17 ms·

Almost no one pays a 6% real-estate commission except Americans

339 points by impish9208 3y ago

deleted 3y ago
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mcntsh 3y ago
Closing costs in Germany are quite high... about 12%. - 3.57% RE commission - 2.00% notary - 6% for the land transfer tax And the seller also pays 3.57% of the RE commission. So over 6% at the end of the day :)
- onlyrealcuzzo 3y ago
  Why is the notary making 2%?! Is that including all legal fees? Even still that seems like a much bigger rip off than a buyer's agent in the US.
  - pierat 3y ago
    That signature is made with a realllllly heavy pen, I guess?
  - hef19898 3y ago
    A nortary makes sure the sale ia properly exevuted and titles properly transferred, he is certifying the transaction and takes on some legal riks dor doing so. This provides legal security for seller and buyer, a service woth paying for in transactions most people only do once in their life (we talk about Germany here). For all others, it is just coat of doing business. No idea why it is always everybody else who should work for free.
    - debacle 3y ago
      Might be a different meaning of the term notary. In the US, you can become a notary public for $35 and an online course in many instances.
      - hef19898 3y ago
        You cannot be elected? In all seriousness, notaries in Germany are all full lawyers and practices are highly sought after, as the numbers of lisvensed notaries is limited.
        tecleandor 3y ago
        In Spain, Notaries and Property Registrars are a weird thing. You have to pass an exam, same as a public servant, and the number of positions is limited. But you don't have a regular salary like any other public servant: you set up a private office and get the money directly from your clients. The price for the actions is regulated but it's high, and the number of licenses is limited, so generally they have hefty salaries, specially compared to the rest of the public servants and the mean of the population. Their salary can be very variable based on location (as you get the money directly from your clients), but it's said to typically be from 100K to 200K€
        mariojv 3y ago
        My eyes popped at that salary for a notary in Spain given most eng positions seem to pay under 60K euro. It looks like they need a law degree, too, so I'm sure they offer legal services other than property transactions? https://www.notariado.org/portal/en/how-to-be-a-notary https://www.notariado.org/portal/en/how-to-be-a-notary
        deleted 3y ago
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      - Tangurena2 3y ago
        In many states, notaries can marry people as the actual legal step of notarizing the marriage license and returning it to the county clerk's office is the actual deed that makes people legally married.
      - deleted 3y ago
        [deleted]
    - esrauch 3y ago
      Does the notary provide the title insurance (as in: if it turns out later that the seller didn't actually own the house, the real owner shows up and proves it, the bank and new buyers have their money covered)? That would make more sense for the 2% but it's not related to the notary in the US; notary literally just does "I checked the id of the person signing and it matches" which is a service that can be had for free at your bank or at most $50 if you have to pay someone, 2% of a house for that service obviously wouldn't make sense.
      - dagw 3y ago
        A notary in the UK is a type of lawyer (although not necessarily a solicitor) and requires special certification and training. Their job is to make sure all the paper work is in order and to sign off and legally certify that is in fact so.
      - hef19898 3y ago
        In Germany you cannot sell real estate thatbisn't yours, ownership is registered. The notary, as part of his job, makes sure this title transfer is done properly. If the seller isn't the owner, the sale is void, as far as I know sales price is to be paid once the title transfer was requested and approved, upon proof of payment the notary finalizes it. So basically no title insurance needed. By the way, excerpts of the registry for the real estate in question are part of the sales contract (just remembered).
        esrauch 3y ago
        Ownership is registered in the US and part of the sale is a "title search" to check that and then update the registered title when the sale is executed (both handled by an attorney). The case of title insurance is only where something weirder happens with wills, contracts, or liens. If there was an owner that died in 2016 and his will said "split my house to all surviving children". And at the time one child shows up who believes they are the sole surviving descendant and claims the house and sells it in 2017, then 2018 a second heir finds out their estranged parent died and shows up to say "actually half of this house was mine, that guy didn't legally have the right to sell it even without any fraud occuring". Title insurance ends up 'fixing' this problem so that the buyer and actual-should-have-been-owner can both be made whole (and they go after the seller for the amount they didn't actually own, but sometimes that won't be possible to recover). If you don't have title insurance you as the buyer just take the liability that you might not actually own the house (or part of the house) if the record was mistaken and needs to be corrected. In Germany would this just be a case where if the will is executed and you find out too late the inheritor would be screwed with no way to get what you owned instead?
    - nmcfarl 3y ago
      This sounds a lot like a ‘title company’ to me.
    - tecleandor 3y ago
      Sounds more like a lawyer or several competencies at the same time. In Spain the notary "just" works through the signature of the contract: - Checks the identities of the parties and their legal status - Makes "sure" both parties understand the contract - Verifies that the property can be sold (checks for legal issues in the national registry) - Serves as a legal witness to the signature - Sends a copy of the contract to the national registry (but AFAIK, doesn't follow up) The cost here, for that, is around 500-800€. It's regulated by law. Then you have to contact a registrar to make all the legal papers to make all the legal papers in the national registry. That's araound 300-400 €, I think.
      - codedokode 3y ago
        Aren't most of the checks automated? E.g. you just fill a form in a government services website and get a PDF back?
      - PaulDavisThe1st 3y ago
        In the US, this can be done by a title & escrow service. They hold the deposit money (assuming there is some, which is normal), and then at closing they will do all of the above, as well as receiving and distributing funds from the buyer/mortgage company.
    - mihaic 3y ago
      Validating property rights is a fixed-time operation that seems to be one of the basic services a state should offer. I read the parent poster naturally asking why 2% instead of some lower, fixed amount.
    - UncleMeat 3y ago
      "Free" and "paid $15,000" don't seem to be the only two options.
  - thiago_fm 3y ago
    The 2% is worth it. It's an expensive, but essential step in Germany. Because there isn't a default real estate purchase contract, so you need to trust that you'll receive the property. It's like paying a lawyer to mediate an expensive purchase, and they carry some legal risks with it. They also do the bureaucracy with the government to add your name to the Grundbuch (it's a book from the government about who owns what % of a property), and also clean up the previous debts that it had (they are written there).
  - mytailorisrich 3y ago
    Because they have a captive market: In general the use of a notary is mandated by law, and being a notary can be extremely regulated with limited numbers of notaries/licenses. They could open this to competition and let lawers do the job as well, but that would go down badly with the notaries who make a fortune.
- benjaminwootton 3y ago
  In the UK, the market rate 1.5% paid by the seller on completion. Nothing to the buyer and rarely any fees for a failed transaction. Then approximately £1000 in legal fees when buying or selling. Then the big one which is stamp duty (a government tax) which is between 0 and 12% of the purchase price. Typically the lower end of that scale though. (https://www.gov.uk/stamp-duty-land-tax/residential-property-rates https://www.gov.uk/stamp-duty-land-tax/residential-property-...)
  - rwmj 3y ago
    It's important to note that (in general) sellers pay the estate agents fee and buyers pay stamp duty. If you are both buying and selling then you'd pay both, but on different properties. However if you're moving to/from rentals, dead or moving abroad then you'd pay only one. Also it's possible to cut out the estate agent if you really want to save money. There are a bunch of websites that for a minimal flat fee will let you DIY it, but be prepared to make your own for sale sign, photograph your own property, and show prospective buyers around.
    - _benedict 3y ago
      Those websites usually include (or at least offer) professional photography, and some also offer various levels of agent assistance for viewings, negotiations etc. an a la carte offering of sorts. A for sale sign is often included as it’s free advertising for them.
    - mytailorisrich 3y ago
      Well the estate agent is the agent (i.e. employee) of the seller: They work for the seller. It's quite normal that they are paid by the party who employs them!
  - enlyth 3y ago
    In the UK we also have one of the worst systems for buying and selling property which on average takes 3 months or more for a single transaction and everyone can walk away at any point until exchange of contracts for whatever dumb reason. As a buyer you will spend thousands on legal and survey fees before you even know if there is anything wrong with the property. Legal fees are more like 2k+ these days (source: buying a house)
- geff82 3y ago
  Germany has high fees when buying a house, but compared to the US it is dirt cheap to actually own the house. „Ground tax“, similar ro „property taxes“ in the US is usually just a few hundred Euro a year. Which, compared to the US, is change money. A German house, when the mortgage is paid, feels like real property.
  - benjaminwootton 3y ago
    I would hate the high US property taxes. It’s like you never really own the property if you are being taxed on it continually. It must play havoc with retirement planning?
    - Tangurena2 3y ago
      In most states, property taxes are what pays for schools, roads, libraries and things like that. When I was modernizing our state's motor vehicle registration system, I had to account for those fees in every vehicle (cars, boats, mobile homes, etc) registration cost. The state constitution states that things can only taxed based on value. Taxed based on value: https://apps.legislature.ky.gov/Law/Constitution/Constitution/ViewConstitution?rsn=203 https://apps.legislature.ky.gov/Law/Constitution/Constitutio... Value based on fair market value: https://apps.legislature.ky.gov/Law/Constitution/Constitution/ViewConstitution?rsn=201 https://apps.legislature.ky.gov/Law/Constitution/Constitutio...
  - criley2 3y ago
    The tax man gets his one way or another. Imagine the shock of an American living without sales tax when they go to Germany and everything has a 20% government markup... In Germany, the net average tax rate on a worker is 37.4%, in America it is 24.8%. That's a dramatic difference in taxation!
    - tempsy 3y ago
      Anyone living in California or NYC and making mid six figures and up is easily paying more than German tax rates then. You’re paying almost 50% around high six figure range. I’ve never quite understood why people think the US is a low tax country.
- voisin 3y ago
  There are land transfer taxes in Canada too, and I presume our equivalent to notary are lawyers which are about $1,000-$1,500. The actual in-and-out costs are significantly higher than just the agents, though the agents are the most expensive and of questionable value.
- bequanna 3y ago
  Sounds like a tax problem, not a commission problem.
