.

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

#197

Post by matwood »

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,…

> Negotiations could easily be worth $40K.

I'm a better negotiator than any agent I've ever dealt with. Add in the white hot market the last decade and the only 'negotiation' happening was figuring out how much to overbid.

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

#198

Post by jaywalk »

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.

Well yeah, of course. I'm talking about the most common scenario, where both parties are using Realtors (TM).

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

#199

Post by Tempest1981 »

Is there mention of this recent lawsuit? Should have some impact. (No WSJ subscription)

Americans are taxed $60 billion in real-estate commissions, says attorney who just won a $1.8 billion mega-verdict against National Association of Realtors

https://fortune.com/2023/11/02/national-association-realtors...

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

#200

Post by pyrrhotech »

I'm an American that has bought and sold 3 houses and never once paid the 6% commission. It seems lots of folks don't realize commissions are negotiable, and that discount brokers exist who charge much less for roughly the same end product. If you think the standard full service 6% is providing you adequate value, by all means pay it, but don't feel like you have to.
Post reply on HN