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

wsj.com

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

#261

Post by closeparen »

rgbrgb wrote: post #252
closeparen wrote: post #238

Earlier quoted context omitted.

The title company is the one who sends and receives wires and executes the nuts-and-bolts transfer of ownership. You could imagine fintechs getting into that space even with traditional agents, and you could imagine title companies catering to for-sale-by-owner.

Title companies are already pretty efficient and relatively cheap... not a lot of margin or process to improve with technology.

Exactly! I’m pretty sure Old Republic’s fee was a couple grand, nowhere near the mid-range luxury car price that the realtors collectively made on the transaction.

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

#262

Post by cscurmudgeon »

ghusto wrote: post #96
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…

I don't normally nitpick in this way, but the single line "Wrong." rubbed me up the wrong way. The claim was: > Almost No One Pays a 6% Real-Estate Commission–Except Americans (wsj.com) and you've cited an example which fits neatly into the word "almost", _right there as the first worth in the sentence_

Readers: Here are a dozen examples that refute you

Author: Ha! I used the mighty "ALMOST"! Don't you plebs know the rule of the mighty "ALMOST". I win. I am so smart.

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

#263

Post by kube-system »

tverbeure wrote: post #246
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.

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.

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 websites.

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

#264

Post by ryandrake »

HWR_14 wrote: post #235
matwood wrote: post #197

Earlier quoted context omitted.

> 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.

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.

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

#265

Post by dragonwriter »

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.

> But agents aren't incentivized to negotiate lower prices because payment on both sides is proportional to total price sold

Typically, agents (on both sides) are incentivized to doing whatever makes the sale happen with the least time, risk, and effort, because what they lose on commission if that involves a (not extraordinarily unreasonable) price cut they make up for in volume.

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

#266

Post by mcoliver »

closeparen wrote: post #238
mcoliver wrote: post #216

This comment is focused on USA. Some people need or want an agent, some people don't. For the majority the checklist for buying a home is fairly straight forward and could be automated with checklists, yelp, Plaid/UWM, and DocuSign. But not all. The bigger issue that I think almost everyone can agree on is the standardized percentage thing. Being an agent should be a flat negotiated fee or billed like the trades per…

The title company is the one who sends and receives wires and executes the nuts-and-bolts transfer of ownership. You could imagine fintechs getting into that space even with traditional agents, and you could imagine title companies catering to for-sale-by-owner.

Good call out. And I am aware of the history and edge cases with residential real estate in the US.

So as to not talk past each other I'm specifically talking about present and future vanilla residential real estate transactions. For example w2 income with history, deed in your name, For these things I struggle to imagine a future where the government does not have a clear view as to who owns and can transfer property (property taxes, IRS filings, Fannie/Freddie, recorded deeds, etc). They are backstopping the mortgage, they should understand what they are lending against.

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

#267

Post by ineptech »

kelnos wrote: post #242
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…

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…

I agree with all of this, I should've said the buyer's value can be significant, in terms of hours spent by the agent. I've had agents that toured dozens of properties with me, around a very large area over several months, and didn't make a cent because I ended up buying in a different county with a different agent. But that isn't so much an example of value-for-money as of a broken market in which agent pay is only tenuously related to job performance.

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

#268

Post by cyanydeez »

moduspol wrote: post #201
scarface_74 wrote: post #186

Earlier quoted context omitted.

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…

This. Though also worth noting: these agents are often working with the same small pool of other agents throughout their career. Their relationship with them is often more valuable than with any individual client, so it doesn't really pay for them to be adversarial on behalf of their client. Both agents are incentivized to keep a healthy working relationship and focus on closing the sale despite the commission percen…

right and their negotiations are likely synthetic and geared towards mass deal making, which distorts the market in nuclear ways.

if we're all for transparent markets, these commissions interfere and it doesn't matter how close to reality they are as we can agree that they're largely not real, but synthetic amalgamations of something not related to the market.

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

#269

Post by lostlogin »

kube-system wrote: post #263
tverbeure wrote: post #246

Earlier quoted context omitted.

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.

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…

Then this is why agents exist. That’s gate keeping to protect their patch.

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

#270

Post by travem »

aftbit wrote: post #239
komadori wrote: post #224

Earlier quoted context omitted.

That system seems very convoluted to me. In the UK, only the seller pays a commission on the sale price (typically ~1.5%) and the seller's estate agent is responsible for showing buyers around the property. The buyer doesn't need their own estate agent unless they're also selling a previous property at the same time.

That seems backwards. Only the buyer should need an agent, as they are the one who is searching. The seller is just sitting around waiting for offers.

Think of this in the context of what happens with the majority of other purchases you are making? How many of those have a "buyers agent" vs a sales person? I've bought houses in both the UK and the US, I preferred the UK approach where I found the houses myself (and in the US it's not that different with tools like Zillow etc.) and paid for a lawyer to handle the paper work for much less than the real estate commission that was paid (and part of the house price I ultimately paid).

In fact, you could really view the commission split paid to the buyers agent (from the seller) as part of that expense of the seller marketing their property.

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