mgaunard 3y ago
[flagged]
- WoodenChair 3y ago
  If you weren’t able to read the article, it’s probably not helpful to respond to it. Would you review a movie you haven’t seen?
  - mgaunard 3y ago
    You're speaking as if web journal articles had meaningful content in them beyond the headline -- you must live in a parallel universe. Anyways, it remains factual that around 6% is standard throughout the developed world. It makes the market illiquid, as you need to wait for the value of the property to increase to make back those costs, which is a main driver of the real estate market inflating so much.
    - WoodenChair 3y ago
      Actually the article has statistics and sourced infographics backing up its point. You can’t challenge those because by not reading it you haven’t seen them… So I’m left either trusting the Wall Street Journal or the anecdote of someone who didn’t read the article. Gonna go with the former in this case.
underseacables 3y ago
I think something that is partly to blame is the expansive licensure scheme, and how those licenses have become a monopolistic edge to protect and expand. Many professions have required a license, and it is the responsibility of the organization that issue those license to protect an expand their authority, preventing competition, and pushing up prices higher. The license requirement creates a perpetuating lobby, which I think is partly to blame for real estate agent commission issue. Do we really need to enshrine into law every professions market corner? A certification law would do just as well, but it would not have the effect of blocking competition, preventing market, disruption, and forcing people who want to practice that particular profession to constantly pay a private association for the right to be licensed.
- Tangurena2 3y ago
  [flagged]
  - CPLX 3y ago
    > Occupational licensing was originally developed to prevent black people from being employed. You’ll need to cite some evidence for this. Occupational guilds and membership associations stretch back a lot further into the Middle Ages in Europe versus the timeline you’re suggesting here. There are also some very common sense public policy issues at play like making sure people who say they can cut hair or fix your teeth actually know how to do it. Granted they’ve been misused as well for various less honorable reasons but the narrative you’re presenting here doesn’t totally hold together.
    - walthamstow 3y ago
      Fix teeth, yes, cut hair, absolutely not. How can you conflate those two things? It is utterly bizarre for the state to license barbers and hairdressers, especially in the so-called land o' the free.
      - underseacables 3y ago
millzlane 3y ago
I wonder if I'll ever come to HN one day and find the entire front page will be paywalled links.
deleted 3y ago
[deleted]
codedokode 3y ago
If you divide 6% commission by hours spend, how much does an agent earns per hour? Probably more than senior Google AI developer?
- ianhawes 3y ago
  Well typically 6% is split between the buyers agent and the sellers agent. And each agent has to kick up a percent to their broker. Most real estate agents I know working in the average market (I.e. not NYC or the Bay Area) are not clearing $100K.
  - benjaminwootton 3y ago
    How did you ever get to the situation where two people want to buy and sell one of life’s fundamental commodities, and 3 people get to insert themselves into the middle to the cost of thousands of dollars? America confuses me sometimes!
    - joshgachnang 3y ago
      It's a hell of a lot more than 3! The list of other agencies and fees I had to pay when buying my house and getting a mortgage were absolutely insane.
    - Ekaros 3y ago
      Before whole online thing from marketing it really made quite a bit of sense. At least the seller agent side. You need to advertise somewhere and someone doing it full time is much more efficient, in spreading the marketing. Some level buyer agent gathering what is available if they did that is also logical. Here not in USA. Buyer agents are more rarely used, but advertisement was taped to my building this week. But for seeing what is available agencies made lot of sense. And still do the paperwork and take somewhat better pictures or are around to show property.
  - deathanatos 3y ago
    Google thinks 2-10 homes sold per year. Assuming the same on the buy side, at 6%, using the median home price of $416,100, that's $50k (2) to $250k (to 10) per agent per year. (That accounts for the split. That doesn't account for whomever the agent works for taking whatever cut.)
voxadam 3y ago
Archive: https://archive.is/SHAht https://archive.is/SHAht Archive: https://web.archive.org/web/20231117124904/https://www.wsj.com/personal-finance/real-estate-buying-home-charts-6dc40caa https://web.archive.org/web/20231117124904/https://www.wsj.c...
- WarOnPrivacy 3y ago
  Dude. I appreciate the diligence but did you click on either of those links?
  - RationPhantoms 3y ago
    This is the first time I've seen WSJ articles not be given full access from archive.
    - cpncrunch 3y ago
      Its been happening to all their articles for the past day.
      - maerF0x0 3y ago
        in fairness that's a pretty tight window for parent commenter to notice. +1 it's never not worked for me
        cpncrunch 3y ago
        Yes indeed, and i wasnt blaming them. I now just flag any articles that are stuck behind paywall.
ssharp 3y ago
I don't know how much value agents added over the past few years, navigating bidding wars, pocket listing access, etc. but I've never understood the justification for spending so much money on these fees. The last time I sold a house was 2011, when the housing market was still down from the 2008/09 crash. I talked with multiple agents and never got a sense of them doing much to push the house other than listing it on MLS and coordinating showings. For the seller agent, they didn't even really want to be at the showings -- they'd just provide a lockbox and give the code to the buyer agent. So where is the value there? On a median home sale, the seller side agent/broker is netting $12,400. A lockbox and MLS listing are in the sub-$500 cost range, so where is the additional $12,000 in value? I at least understand the incentive on the buyer side. A buyer can just ring up an agent and have them do their home search for them and coordinate everything. The buyer doesn't bear the cost at all, so why not utilize that convenience? Anyway, after talking with a few agents in 2011, I had one recommended to me. He could get deals done quickly and was great to work with, so I was told. I met with him and he wanted to list the house at 8% below the price I thought the house was worth (no bidding wars back then so this was no good) and flat-out refused to reduce the total commission from 6% to 5%. I said "good riddance" to the agents and did an MLS self-list for like $400. I set the buyer-side commission at 1.5%. I still got plenty of people looking at the house and sold it for the value I initially established it was worth. So I ended up saving over 10% from what the whiz-kid agent would have cost me in lost value and fees. So back to my original point -- where is that seller value coming from? There isn't much legal stuff the agents help with. You need a purchase contract (boilerplate in most cases), some standard state/federal disclosure forms, and then the title agency handles everything else.
- WXLCKNO 3y ago
  The extra value is not there. Anyone can do this job, it's literally filling out boilerplate documents, you can ask gpt 4 vision to do it for you.
  - AndrewKemendo 3y ago
    Sounds like a business opportunity if I’ve ever heard one
sgerenser 3y ago
Unpayealled version: https://www.msn.com/en-us/money/other/almost-no-one-pays-a-6-real-estate-commission-except-americans/ar-AA1k3RVW https://www.msn.com/en-us/money/other/almost-no-one-pays-a-6...
Waterluvian 3y ago
For my first home in Canada we (really the seller, but that’s just a shell game) paid 2% and it felt like a lot in terms of actual $, largely given how home prices have inflated. We walked through three homes I picked out, and then an evening of email counter offers, and then another walk through, and then some paper work. Then I got to pay the lawyers as well as the inspector. I imagine I subsidize the times in my agent’s job where she does a ton of work and there’s no sale at all. Though maybe a flat fee could still incorporate that reality.
nemo44x 3y ago
I guess the argument is that the agent brings more than 6% value to the table so everyone wins. But I’ve always found it odd it’s a fixed percentage on total sale and not a fixed rate + percentage over a threshold. Saying that, where I live many hones are well over $1,000,000 - that’s more or less the entry level. The agencies do a good job staging them (moving all existing furnishings out and replacing with pieces that flatter the space), taking great photographs, and hosting events at the property - that all costs money.
thiago_fm 3y ago
Wrong. In Germany the Maklerprovision (comission for the Real State agent) is 7%. Typically, the seller pays half of it, but there are cases where the buyer pays it all. You also need to pay a notary, government taxes, making the cost of buying a property over 12%+. Furthermore, you shouldn't sell that property for around 10 years, otherwise, you'll need to pay Capital gains taxes. The good part is that you don't pay any taxes if you own it for over 10 years and sell it. Also property taxes are quite low, so once you get through this, it's usually great. Given that health insurance is public, there's quality public transport and the supermarket bill is cheap enough, it makes worth it!
- epx 3y ago
  In Brazil it is 6%, some agents used to charge even 8% or 10% but the trend is towards 5% (since real estate became expensive here as well in the last 12 years).
  - thiago_fm 3y ago
    Brazil is pretty cheap in that regard, what is expensive there are property taxes.
    - barelyauser 3y ago
      A friend of mine used to live in Brazil and he payed close to half a percent.
- Terretta 3y ago
  [flagged]
  - drstewart 3y ago
    "Except Americans" - So wrong then.
  - sokoloff 3y ago
    It wasn't an anecdote of one person who paid that/more; it was a note that the fourth largest economy in the world has such a typical arrangement.
garyclarke27 3y ago
Here in Portugal it's 5% + VAT 23% so over 6%. It's like a cartel - they all point blank refuse to negotiate and most insist on exclusivity. Bit of a shock after selling a house for 1% commission in UK.
snowzach 3y ago
I think this very much depends on the agent. My wife is an agent and busts her ass. When she's a seller agent, if it's small jobs like painting a room, covering up spots, changing a massively outdated light fixture, she does it her self. She's spent days a time landscaping. Also when it comes to pricing, it helps to know the market. She will list a house for 8% under market value because she knows it will draw interest and end in a bidding war with escalation clauses. She also knows other agents and other lenders and that's very important when you have a timeline. One offer may look good but you know the agent and know they will give you an artifically high offer and then ask for 10's of thousands in remedies. Or if you're trying to get a deal done on a timeline so you can get another house and a buyer comes in with a lender that's just notoriously bad at doing things on time. You may take an offer for a few thousand less when you know a deal will end on time. Like most things, you get what you pay for and there's plenty of people out there willing to take your money and do nothing. There are good realtors and bad ones.
- cj 3y ago
  > One offer may look good but you know the agent and know they will give you an artifically high offer and then ask for 10's of thousands in remedies. True, but it also greats a negative incentive. The realtor is obligated to present to high offer to the seller, but not obligated to tell them “this agent usually tries to bump the price down $30k during inspection”. A less than ethical agent can use this to their advantage to get the seller to accept the offer, then convince the seller to accept the lower offer later after they’ve stopped showing the house. Good realtors like your wife can definitely add value, but there’s no good way to know which realtors are good and which are terrible other than (maybe) references.
