4 ms·

All funds, repeat ALL FUNDS, from a real estate transaction come from buyer. Some of these funds are returned to seller, and buyer receives title to a house.

by aj7 6y ago

All funds, repeat ALL FUNDS, from a real estate transaction come from buyer. Some of these funds are returned to seller, and buyer receives title to a house. Study this. It is more subtle than it sounds, especially in light of the closing statement.

fshbbdssbbgdd 6y ago
Is this like saying “your income tax is paid your employer”? It seems true in some sense (the withheld money goes from the employer’s account to the government’s account) but false in another.
- syops 6y ago
  The buyer does not pay for the costs of using real estate agents in upfront money. They pay the cost of using agents by paying a higher price for the property, all other things being equal, if no agents are used.
  - aj7 6y ago
    The buyer pays the costs of EVERYTHING. This does not mean that the deal isn’t good. The seller does not bring money to the closing. He brings the house title, figuratively.
    - fshbbdssbbgdd 6y ago
      Let’s imagine that two identical homes are for sale, and it’s a buyer’s market. The owner of home A has contracted with a real estate agent to pay a 1% commission if there’s a sale, and the owner of home B has contracted to pay 2% to a different agent. Both homes have a market value of $1 million. The buyer will pay $1 million for either home, and won’t be willing to pay more for home B just because the seller has agreed to pay their agent more. We can see that the incidence of the agent’s fee is on the seller in this case. Put differently, increasing the agent fee decreased the net worth of the seller after the transaction, not the buyer. Given different facts, the incidence could be on the buyer. The fact that the buyer is supplying the cash doesn’t tell us who the cost falls on. The buyer could pay by adding more cash or the seller could pay by gaining less cash. I’m cribbing from the concept of tax incidence here: https://en.m.wikipedia.org/wiki/Tax_incidence https://en.m.wikipedia.org/wiki/Tax_incidence
      - aj7 5y ago
        Indeed, various actions by seller can affect his yield. Nevertheless, all funds in a real estate transaction COME from buyer. Once you get this, you've learned something.
- ramraj07 6y ago
  Your income tax is indeed paid by your employer? Is there any other way to look at it for employees on payroll? It's just that you do the calculations to tell what rate you're supposed to be on..
  - Retric 6y ago
    “Your income tax is paid by your employer” is untrue if you have 2 jobs at the same time. If they where on the hook based on what they pay you then it wouldn’t matter that you have a second job. However, because you’re on the hook for the total amount, having a second job does matter and the IRS goes after you if you mess up the calculation. This is similar because a bank could be providing the money, but the buyer is ultimately on the hook for it.
- deleted 6y ago
  [deleted]
- aj7 6y ago
  No, it’s not. Read it again. ONLY THE BUYER brings money to the closing. Of course, how much is open to negotiation.
  - rland 6y ago
    The buyer brings the money but the seller brings the house. Tax incidence depends on the elasticity of either buyer vs seller (whether or not it's a seller's market or a buyer's market) I mean yes the literal money is paid out but the money is just the abstraction over the real thing.

by aj7 6y ago

fshbbdssbbgdd 6y ago

Is this like saying “your income tax is paid your employer”? It seems true in some sense (the withheld money goes from the employer’s account to the government’s account) but false in another.

syops 6y ago
The buyer does not pay for the costs of using real estate agents in upfront money. They pay the cost of using agents by paying a higher price for the property, all other things being equal, if no agents are used.
- aj7 6y ago
  The buyer pays the costs of EVERYTHING. This does not mean that the deal isn’t good. The seller does not bring money to the closing. He brings the house title, figuratively.
  - fshbbdssbbgdd 6y ago
    Let’s imagine that two identical homes are for sale, and it’s a buyer’s market. The owner of home A has contracted with a real estate agent to pay a 1% commission if there’s a sale, and the owner of home B has contracted to pay 2% to a different agent. Both homes have a market value of $1 million. The buyer will pay $1 million for either home, and won’t be willing to pay more for home B just because the seller has agreed to pay their agent more. We can see that the incidence of the agent’s fee is on the seller in this case. Put differently, increasing the agent fee decreased the net worth of the seller after the transaction, not the buyer. Given different facts, the incidence could be on the buyer. The fact that the buyer is supplying the cash doesn’t tell us who the cost falls on. The buyer could pay by adding more cash or the seller could pay by gaining less cash. I’m cribbing from the concept of tax incidence here: https://en.m.wikipedia.org/wiki/Tax_incidence https://en.m.wikipedia.org/wiki/Tax_incidence
    - aj7 5y ago
      Indeed, various actions by seller can affect his yield. Nevertheless, all funds in a real estate transaction COME from buyer. Once you get this, you've learned something.
ramraj07 6y ago
Your income tax is indeed paid by your employer? Is there any other way to look at it for employees on payroll? It's just that you do the calculations to tell what rate you're supposed to be on..
- Retric 6y ago
  “Your income tax is paid by your employer” is untrue if you have 2 jobs at the same time. If they where on the hook based on what they pay you then it wouldn’t matter that you have a second job. However, because you’re on the hook for the total amount, having a second job does matter and the IRS goes after you if you mess up the calculation. This is similar because a bank could be providing the money, but the buyer is ultimately on the hook for it.
deleted 6y ago
[deleted]
aj7 6y ago
No, it’s not. Read it again. ONLY THE BUYER brings money to the closing. Of course, how much is open to negotiation.
- rland 6y ago
  The buyer brings the money but the seller brings the house. Tax incidence depends on the elasticity of either buyer vs seller (whether or not it's a seller's market or a buyer's market) I mean yes the literal money is paid out but the money is just the abstraction over the real thing.