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I think percentage commissions aren't a great idea for buyers and sellers. An agent helping you buy a $2M house gets a 2.5% commission of $50,000, but they aren

I think percentage commissions aren't a great idea for buyers and sellers. An agent helping you buy a $2M house gets a 2.5% commission of $50,000, but they aren't really doing $40,000 more work than helping buy a $400K house. The value of their services may change a bit, because dotting all the Is and crossing the Ts on an expensive house might save more money in the long run, but still.. a 40K difference in commission for basically the same amount of work seems absurd. Honestly, I think that's the biggest disruption one could make in the real estate industry. Flat fees rather than percentages. The technological answer is figuring out how to automate all the paperwork. Make a TurboTax-style interface where it prompts you for every document you might need, then validates everything for you, assesses the chances of something going wrong, maybe even handles finding a mortgage for you. The seller would interact on the other side on their end for their paperwork. Waivers can be applied or required, the offers could be managed transparently. I could see a lot of wins here to eliminate/automate most of the role of a mediocre agent, or the kind that farms out the work to more junior agents. (Note: Great agents provide a lot of value, but there are far more mediocre ones out there.)

mikkergp 4y ago
Presumably percentage is a proxy for how long it takes to sell the house. Assuming more expensive houses have fewer potential buyers and take longer to sell. Thinking about all the other ways they could charge I don’t know if there is a silver bullet. They could charge by the hour, which puts pressure on the buyer to not see a bunch of houses, and has all sort so implications for buyer and seller. They could charge a flat rate but then they would be a lot more careful in the types of houses they take on. Other oddities are that they get paid more when the house into market is doing well and presumably are doing less work and they get paid less when the housing market is doing well and are presumably doing more work. But yeah there’s a lot of easy sales subsidizing hard sales I imagine
arethuza 4y ago
That seems amazingly expensive from here in Scotland (I make the distinction as the legal system and the process of house selling/buying is different to the reset of the UK) - we bought and sold properties a few years back and went for an up-market solicitors to handle the process. They were very good and the marketing materials and videos they produced were excellent quality (e.g. the photographer and her assistant were there for a couple of hours - moving a lot of furniture in the process). The full cost for selling and buying was well under 1% of the house we sold.

mikkergp 4y ago

Presumably percentage is a proxy for how long it takes to sell the house. Assuming more expensive houses have fewer potential buyers and take longer to sell. Thinking about all the other ways they could charge I don’t know if there is a silver bullet. They could charge by the hour, which puts pressure on the buyer to not see a bunch of houses, and has all sort so implications for buyer and seller. They could charge a flat rate but then they would be a lot more careful in the types of houses they take on. Other oddities are that they get paid more when the house into market is doing well and presumably are doing less work and they get paid less when the housing market is doing well and are presumably doing more work. But yeah there’s a lot of easy sales subsidizing hard sales I imagine

arethuza 4y ago

That seems amazingly expensive from here in Scotland (I make the distinction as the legal system and the process of house selling/buying is different to the reset of the UK) - we bought and sold properties a few years back and went for an up-market solicitors to handle the process. They were very good and the marketing materials and videos they produced were excellent quality (e.g. the photographer and her assistant were there for a couple of hours - moving a lot of furniture in the process). The full cost for selling and buying was well under 1% of the house we sold.