- willismichael 3y ago
  > you get what you pay for and there's plenty of people out there willing to take your money and do nothing So you're saying that sometimes you don't get what you pay for?
- pb7 3y ago
  Everyone thinks they bust their ass. Maybe your wife does, maybe she’s just like everyone else. Fact of the matter is the average real estate agent provides little to no value. Thats why anyone with a pulse can become licensed to be one.
tecleandor 3y ago
Here in Spain is from 3% to 7%, usually around 5%.
- asmnzxklopqw 3y ago
  Who is paying? The buyer or the seller?
  - tecleandor 3y ago
    That's not mandated on law. So whatever is negotiated in the contract.
myth_drannon 3y ago
In Canada, it's usually 5%.
deleted 3y ago
[deleted]
pavlov 3y ago
The North American middleman is one of the most successful organisms on the planet. Just look at the healthcare system.
- tempodox 3y ago
  And standardized bribes are The American Way™
deleted 3y ago
[deleted]
mytailorisrich 3y ago
Here (England) people like to complain about the system, mostly because either party can walk away for free until the actual contracts are exchanged, but overall it is simple and cheap. Technically, estate agents are not required, lawyers are not required, etc. Seller and/or buyer could do everything themselves if they wished (unwise but they could) as long as no mortgage is involved (the lenders are the ones requiring that the buyer uses a lawyer). Lawyers are cheap, estate agents' commissions (paid in full by seller since agent works for them) are low, maybe 3%+VAT max. Personally I prefer this than the rip off that is going on in many other countries where both sides are taken to the cleaners.
- scrlk 3y ago
  The chain system is absolutely ludicrous, I wouldn't call it "simple and cheap". IMO the whole system needs reform, I would wager it would go some way in fixing the housing crisis in the country.
  - mytailorisrich 3y ago
    Well, it is simple and cheap. "Chains" are not 'the system' they are a fact of life. Many people sell one property to buy their next one and need the money from the sale to finance the purchase (and also don't want to end up on the street) so they want contracts on both sides to be entered into at the same time. It adds a level of complication but no additional costs. This is an issue that exists everywhere though solutions perhaps vary a bit. Usually it is a combination of relay loans (not free) and conditional contracts (tricky and pretty much the same result). If you are a first time buyer it does not matter much apart from adding delays. I don't see how reforming (how?) a system that is simple and cheap would help solve the "housing crisis". If there is something that needs reforming, well abolishing really, it is leaseholds.
    - hotnfresh 3y ago
      > This is an issue that exists everywhere though solutions perhaps vary a bit. Usually it is a combination of relay loans (not free) and conditional contracts (tricky and pretty much the same result). We use both in the US. I’m assuming a “relay loan” is akin to what I’ve seen as a “bridge loan” here—a temporary loan to cover a down payment while waiting for your current house to sell. More often, we use conditional contracts. This would be classified as a “contingency”—we’ll buy this house on date X for price Y if the money from the sale of our house is in the bank by date X, that kind of thing. Needing one of these tends to make an offer less attractive, though.
thelastgallon 3y ago
Whenever you see a monopoly wealth extraction made possible by Govt, you will see a super rich billionaire owning most of it. Warren Buffet extracts a nice percentage of these commissions. Berkshire Hathaway HomeServices Fox & Roach, REALTORS® is part of HomeServices of America, the nation’s largest provider of total home services and largest residential brokerage company in the U.S. in sales, according to the 2022 REAL Trends 500 report: https://www.foxroach.com/about-fox-roac https://www.foxroach.com/about-fox-roac
showerst 3y ago
I thought because I literally haven't seen a single "what do real estate agents even do" post on here, I'd post my positive experience -- We bought a house this year in a competitive, expensive market (DC). Our agent found the listing through word of mouth before it went on MLS, and got us lined up for an early tour so we had the chance to look at it before the open house. We liked it enough to get a pre-inspection on his advice (The market is too hot here for inspection contingencies, which is insane on a 100 year old house!). By the time the open house ended we had seen it twice and walked through with an inspector, which made us confident enough to bid. The agent talked to the seller's agent at length and figured out what was most important to them (close time over raw cash, because they were carrying two mortgages), and it turned out that the seller's agent knew our mortgage broker (who our agent originally referred us to) and trusted how fast he worked. We ended up beating over a dozen other offers, some of which were substantially higher. There's zero chance we'd have gotten this house (or anything competitive in DC) without a good agent, unless we were already in the industry and hyper connected, or bidding well into the six figures over ask. We looked at many places, and bid on two other houses we didn't win (post-covid market), so per hour he probably didn't make a crazy high salary, though in line with a good salesperson or manager. When we sold our old place, he helped advise us on pricing, set us up with good options for staging, arranged the floor plan maker and photographer, etc etc. For 3% of the sales fee I certainly could've done all that myself, but I know people who would've never gotten all that organized while also moving. We barely did even with the help! Now all that said, your median realtor in America just forwarding MLS listings and lockbox codes is probably not earning their share, but in competitive markets I think realtors can make a lot of sense.
- judge2020 3y ago
  The pro tip is to become an agent yourself. You'll have to become active with a broker whenever you want to buy, which is 50-100/month in fees, but then you'll get the "buyer's agent" 3% at closing (or after closing, depending on how the brokers negotiate payment).
- schnable 3y ago
  We bought three houses and sold two through the same agent. The first few transactions were pretty straightforward so he really just acted as a coach. Probably not worth the 6%. In our latest sell/buy, the house were selling had a significant unaddressed issue and the house we were buying had easement issues and a hard to work with seller/agent. His experience was crucial in getting it all over the finish line, we would never have been able to do it successfully ourselves and I would say he earned his money.
djoldman 3y ago
unpaywalled: https://www.msn.com/en-ca/money/finance-real-estate/almost-no-one-pays-a-6-real-estate-commission-except-americans/ar-AA1k3RVW https://www.msn.com/en-ca/money/finance-real-estate/almost-n...
triceratops 3y ago
Technology has been able to do 80% of the job of a realtor for about 20 years now. The profession has only become more lucrative in that time. Legal action, not market forces, have finally brought it to a point of change. Maybe in the age of AI there are some lessons us software devs can take from the real estate agents.
- RealAgentAI 3y ago
  We are trying at https://realagent.ai https://realagent.ai, issue is the real estate "cartel" is strong.
bambax 3y ago
In France it varies between 5 and... 10% 6% sounds like a very good deal. Of course, anyone can sell their house without an agent, but it's more difficult than it sounds.
drukenemo 3y ago
Brazilians pay between 5-8%
Multiplayer 3y ago
In coastal California the commission situation becomes ludicrously lucrative to the top agents. This week a home in my community sold for $25,0000,000. One of my friends had the buy side, another had the sell side. The buy side agent will be involved in ~200,000,000 in transactions this year, a down year. In this community there are plenty of transactions north of $20,000,000. He just did another and had both sides of the deal for $50,000,000. At this level the commissions are usually 2.5%/2.5%. 5% of 25,000,000 is $1,250,000. The irony? High end home sales require much less work/effort than low end. Far fewer showings. No open houses, ever. I used to work at a major real estate company and I know very well how intent they are on holding the listing service monopoly together. Redfin, Zillow, etc were all bets on the opening of the listing services that misunderstood the regulatory capture of the National, State and Local Realtor associations. They ended up selling ads to Realtors rather than opening up a new way for owners to sell their homes directly.
- PaulDavisThe1st 3y ago
  AFAIK, there is zero regulatory capture associated with realtor associations. They have no special priviledge under the law, and are not required for real estate transactions. The one thing they do have is control over access to the MLS, plus social inertia.
  - kjkjadksj 3y ago
    People should not be surprised we have realtors when we have companies like turbotax raking in millions for 3 pages of boilerplate tax return form fills. You could tell people all day how they can do it themselves yet they will still gladly pay for someone or a service to hand hold them because thats what they really want. Not the ability to do something but to feel fussed over and to minimally think.
- ugh123 3y ago
  >They ended up selling ads to Realtors rather than opening up a new way for owners to sell their homes directly. Doesn't it always go that way with goals like that? How many times have we seen "automated recruiting" platforms pop up, only for them to pivot a year later into selling access and ads directly to recruiters. The market for "middle-men" seems to always be thriving when there's little to do and much to gain.
matwood 3y ago
I thought the recent court case did not receive as much attention as it should. 6% has been usury for awhile, even if you think you had a 'good' agent. Now it can simply be another negotiated deal point. It will also help remove some of the enormous friction in selling/buying a house.
charles_f 3y ago
This is one of these cases where I don't see why they collect a % fee except because they could, and they all do. There's typically very little that they do differently for a more expensive house than for a small condo. Everything is listed on their central system, which serves as an indefferentiated marketing platform - and also informs them pretty well on the state of the market. If they do any staging, repairs, cleaning, it's usually a subcontract that you get charged for. It's a pretty linear job (not even judging if it's complex or not), so why do they charge a proportional - and typically large - fee? I think that it is one of these psychological caveats where you're already talking about amounts that exceed your day to day understanding, in a stressful context. You only really see that one digit percentage fee, that you can't really negotiate anyway. And the actual amount is displayed in context to the real price tag, so it's looking small in comparison. The worst consequence, beyond just the relative unfairness of that practice, is the detriment it creates. In Canada (at least where I leave) the commission is split between the agent of both sellers and buyers. Since it's a portion of the selling price, everyone (apart from the buyers themselves) is financially incentivized to maximize the price.
Tempest1981 3y ago
Is there mention of this recent lawsuit? Should have some impact. (No WSJ subscription) Americans are taxed $60 billion in real-estate commissions, says attorney who just won a $1.8 billion mega-verdict against National Association of Realtors https://fortune.com/2023/11/02/national-association-realtors-class-action-verdict-60-billion-commissions-ever-year/ https://fortune.com/2023/11/02/national-association-realtors...
