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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

#351

Earlier quoted context omitted.

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 yo…

Fair point. The thing about real estate is that cost doesn’t correlate with anything, and the principal of the brokerage has an incentive that doesn’t align with any other stakeholder.

I found the idea that a salesperson was cultivating people in therapy as sales leads repulsive. But I cashed the check nonetheless.

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

#352
post #180

Earlier quoted context omitted.

Home assessments are based on property value, not sales prices, in many jurisdictions.

Sales prices (for an arms length sale) are de facto assessments. Every jurisdiction accepts or at least factors them in if you request an assessment to lower your property taxes. In some jurisdictions where the growth rate is capped (like CA), a 3-6% drop in price will be locked in essentially forever.

Not in my jurisdiction (seattle), and my assessment hasn’t come close to hitting the price I paid yet since they are weighting land more than buildings in property taxes now (so…we never expect it to ever actually match, and that’s by design).

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

#353

Earlier quoted context omitted.

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.

There are multiple MLSes and Zillow only has deals with most of them. It's possible you're in a region with prominent "local MLSes" that decided Zillow wasn't paying them enough for access.

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

#354

Earlier quoted context omitted.

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.

The following video explains some of the possible discrepancy due to pocket listings not appearing in Zillow. It also suggested that realtor.com had more listings in its database in some neighborhoods.

https://www.youtube.com/watch?v=_emO4Dl8sUM&t=1740s

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

#355

Earlier quoted context omitted.

In Spain, Notaries and Property Registrars are a weird thing. You have to pass an exam, same as a public servant, and the number of positions is limited. But you don't have a regular salary like any other public servant: you set up a private office and get the money directly from your clients. The price for the actions is regulated but it's high, and the number of licenses is limited, so generally they have hefty sal…

My eyes popped at that salary for a notary in Spain given most eng positions seem to pay under 60K euro. It looks like they need a law degree, too, so I'm sure they offer legal services other than property transactions? https://www.notariado.org/portal/en/how-to-be-a-notary

[deleted]

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

#356

Earlier quoted context omitted.

> 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 p…

How can these services justify a large percentage of an asset with zero guarantees or clawbacks? You are seriously justifying all of that for a 6% of the most expensive asset anyone will ever buy? Why is it not a flat rate, i.e. $1-10k to sell a home?

Because:

A) If you want to work with a flat rate agent, go find one. Every property I have in my pipeline right now is on a different commission level, and only a couple of them are this magical "6%" the public loves to believe is "standard". Some of them are even fixed amounts.

B) It's only "6%" if the agent does both sides, otherwise it's whatever the agreed upon split might be - say 50/50, so you are only getting 3%. And, as a few astute observers in this thread have noted, the brokerage is going to further reduce what goes into the pocket of the agent themselves. I've had plenty of deals where my actual net was at or under 1% - I've even had deals where I lost money.

C) So if I sell a $10MM property that takes a year to sell and needs tens of thousands in marketing dollars to sell, I should accept only $10K in compensation?

D) Let's say you've got some shitty dilapidated house or scrub ground with zoning issues, maybe a barely inhabitable cabin somewhere. I find a buyer for it to get the monkey off your back. What's that worth to you, to have the pain gone? You think I don't deserve compensation for spending potentially months or even years to bring you a deal? When I sell properties like that, it is at best a break-even proposition for me, but someone has to step up and assist the public.

E) Everything I listed in my post is about risk management. I am assisting you with not buying a foot gun. In some cases, I am assisting you with buying an asset that will bring cash flow or other financial benefits. In other cases, I may be assisting you with getting a financial drain off your back. Perhaps not for you, but do you begin to see why these service do have value for many consumers?

It's normally about this point that someone in one of these threads says "but I'm taking about 'normal' deals!" Dude - anyone who has been in the real estate business for more than 5 minutes knows that the so-called "normal" deals that the public loves to talk about are maybe one deal a year for an active agent. They are the unicorns of the real estate world. Likewise, people in urban markets have likely no idea the variety of real estate transaction that happen in the world. At the moment I've got transactions in my pipeline for land development, commercial, leases, duplexes, not to mention basic residential work. And every single one of those have unique challenges.

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

#357
post #240
post #18

Earlier quoted context omitted.

The tax man gets his one way or another. Imagine the shock of an American living without sales tax when they go to Germany and everything has a 20% government markup... In Germany, the net average tax rate on a worker is 37.4%, in America it is 24.8%. That's a dramatic difference in taxation!

> That's a dramatic difference in taxation! To be fair, we (US) outsource much of our taxation to the private sector, so that basics like healthcare fees/taxes are routed through private companies. If it comes out of your check before you get it, and it's not going into your 401(k), it might as well be a tax.

[deleted]

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

#358
post #61

Earlier quoted context omitted.

That sounds like some great tax policies in favor of long term home owners. I was surprised that taxes ended up being over 50% of the total cost of home ownership, at least in New York (not NYC). Bought my first house in 2021. My mortgage payment is less than my annual school + property taxes. It’s quite insane. A big problem is my town’s property assessments arent done fairly. Anyone who hasn’t bought or sold their…

That's why Germany has some of the highest homeownership rates in the world! Oh wait... Turns out encouraging illiquidity, high entry costs, and limiting people's options when it comes to selling without paying extortionate amounts of taxes doesn't actually do that.

That is cultural; Germans are risk-averse, and buying a property is a huge risk.

Americans are the ones that take home buying as low risk when divorce rates are really high and there's a huge "forced seller" probability on every new home bought.

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

#359

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…

Wrong. Almost no one != no one

I can list at least ten countries that charge the same or more than the US. I believe the article headline is exaggerated.

That's why I started my post with "Wrong" because it is a response of a similar caliber.

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