4 ms·

Seems to me that having the commission as a % of the sale price is not the right way to go. You lock in with an agent for 3 months and agree to pay them a set f

Seems to me that having the commission as a % of the sale price is not the right way to go. You lock in with an agent for 3 months and agree to pay them a set fee when they/you sell it. You should pay as a buyer for an agent to represent you. Currently, if I'm not mistaken, all most all agents get paid by the seller and, if you are a buyer, the agent has no legal responsibility to watch out for your interests. The current situation exist due to a slow long-term evolution of events but seems like won't change any time soon. Sort of like how wage controls during WWII encouraged businesses to pay for your health care and it is not taxed, but you don't get that tax break when you pay for it yourself. An insane situation, but next to impossible to change.

scarface74 8y ago
You are free to get a buyers agent that does represent you. In that case, the buyer’s agent and seller’s agent split the cost.
- setr 8y ago
  I still don't understand this mechanism... the buying agent takes his fee as a percentage of the total house price? Doesn't this mean that both the selling and buying agents are incentivized to drive up the price?
  - scarface74 8y ago
    In reality, neither is incentivized to drive up the price of the house. It’s all about selling fast. Freakonomics talks about this all of the time. http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...
  - scarface74 8y ago
    A better link. https://www.nachi.org/forum/f11/exerpt-freakonomics-book-regarding-real-estate-agents-57929/ https://www.nachi.org/forum/f11/exerpt-freakonomics-book-reg...
skh 8y ago
The buyer always pays the cost of both the seller's and buyer's agent in the same way that people who rent apartments do pay property tax. That cost happens to be hidden in the sense that there is no specific charge that the buyer sees but the buyer is the one who ultimately pays it.
- njarboe 8y ago
  Well, in that case I would say "Not really then". Landlords generally don't run on a cost plus basis. They don't add up their costs add 10% and make that the rent come hell or high water. They charge as much as the can to achieve the desired rate of turn-over. If they are a person instead of a company, they may give tenets who have proven not to be a hassle and they have a personal relationship with a bit of a break on the rent. In some markets, like the Bay area, rents are much less than the cost of owning the property, and in others, like Kent, Ohio, they are higher. Plus: If there is a willing buyer for something you own at price X and then someone takes 6% of that when the seller pays, true the sell pays it all, but the buyer also pays it in getting less money.
gnopgnip 8y ago
There are ethical and practical reasons to avoid a system where buyers have a financial incentive to go without representation. In practice buyers without representation are unlikely to close, and sellers are unlikely to accept unrepresented sellers because the sellers agent would charge more money because. Neither the seller or the buy would save a substantial amount of money compared to the old system.
- laurencerowe 8y ago
  Yet somehow people still manage to buy and sell houses in the UK where buyers have no agent representing them. Buyers pay a fixed or hourly fee to a lawyer for conveyancing and sellers pay 1-1.5% to their listing agent. Overall costs seem to end up well under half that in the US (5-6% of sale price).
  - stevekemp 8y ago
    I do often shake my head at the ideas of "normal" that different countries have. I'm from the UK, but in Finland these days, and the way that both of these countries work is very similar. In America a lot of things are very odd with regard for property, even common things like tenants paying rent by posting/delivering cheques!
- njarboe 8y ago
  Yes. One needs to get rid of the idea in everyones head that one needs a buyer and sellers agent. This is a pure network effect that is keeping this over-priced service intact. Similar to the AMA's restriction on medical school licensing.

scarface74 8y ago

You are free to get a buyers agent that does represent you. In that case, the buyer’s agent and seller’s agent split the cost.

setr 8y ago
I still don't understand this mechanism... the buying agent takes his fee as a percentage of the total house price? Doesn't this mean that both the selling and buying agents are incentivized to drive up the price?
- scarface74 8y ago
  In reality, neither is incentivized to drive up the price of the house. It’s all about selling fast. Freakonomics talks about this all of the time. http://freakonomics.com/2008/02/26/real-estate-agents-revisited/ http://freakonomics.com/2008/02/26/real-estate-agents-revisi...
- scarface74 8y ago
  A better link. https://www.nachi.org/forum/f11/exerpt-freakonomics-book-regarding-real-estate-agents-57929/ https://www.nachi.org/forum/f11/exerpt-freakonomics-book-reg...

skh 8y ago

The buyer always pays the cost of both the seller's and buyer's agent in the same way that people who rent apartments do pay property tax. That cost happens to be hidden in the sense that there is no specific charge that the buyer sees but the buyer is the one who ultimately pays it.

njarboe 8y ago
Well, in that case I would say "Not really then". Landlords generally don't run on a cost plus basis. They don't add up their costs add 10% and make that the rent come hell or high water. They charge as much as the can to achieve the desired rate of turn-over. If they are a person instead of a company, they may give tenets who have proven not to be a hassle and they have a personal relationship with a bit of a break on the rent. In some markets, like the Bay area, rents are much less than the cost of owning the property, and in others, like Kent, Ohio, they are higher. Plus: If there is a willing buyer for something you own at price X and then someone takes 6% of that when the seller pays, true the sell pays it all, but the buyer also pays it in getting less money.

gnopgnip 8y ago

There are ethical and practical reasons to avoid a system where buyers have a financial incentive to go without representation. In practice buyers without representation are unlikely to close, and sellers are unlikely to accept unrepresented sellers because the sellers agent would charge more money because. Neither the seller or the buy would save a substantial amount of money compared to the old system.

laurencerowe 8y ago
Yet somehow people still manage to buy and sell houses in the UK where buyers have no agent representing them. Buyers pay a fixed or hourly fee to a lawyer for conveyancing and sellers pay 1-1.5% to their listing agent. Overall costs seem to end up well under half that in the US (5-6% of sale price).
- stevekemp 8y ago
  I do often shake my head at the ideas of "normal" that different countries have. I'm from the UK, but in Finland these days, and the way that both of these countries work is very similar. In America a lot of things are very odd with regard for property, even common things like tenants paying rent by posting/delivering cheques!
njarboe 8y ago
Yes. One needs to get rid of the idea in everyones head that one needs a buyer and sellers agent. This is a pure network effect that is keeping this over-priced service intact. Similar to the AMA's restriction on medical school licensing.