- Tempest1981 3y ago
  Discussed 5 days ago: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages https://news.ycombinator.com/item?id=38089356 https://news.ycombinator.com/item?id=38089356 (276 comments) And from 5 years before (same lawsuit? Began in 2019) https://news.ycombinator.com/item?id=19431927 https://news.ycombinator.com/item?id=19431927 (336 comments)
pyrrhotech 3y ago
I'm an American that has bought and sold 3 houses and never once paid the 6% commission. It seems lots of folks don't realize commissions are negotiable, and that discount brokers exist who charge much less for roughly the same end product. If you think the standard full service 6% is providing you adequate value, by all means pay it, but don't feel like you have to.
- astrostl 3y ago
  There are several states in which negotiation with realtors is legally restricted.
r00fus 3y ago
Almost no one has fixed rate mortgages except Americans, either. Our real-estate market has some unique features.
exabrial 3y ago
Real Estate agents have a very top secret elite club where nobody defects from the tribe or you're kicked out and shunned. Ultimate collusion experience!
mcoliver 3y ago
This comment is focused on USA. Some people need or want an agent, some people don't. For the majority the checklist for buying a home is fairly straight forward and could be automated with checklists, yelp, Plaid/UWM, and DocuSign. But not all. The bigger issue that I think almost everyone can agree on is the standardized percentage thing. Being an agent should be a flat negotiated fee or billed like the trades per hour / cost+. The good ones charge more, you pay for what you need, etc... One other thing. I'm not usually for more government intervention but at least in the USA, the government backstops the vast majority of mortgages (Fannie and Freddie), and collects rent in perpetuity through property taxes. They are so integral to the housing market that they should be providing the standardized forms and checklists that would cover most residential real estate transactions. Not Redfin/Zillow and definitely not NAR/MLS.
- closeparen 3y ago
  The title company is the one who sends and receives wires and executes the nuts-and-bolts transfer of ownership. You could imagine fintechs getting into that space even with traditional agents, and you could imagine title companies catering to for-sale-by-owner.
  - rgbrgb 3y ago
    Title companies are already pretty efficient and relatively cheap... not a lot of margin or process to improve with technology.
    - closeparen 3y ago
      Exactly! I’m pretty sure Old Republic’s fee was a couple grand, nowhere near the mid-range luxury car price that the realtors collectively made on the transaction.
      - eldavido 3y ago
        Keep in mind this has to include downside protection to cover the very real risk of someone initiating a suit in case they screw up (which I'm sure happens from time to time). I think overall, what a lot of this entire discussion misses is that 90, maybe 99% of transactions are pretty straightforward, but the 1% where things go haywire, might cost 10, even 100x as much in wasted time, money, etc. Real estate brokerage is a regulated professional service which means by law, there's a minimum standard of care owed to anyone who uses these peoples' services. This costs money to provide which ultimately means a lot of the costs of the problem cases end up socialized/spread out, over everyone. This feels quite unfair if you've got your act together and everything goes smoothly, but it seems hard to know upfront which ones will be the hard cases, or not.
coding123 3y ago
If anyone wonders why housing prices keep going up - maybe because each time we sell we are adding cost to the transaction that makes no sense.
cschmidt 3y ago
The Economist also wrote an article about this last week, spurred by the class action lawsuit. Paywalled as well, but I'm hoping you have some free articles left, unlike the WSJ: https://www.economist.com/leaders/2023/11/08/time-to-take-a-wrecking-ball-to-realtors-fees-in-america https://www.economist.com/leaders/2023/11/08/time-to-take-a-...
fakedang 3y ago
5% in Asia so.....
psunavy03 3y ago
This is worth reforming, but almost no one except Americans also gets to get a 30-year fixed-rate mortgage. And this is a major boon for stability and predictability in American homeowners' finances.
- mcoliver 3y ago
  Wait till that becomes a 40yr fixed rate. I see two viable ways to unlock the current supply/demand stalemate in the US (please chime in if you can think of other alternatives). People can't afford the 30yr payment (interest rates), can't drop interest rates (inflation), supply dried up because who is giving up that low rate for a higher one. So push the payments out over a longer period of time and drop the monthly hit. That or allow people to carry their mortgage under the current rate to a new property.
  - reducesuffering 3y ago
    > That or allow people to carry their mortgage under the current rate to a new property. This would probably increase the interest rate of new mortgages. Right now, lenders have data that these loans average around ~10 years, and thus have a premium over the 10 year treasury. If they get closed less often, because they can be carried around, we'll see the average as maybe ~15 years, which is a higher interest rate treasury (10-20) and will have higher interest rate costs.
  - psunavy03 3y ago
    You can only go so far before you defeat the main purpose of the 30-year mortgage, which is to allow retirees to pay the house off and be able to retire on a smaller nest egg because they only have to pay property tax and maintenance.
deleted 3y ago
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mNovak 3y ago
I thought for sure realtors would get the gig-economy treatment during the rise of Uber and AirBnb; just a person to handle showings while the mega-corp drops prices slightly and collects huge profits. Not sure if I'm happy or sad that they persist. But to me the craziest part of it, is that in my experience 90% of people don't comparison shop for a realtor, they just go with that person their friend used. Those social referrals are the vast majority of realtors' deal flow. Consider also that when realtors' make referrals among themselves, the receiving agent will typical give a 30% commission split back to the referrer. So what I'm getting at is, there's basically $10k+ value decisions being thrown around essentially at random, and without any metrics or qualifications.
- cyanydeez 3y ago
  I think they're mostly esoteric social network parasites. the easy part is getting the license but the hard is finding clients and your skills are all intangible unless you can demonstrate those connections (easier I guess with social media). it's just not a commodity a app can just sweep in and try to corner. but it has been "disrupted" with companies like Zillow effectively trying to be buyers and sellers of real estate, driving up prices
fatzeus 3y ago
The real issue to me is that normally the seller pays for the buyer agent as well. This creates a few problems: 1-The buyer will get an agent even if they don't think it's very useful, since they don't pay for it 2-The buyer agent has an incentive to show/promote properties that also have a seller agent, especially if it has the full 3% commission I think having buyers pay for their own agent (if they want one) would result in lower fees for everyone
jerich 3y ago
I think AirBNB has the infrastructure to upend the Realtor market. If they just add an “AirBNB listings” buyers can search and scroll through pictures. They’d have to show exact location, but otherwise pretty much the same as what’s there. Seller pays an upfront listing fee, gets referrals for staging and photos if they want to stand out. Simply add a “30 minute viewing” rental for $25-$50 (AirBNB keeps $10-25), available to registered users (with already-verified ID). Maybe rent the homeowner a bundle of cams for viewings for extra security. If a buyer is really interested, have an above-market-rate nightly rental—I’d love to spend a night in a house before paying a million+ dollars for it (without the cams, of course). Maybe half refunded with an offer made thru AirBNB Listings; full refund with an accepted offer (again, less AirBNB fees). Maybe partner with Redfin or Zillow to set prices, provide school and property info, and finish the deals. Do it all cheap enough to make it worth sellers forgoing an MLS listing; should be a flat fee, a tiny fraction of 6% in most cases. A startup couldn’t do it, but AirBNB has the name recognition, and the pieces already there, right? I’m available for consulting, or send me a fruit basket if it all works out, a nice one, without a lot of melon.
rgbrgb 3y ago
FWIW in America you can totally ask for a refund on agent commission when looking for an agent to buy with. Not all agents will do it but it is straightforward for them to credit their commission against the closing costs. With online listings, agents today do so much less than they did when those commissions were set and home prices have obviously ballooned faster than inflation. The end-state of our startup, Open Listings, was basically a (magnificent) listings site + easy way to connect with vetted buyers agents who had pre-negotiated refunds (50% of their commission). For anecdata, I bought a home recently in a market our service never supported. We googled and quickly found a great agent who was happy to refund half their commission.
- RealAgentAI 3y ago
  Working on a similar product at https://realagent.ai https://realagent.ai, check us out.
mbostleman 3y ago
Yea, it's time for this whole NAR thing to be disassembled. It's unfortunate how much we undervalue the impact of collusion on the health of a free market. And worse, how out in the open and right in front of everyone this was. There are a lot of shady corners of industries that the mainstream doesn't know about or have regular exposure to, so it's not surprising that monopolies and regulatory capture shenanigans exist like this, but this is something that almost everyone uses multiple times in adulthood.
queuebert 3y ago
While caring about what the rest of the world is certainly what Americans do best (j/k), another take would be that this isn't a free market, and there is no reason for it not to be. If 6% is what the market determined to be optimal then fine, but all signs suggest a truly free market would push the rate down a few points.
- poulsbohemian 3y ago
  What do you believe is not free market about it? -- You as a homeowner have the legal right to sell your home yourself without a lawyer, escrow officer, or real estate agent involved. -- You as a buyer have the legal right to represent yourself in purchasing a home. -- You, as buyer or seller, likely have multiple options either lawyers or real estate agents in the place you live who could facilitate a transaction. -- If you choose to work with a brokerage / agent, you will likely find a range of commission price points as well as levels of service available to you. Want a "listing only" service? I've seen people in my community offer that for a nominal fixed price. Want the full monty or have a unique property? I've seen 10% commissions to both sides. -- Think it is unfair that you can't list your property directly with an MLS? Become a licensed agent, pay your membership dues, and you too can have direct access to the MLS. Listing services are owned by (read: costs paid by) real estate brokerages, just like any other market, IE: Nasdaq, NYSE, etc.
thunkshift1 3y ago
This biggest drawback in my opinion is not the commission percentage, it is the gate keeping that realtors do wrt the inventory in market. Only realtors have access to and complete picture of what is on the market and for what price. I think this is the MLS database? Its weird that the person actually shelling out the money has to go through these middle men to even gain an understanding of what his hard earned money can get him.
alberth 3y ago
On a positive note, 30-year fixed rate mortgages are super common in US. Not so much in other parts of the world.

