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In this case, so? Like I said, you're not being charged anything there. It comes out of the purchase price. It's the agent who is listing the house at a price
by bena 5y ago
In this case, so?
Like I said, you're not being charged anything there. It comes out of the purchase price.
It's the agent who is listing the house at a price and sourcing the various inspectors and appraisers. They're putting in the work to sell your house at a price point.
So, if the agent can manage to move your house for $2 million rather than $1 million, why shouldn't they get a larger reward?
It's a different scenario from servers. Servers can't convince you to pay more for an item or for the business to sell that item for less. Real estate agents can.
- AlexandrB 5y ago> So, if the agent can manage to move your house for $2 million rather than $1 million, why shouldn't they get a larger reward? Indeed, for the seller this makes sense and the agent's and seller's incentives are aligned. But there's a nasty externality created where real estate agents contribute to a constant upward pressure on housing prices. This eventually helps make housing unaffordable.
- bena 5y agoSelling agents are incentivized downward, because in reality, agents are incentivized to churn. Agent commission is just shy of 6%. And that's for both the selling and buying agent. So they each get around 3%. For all the work you could be doing maximizing a house's selling price to get another $1k or $2k, you could be closing another house and getting another $10k.
- bradleyjg 5y agoThis assumes that any house can go for $2 million if you just get a good enough agent. That’s clearly not the case. If there was some way to pay for excess returns, that would be a good argument. But flat commission percentage isn’t it.