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> 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 mak
by 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.