339 points by impish9208 3y ago

deleted 3y ago

[deleted]

Closing costs in Germany are quite high... about 12%. - 3.57% RE commission - 2.00% notary - 6% for the land transfer tax And the seller also pays 3.57% of the RE commission. So over 6% at the end of the day :)

onlyrealcuzzo 3y ago
Why is the notary making 2%?! Is that including all legal fees? Even still that seems like a much bigger rip off than a buyer's agent in the US.
- pierat 3y ago
  That signature is made with a realllllly heavy pen, I guess?
- hef19898 3y ago
  A nortary makes sure the sale ia properly exevuted and titles properly transferred, he is certifying the transaction and takes on some legal riks dor doing so. This provides legal security for seller and buyer, a service woth paying for in transactions most people only do once in their life (we talk about Germany here). For all others, it is just coat of doing business. No idea why it is always everybody else who should work for free.
  - debacle 3y ago
    Might be a different meaning of the term notary. In the US, you can become a notary public for $35 and an online course in many instances.
    - hef19898 3y ago
      You cannot be elected? In all seriousness, notaries in Germany are all full lawyers and practices are highly sought after, as the numbers of lisvensed notaries is limited.
      - tecleandor 3y ago
        In Spain, Notaries and Property Registrars are a weird thing. You have to pass an exam, same as a public servant, and the number of positions is limited. But you don't have a regular salary like any other public servant: you set up a private office and get the money directly from your clients. The price for the actions is regulated but it's high, and the number of licenses is limited, so generally they have hefty salaries, specially compared to the rest of the public servants and the mean of the population. Their salary can be very variable based on location (as you get the money directly from your clients), but it's said to typically be from 100K to 200K€
        mariojv 3y ago
        My eyes popped at that salary for a notary in Spain given most eng positions seem to pay under 60K euro. It looks like they need a law degree, too, so I'm sure they offer legal services other than property transactions? https://www.notariado.org/portal/en/how-to-be-a-notary https://www.notariado.org/portal/en/how-to-be-a-notary
        deleted 3y ago
        [deleted]
    - Tangurena2 3y ago
      In many states, notaries can marry people as the actual legal step of notarizing the marriage license and returning it to the county clerk's office is the actual deed that makes people legally married.
    - deleted 3y ago
      [deleted]
  - esrauch 3y ago
    Does the notary provide the title insurance (as in: if it turns out later that the seller didn't actually own the house, the real owner shows up and proves it, the bank and new buyers have their money covered)? That would make more sense for the 2% but it's not related to the notary in the US; notary literally just does "I checked the id of the person signing and it matches" which is a service that can be had for free at your bank or at most $50 if you have to pay someone, 2% of a house for that service obviously wouldn't make sense.
    - dagw 3y ago
      A notary in the UK is a type of lawyer (although not necessarily a solicitor) and requires special certification and training. Their job is to make sure all the paper work is in order and to sign off and legally certify that is in fact so.
    - hef19898 3y ago
      In Germany you cannot sell real estate thatbisn't yours, ownership is registered. The notary, as part of his job, makes sure this title transfer is done properly. If the seller isn't the owner, the sale is void, as far as I know sales price is to be paid once the title transfer was requested and approved, upon proof of payment the notary finalizes it. So basically no title insurance needed. By the way, excerpts of the registry for the real estate in question are part of the sales contract (just remembered).
      - esrauch 3y ago
        Ownership is registered in the US and part of the sale is a "title search" to check that and then update the registered title when the sale is executed (both handled by an attorney). The case of title insurance is only where something weirder happens with wills, contracts, or liens. If there was an owner that died in 2016 and his will said "split my house to all surviving children". And at the time one child shows up who believes they are the sole surviving descendant and claims the house and sells it in 2017, then 2018 a second heir finds out their estranged parent died and shows up to say "actually half of this house was mine, that guy didn't legally have the right to sell it even without any fraud occuring". Title insurance ends up 'fixing' this problem so that the buyer and actual-should-have-been-owner can both be made whole (and they go after the seller for the amount they didn't actually own, but sometimes that won't be possible to recover). If you don't have title insurance you as the buyer just take the liability that you might not actually own the house (or part of the house) if the record was mistaken and needs to be corrected. In Germany would this just be a case where if the will is executed and you find out too late the inheritor would be screwed with no way to get what you owned instead?
  - nmcfarl 3y ago
    This sounds a lot like a ‘title company’ to me.
  - tecleandor 3y ago
    Sounds more like a lawyer or several competencies at the same time. In Spain the notary "just" works through the signature of the contract: - Checks the identities of the parties and their legal status - Makes "sure" both parties understand the contract - Verifies that the property can be sold (checks for legal issues in the national registry) - Serves as a legal witness to the signature - Sends a copy of the contract to the national registry (but AFAIK, doesn't follow up) The cost here, for that, is around 500-800€. It's regulated by law. Then you have to contact a registrar to make all the legal papers to make all the legal papers in the national registry. That's araound 300-400 €, I think.
    - codedokode 3y ago
      Aren't most of the checks automated? E.g. you just fill a form in a government services website and get a PDF back?
    - PaulDavisThe1st 3y ago
      In the US, this can be done by a title & escrow service. They hold the deposit money (assuming there is some, which is normal), and then at closing they will do all of the above, as well as receiving and distributing funds from the buyer/mortgage company.
  - mihaic 3y ago
    Validating property rights is a fixed-time operation that seems to be one of the basic services a state should offer. I read the parent poster naturally asking why 2% instead of some lower, fixed amount.
  - UncleMeat 3y ago
    "Free" and "paid $15,000" don't seem to be the only two options.
- thiago_fm 3y ago
  The 2% is worth it. It's an expensive, but essential step in Germany. Because there isn't a default real estate purchase contract, so you need to trust that you'll receive the property. It's like paying a lawyer to mediate an expensive purchase, and they carry some legal risks with it. They also do the bureaucracy with the government to add your name to the Grundbuch (it's a book from the government about who owns what % of a property), and also clean up the previous debts that it had (they are written there).
- mytailorisrich 3y ago
  Because they have a captive market: In general the use of a notary is mandated by law, and being a notary can be extremely regulated with limited numbers of notaries/licenses. They could open this to competition and let lawers do the job as well, but that would go down badly with the notaries who make a fortune.
benjaminwootton 3y ago
In the UK, the market rate 1.5% paid by the seller on completion. Nothing to the buyer and rarely any fees for a failed transaction. Then approximately £1000 in legal fees when buying or selling. Then the big one which is stamp duty (a government tax) which is between 0 and 12% of the purchase price. Typically the lower end of that scale though. (https://www.gov.uk/stamp-duty-land-tax/residential-property-rates https://www.gov.uk/stamp-duty-land-tax/residential-property-...)
- rwmj 3y ago
  It's important to note that (in general) sellers pay the estate agents fee and buyers pay stamp duty. If you are both buying and selling then you'd pay both, but on different properties. However if you're moving to/from rentals, dead or moving abroad then you'd pay only one. Also it's possible to cut out the estate agent if you really want to save money. There are a bunch of websites that for a minimal flat fee will let you DIY it, but be prepared to make your own for sale sign, photograph your own property, and show prospective buyers around.
  - _benedict 3y ago
    Those websites usually include (or at least offer) professional photography, and some also offer various levels of agent assistance for viewings, negotiations etc. an a la carte offering of sorts. A for sale sign is often included as it’s free advertising for them.
  - mytailorisrich 3y ago
    Well the estate agent is the agent (i.e. employee) of the seller: They work for the seller. It's quite normal that they are paid by the party who employs them!
- enlyth 3y ago
  In the UK we also have one of the worst systems for buying and selling property which on average takes 3 months or more for a single transaction and everyone can walk away at any point until exchange of contracts for whatever dumb reason. As a buyer you will spend thousands on legal and survey fees before you even know if there is anything wrong with the property. Legal fees are more like 2k+ these days (source: buying a house)
geff82 3y ago
Germany has high fees when buying a house, but compared to the US it is dirt cheap to actually own the house. „Ground tax“, similar ro „property taxes“ in the US is usually just a few hundred Euro a year. Which, compared to the US, is change money. A German house, when the mortgage is paid, feels like real property.
- benjaminwootton 3y ago
  I would hate the high US property taxes. It’s like you never really own the property if you are being taxed on it continually. It must play havoc with retirement planning?
  - Tangurena2 3y ago
    In most states, property taxes are what pays for schools, roads, libraries and things like that. When I was modernizing our state's motor vehicle registration system, I had to account for those fees in every vehicle (cars, boats, mobile homes, etc) registration cost. The state constitution states that things can only taxed based on value. Taxed based on value: https://apps.legislature.ky.gov/Law/Constitution/Constitution/ViewConstitution?rsn=203 https://apps.legislature.ky.gov/Law/Constitution/Constitutio... Value based on fair market value: https://apps.legislature.ky.gov/Law/Constitution/Constitution/ViewConstitution?rsn=201 https://apps.legislature.ky.gov/Law/Constitution/Constitutio...
- criley2 3y ago
  The tax man gets his one way or another. Imagine the shock of an American living without sales tax when they go to Germany and everything has a 20% government markup... In Germany, the net average tax rate on a worker is 37.4%, in America it is 24.8%. That's a dramatic difference in taxation!
  - tempsy 3y ago
    Anyone living in California or NYC and making mid six figures and up is easily paying more than German tax rates then. You’re paying almost 50% around high six figure range. I’ve never quite understood why people think the US is a low tax country.
voisin 3y ago
There are land transfer taxes in Canada too, and I presume our equivalent to notary are lawyers which are about $1,000-$1,500. The actual in-and-out costs are significantly higher than just the agents, though the agents are the most expensive and of questionable value.
bequanna 3y ago
Sounds like a tax problem, not a commission problem.

mgaunard 3y ago

[flagged]

WoodenChair 3y ago
If you weren’t able to read the article, it’s probably not helpful to respond to it. Would you review a movie you haven’t seen?
- mgaunard 3y ago
  You're speaking as if web journal articles had meaningful content in them beyond the headline -- you must live in a parallel universe. Anyways, it remains factual that around 6% is standard throughout the developed world. It makes the market illiquid, as you need to wait for the value of the property to increase to make back those costs, which is a main driver of the real estate market inflating so much.
  - WoodenChair 3y ago
    Actually the article has statistics and sourced infographics backing up its point. You can’t challenge those because by not reading it you haven’t seen them… So I’m left either trusting the Wall Street Journal or the anecdote of someone who didn’t read the article. Gonna go with the former in this case.

underseacables 3y ago

I think something that is partly to blame is the expansive licensure scheme, and how those licenses have become a monopolistic edge to protect and expand. Many professions have required a license, and it is the responsibility of the organization that issue those license to protect an expand their authority, preventing competition, and pushing up prices higher. The license requirement creates a perpetuating lobby, which I think is partly to blame for real estate agent commission issue. Do we really need to enshrine into law every professions market corner? A certification law would do just as well, but it would not have the effect of blocking competition, preventing market, disruption, and forcing people who want to practice that particular profession to constantly pay a private association for the right to be licensed.

Tangurena2 3y ago
[flagged]
- CPLX 3y ago
  > Occupational licensing was originally developed to prevent black people from being employed. You’ll need to cite some evidence for this. Occupational guilds and membership associations stretch back a lot further into the Middle Ages in Europe versus the timeline you’re suggesting here. There are also some very common sense public policy issues at play like making sure people who say they can cut hair or fix your teeth actually know how to do it. Granted they’ve been misused as well for various less honorable reasons but the narrative you’re presenting here doesn’t totally hold together.
  - walthamstow 3y ago
    Fix teeth, yes, cut hair, absolutely not. How can you conflate those two things? It is utterly bizarre for the state to license barbers and hairdressers, especially in the so-called land o' the free.
    - underseacables 3y ago

millzlane 3y ago

I wonder if I'll ever come to HN one day and find the entire front page will be paywalled links.

deleted 3y ago

[deleted]

codedokode 3y ago

If you divide 6% commission by hours spend, how much does an agent earns per hour? Probably more than senior Google AI developer?

ianhawes 3y ago
Well typically 6% is split between the buyers agent and the sellers agent. And each agent has to kick up a percent to their broker. Most real estate agents I know working in the average market (I.e. not NYC or the Bay Area) are not clearing $100K.
- benjaminwootton 3y ago
  How did you ever get to the situation where two people want to buy and sell one of life’s fundamental commodities, and 3 people get to insert themselves into the middle to the cost of thousands of dollars? America confuses me sometimes!
  - joshgachnang 3y ago
    It's a hell of a lot more than 3! The list of other agencies and fees I had to pay when buying my house and getting a mortgage were absolutely insane.
  - Ekaros 3y ago
    Before whole online thing from marketing it really made quite a bit of sense. At least the seller agent side. You need to advertise somewhere and someone doing it full time is much more efficient, in spreading the marketing. Some level buyer agent gathering what is available if they did that is also logical. Here not in USA. Buyer agents are more rarely used, but advertisement was taped to my building this week. But for seeing what is available agencies made lot of sense. And still do the paperwork and take somewhat better pictures or are around to show property.
- deathanatos 3y ago
  Google thinks 2-10 homes sold per year. Assuming the same on the buy side, at 6%, using the median home price of $416,100, that's $50k (2) to $250k (to 10) per agent per year. (That accounts for the split. That doesn't account for whomever the agent works for taking whatever cut.)

voxadam 3y ago

Archive: https://archive.is/SHAht https://archive.is/SHAht Archive: https://web.archive.org/web/20231117124904/https://www.wsj.com/personal-finance/real-estate-buying-home-charts-6dc40caa https://web.archive.org/web/20231117124904/https://www.wsj.c...

WarOnPrivacy 3y ago
Dude. I appreciate the diligence but did you click on either of those links?
- RationPhantoms 3y ago
  This is the first time I've seen WSJ articles not be given full access from archive.
  - cpncrunch 3y ago
    Its been happening to all their articles for the past day.
    - maerF0x0 3y ago
      in fairness that's a pretty tight window for parent commenter to notice. +1 it's never not worked for me
      - cpncrunch 3y ago
        Yes indeed, and i wasnt blaming them. I now just flag any articles that are stuck behind paywall.

ssharp 3y ago

I don't know how much value agents added over the past few years, navigating bidding wars, pocket listing access, etc. but I've never understood the justification for spending so much money on these fees. The last time I sold a house was 2011, when the housing market was still down from the 2008/09 crash. I talked with multiple agents and never got a sense of them doing much to push the house other than listing it on MLS and coordinating showings. For the seller agent, they didn't even really want to be at the showings -- they'd just provide a lockbox and give the code to the buyer agent. So where is the value there? On a median home sale, the seller side agent/broker is netting $12,400. A lockbox and MLS listing are in the sub-$500 cost range, so where is the additional $12,000 in value? I at least understand the incentive on the buyer side. A buyer can just ring up an agent and have them do their home search for them and coordinate everything. The buyer doesn't bear the cost at all, so why not utilize that convenience? Anyway, after talking with a few agents in 2011, I had one recommended to me. He could get deals done quickly and was great to work with, so I was told. I met with him and he wanted to list the house at 8% below the price I thought the house was worth (no bidding wars back then so this was no good) and flat-out refused to reduce the total commission from 6% to 5%. I said "good riddance" to the agents and did an MLS self-list for like $400. I set the buyer-side commission at 1.5%. I still got plenty of people looking at the house and sold it for the value I initially established it was worth. So I ended up saving over 10% from what the whiz-kid agent would have cost me in lost value and fees. So back to my original point -- where is that seller value coming from? There isn't much legal stuff the agents help with. You need a purchase contract (boilerplate in most cases), some standard state/federal disclosure forms, and then the title agency handles everything else.

WXLCKNO 3y ago
The extra value is not there. Anyone can do this job, it's literally filling out boilerplate documents, you can ask gpt 4 vision to do it for you.
- AndrewKemendo 3y ago
  Sounds like a business opportunity if I’ve ever heard one

sgerenser 3y ago

Unpayealled version: https://www.msn.com/en-us/money/other/almost-no-one-pays-a-6-real-estate-commission-except-americans/ar-AA1k3RVW https://www.msn.com/en-us/money/other/almost-no-one-pays-a-6...

Waterluvian 3y ago

For my first home in Canada we (really the seller, but that’s just a shell game) paid 2% and it felt like a lot in terms of actual $, largely given how home prices have inflated. We walked through three homes I picked out, and then an evening of email counter offers, and then another walk through, and then some paper work. Then I got to pay the lawyers as well as the inspector. I imagine I subsidize the times in my agent’s job where she does a ton of work and there’s no sale at all. Though maybe a flat fee could still incorporate that reality.

nemo44x 3y ago

I guess the argument is that the agent brings more than 6% value to the table so everyone wins. But I’ve always found it odd it’s a fixed percentage on total sale and not a fixed rate + percentage over a threshold. Saying that, where I live many hones are well over $1,000,000 - that’s more or less the entry level. The agencies do a good job staging them (moving all existing furnishings out and replacing with pieces that flatter the space), taking great photographs, and hosting events at the property - that all costs money.

thiago_fm 3y ago

Wrong. In Germany the Maklerprovision (comission for the Real State agent) is 7%. Typically, the seller pays half of it, but there are cases where the buyer pays it all. You also need to pay a notary, government taxes, making the cost of buying a property over 12%+. Furthermore, you shouldn't sell that property for around 10 years, otherwise, you'll need to pay Capital gains taxes. The good part is that you don't pay any taxes if you own it for over 10 years and sell it. Also property taxes are quite low, so once you get through this, it's usually great. Given that health insurance is public, there's quality public transport and the supermarket bill is cheap enough, it makes worth it!

epx 3y ago
In Brazil it is 6%, some agents used to charge even 8% or 10% but the trend is towards 5% (since real estate became expensive here as well in the last 12 years).
- thiago_fm 3y ago
  Brazil is pretty cheap in that regard, what is expensive there are property taxes.
  - barelyauser 3y ago
    A friend of mine used to live in Brazil and he payed close to half a percent.
Terretta 3y ago
[flagged]
- drstewart 3y ago
  "Except Americans" - So wrong then.
- sokoloff 3y ago
  It wasn't an anecdote of one person who paid that/more; it was a note that the fourth largest economy in the world has such a typical arrangement.

garyclarke27 3y ago

Here in Portugal it's 5% + VAT 23% so over 6%. It's like a cartel - they all point blank refuse to negotiate and most insist on exclusivity. Bit of a shock after selling a house for 1% commission in UK.

snowzach 3y ago

I think this very much depends on the agent. My wife is an agent and busts her ass. When she's a seller agent, if it's small jobs like painting a room, covering up spots, changing a massively outdated light fixture, she does it her self. She's spent days a time landscaping. Also when it comes to pricing, it helps to know the market. She will list a house for 8% under market value because she knows it will draw interest and end in a bidding war with escalation clauses. She also knows other agents and other lenders and that's very important when you have a timeline. One offer may look good but you know the agent and know they will give you an artifically high offer and then ask for 10's of thousands in remedies. Or if you're trying to get a deal done on a timeline so you can get another house and a buyer comes in with a lender that's just notoriously bad at doing things on time. You may take an offer for a few thousand less when you know a deal will end on time. Like most things, you get what you pay for and there's plenty of people out there willing to take your money and do nothing. There are good realtors and bad ones.

cj 3y ago
> One offer may look good but you know the agent and know they will give you an artifically high offer and then ask for 10's of thousands in remedies. True, but it also greats a negative incentive. The realtor is obligated to present to high offer to the seller, but not obligated to tell them “this agent usually tries to bump the price down $30k during inspection”. A less than ethical agent can use this to their advantage to get the seller to accept the offer, then convince the seller to accept the lower offer later after they’ve stopped showing the house. Good realtors like your wife can definitely add value, but there’s no good way to know which realtors are good and which are terrible other than (maybe) references.
willismichael 3y ago
> you get what you pay for and there's plenty of people out there willing to take your money and do nothing So you're saying that sometimes you don't get what you pay for?
pb7 3y ago
Everyone thinks they bust their ass. Maybe your wife does, maybe she’s just like everyone else. Fact of the matter is the average real estate agent provides little to no value. Thats why anyone with a pulse can become licensed to be one.

tecleandor 3y ago

Here in Spain is from 3% to 7%, usually around 5%.

asmnzxklopqw 3y ago
Who is paying? The buyer or the seller?
- tecleandor 3y ago
  That's not mandated on law. So whatever is negotiated in the contract.

myth_drannon 3y ago

In Canada, it's usually 5%.

deleted 3y ago

[deleted]

pavlov 3y ago

The North American middleman is one of the most successful organisms on the planet. Just look at the healthcare system.

tempodox 3y ago
And standardized bribes are The American Way™

deleted 3y ago

[deleted]

mytailorisrich 3y ago

Here (England) people like to complain about the system, mostly because either party can walk away for free until the actual contracts are exchanged, but overall it is simple and cheap. Technically, estate agents are not required, lawyers are not required, etc. Seller and/or buyer could do everything themselves if they wished (unwise but they could) as long as no mortgage is involved (the lenders are the ones requiring that the buyer uses a lawyer). Lawyers are cheap, estate agents' commissions (paid in full by seller since agent works for them) are low, maybe 3%+VAT max. Personally I prefer this than the rip off that is going on in many other countries where both sides are taken to the cleaners.

scrlk 3y ago
The chain system is absolutely ludicrous, I wouldn't call it "simple and cheap". IMO the whole system needs reform, I would wager it would go some way in fixing the housing crisis in the country.
- mytailorisrich 3y ago
  Well, it is simple and cheap. "Chains" are not 'the system' they are a fact of life. Many people sell one property to buy their next one and need the money from the sale to finance the purchase (and also don't want to end up on the street) so they want contracts on both sides to be entered into at the same time. It adds a level of complication but no additional costs. This is an issue that exists everywhere though solutions perhaps vary a bit. Usually it is a combination of relay loans (not free) and conditional contracts (tricky and pretty much the same result). If you are a first time buyer it does not matter much apart from adding delays. I don't see how reforming (how?) a system that is simple and cheap would help solve the "housing crisis". If there is something that needs reforming, well abolishing really, it is leaseholds.
  - hotnfresh 3y ago
    > This is an issue that exists everywhere though solutions perhaps vary a bit. Usually it is a combination of relay loans (not free) and conditional contracts (tricky and pretty much the same result). We use both in the US. I’m assuming a “relay loan” is akin to what I’ve seen as a “bridge loan” here—a temporary loan to cover a down payment while waiting for your current house to sell. More often, we use conditional contracts. This would be classified as a “contingency”—we’ll buy this house on date X for price Y if the money from the sale of our house is in the bank by date X, that kind of thing. Needing one of these tends to make an offer less attractive, though.

thelastgallon 3y ago

Whenever you see a monopoly wealth extraction made possible by Govt, you will see a super rich billionaire owning most of it. Warren Buffet extracts a nice percentage of these commissions. Berkshire Hathaway HomeServices Fox & Roach, REALTORS® is part of HomeServices of America, the nation’s largest provider of total home services and largest residential brokerage company in the U.S. in sales, according to the 2022 REAL Trends 500 report: https://www.foxroach.com/about-fox-roac https://www.foxroach.com/about-fox-roac

showerst 3y ago

I thought because I literally haven't seen a single "what do real estate agents even do" post on here, I'd post my positive experience -- We bought a house this year in a competitive, expensive market (DC). Our agent found the listing through word of mouth before it went on MLS, and got us lined up for an early tour so we had the chance to look at it before the open house. We liked it enough to get a pre-inspection on his advice (The market is too hot here for inspection contingencies, which is insane on a 100 year old house!). By the time the open house ended we had seen it twice and walked through with an inspector, which made us confident enough to bid. The agent talked to the seller's agent at length and figured out what was most important to them (close time over raw cash, because they were carrying two mortgages), and it turned out that the seller's agent knew our mortgage broker (who our agent originally referred us to) and trusted how fast he worked. We ended up beating over a dozen other offers, some of which were substantially higher. There's zero chance we'd have gotten this house (or anything competitive in DC) without a good agent, unless we were already in the industry and hyper connected, or bidding well into the six figures over ask. We looked at many places, and bid on two other houses we didn't win (post-covid market), so per hour he probably didn't make a crazy high salary, though in line with a good salesperson or manager. When we sold our old place, he helped advise us on pricing, set us up with good options for staging, arranged the floor plan maker and photographer, etc etc. For 3% of the sales fee I certainly could've done all that myself, but I know people who would've never gotten all that organized while also moving. We barely did even with the help! Now all that said, your median realtor in America just forwarding MLS listings and lockbox codes is probably not earning their share, but in competitive markets I think realtors can make a lot of sense.

judge2020 3y ago
The pro tip is to become an agent yourself. You'll have to become active with a broker whenever you want to buy, which is 50-100/month in fees, but then you'll get the "buyer's agent" 3% at closing (or after closing, depending on how the brokers negotiate payment).
schnable 3y ago
We bought three houses and sold two through the same agent. The first few transactions were pretty straightforward so he really just acted as a coach. Probably not worth the 6%. In our latest sell/buy, the house were selling had a significant unaddressed issue and the house we were buying had easement issues and a hard to work with seller/agent. His experience was crucial in getting it all over the finish line, we would never have been able to do it successfully ourselves and I would say he earned his money.

djoldman 3y ago

unpaywalled: https://www.msn.com/en-ca/money/finance-real-estate/almost-no-one-pays-a-6-real-estate-commission-except-americans/ar-AA1k3RVW https://www.msn.com/en-ca/money/finance-real-estate/almost-n...

triceratops 3y ago

Technology has been able to do 80% of the job of a realtor for about 20 years now. The profession has only become more lucrative in that time. Legal action, not market forces, have finally brought it to a point of change. Maybe in the age of AI there are some lessons us software devs can take from the real estate agents.

RealAgentAI 3y ago
We are trying at https://realagent.ai https://realagent.ai, issue is the real estate "cartel" is strong.

bambax 3y ago

In France it varies between 5 and... 10% 6% sounds like a very good deal. Of course, anyone can sell their house without an agent, but it's more difficult than it sounds.

drukenemo 3y ago

Brazilians pay between 5-8%

Multiplayer 3y ago

In coastal California the commission situation becomes ludicrously lucrative to the top agents. This week a home in my community sold for $25,0000,000. One of my friends had the buy side, another had the sell side. The buy side agent will be involved in ~200,000,000 in transactions this year, a down year. In this community there are plenty of transactions north of $20,000,000. He just did another and had both sides of the deal for $50,000,000. At this level the commissions are usually 2.5%/2.5%. 5% of 25,000,000 is $1,250,000. The irony? High end home sales require much less work/effort than low end. Far fewer showings. No open houses, ever. I used to work at a major real estate company and I know very well how intent they are on holding the listing service monopoly together. Redfin, Zillow, etc were all bets on the opening of the listing services that misunderstood the regulatory capture of the National, State and Local Realtor associations. They ended up selling ads to Realtors rather than opening up a new way for owners to sell their homes directly.

PaulDavisThe1st 3y ago
AFAIK, there is zero regulatory capture associated with realtor associations. They have no special priviledge under the law, and are not required for real estate transactions. The one thing they do have is control over access to the MLS, plus social inertia.
- kjkjadksj 3y ago
  People should not be surprised we have realtors when we have companies like turbotax raking in millions for 3 pages of boilerplate tax return form fills. You could tell people all day how they can do it themselves yet they will still gladly pay for someone or a service to hand hold them because thats what they really want. Not the ability to do something but to feel fussed over and to minimally think.
ugh123 3y ago
>They ended up selling ads to Realtors rather than opening up a new way for owners to sell their homes directly. Doesn't it always go that way with goals like that? How many times have we seen "automated recruiting" platforms pop up, only for them to pivot a year later into selling access and ads directly to recruiters. The market for "middle-men" seems to always be thriving when there's little to do and much to gain.

matwood 3y ago

I thought the recent court case did not receive as much attention as it should. 6% has been usury for awhile, even if you think you had a 'good' agent. Now it can simply be another negotiated deal point. It will also help remove some of the enormous friction in selling/buying a house.

charles_f 3y ago

This is one of these cases where I don't see why they collect a % fee except because they could, and they all do. There's typically very little that they do differently for a more expensive house than for a small condo. Everything is listed on their central system, which serves as an indefferentiated marketing platform - and also informs them pretty well on the state of the market. If they do any staging, repairs, cleaning, it's usually a subcontract that you get charged for. It's a pretty linear job (not even judging if it's complex or not), so why do they charge a proportional - and typically large - fee? I think that it is one of these psychological caveats where you're already talking about amounts that exceed your day to day understanding, in a stressful context. You only really see that one digit percentage fee, that you can't really negotiate anyway. And the actual amount is displayed in context to the real price tag, so it's looking small in comparison. The worst consequence, beyond just the relative unfairness of that practice, is the detriment it creates. In Canada (at least where I leave) the commission is split between the agent of both sellers and buyers. Since it's a portion of the selling price, everyone (apart from the buyers themselves) is financially incentivized to maximize the price.

Tempest1981 3y ago

Is there mention of this recent lawsuit? Should have some impact. (No WSJ subscription) Americans are taxed $60 billion in real-estate commissions, says attorney who just won a $1.8 billion mega-verdict against National Association of Realtors https://fortune.com/2023/11/02/national-association-realtors-class-action-verdict-60-billion-commissions-ever-year/ https://fortune.com/2023/11/02/national-association-realtors...

Tempest1981 3y ago
Discussed 5 days ago: Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages https://news.ycombinator.com/item?id=38089356 https://news.ycombinator.com/item?id=38089356 (276 comments) And from 5 years before (same lawsuit? Began in 2019) https://news.ycombinator.com/item?id=19431927 https://news.ycombinator.com/item?id=19431927 (336 comments)

pyrrhotech 3y ago

I'm an American that has bought and sold 3 houses and never once paid the 6% commission. It seems lots of folks don't realize commissions are negotiable, and that discount brokers exist who charge much less for roughly the same end product. If you think the standard full service 6% is providing you adequate value, by all means pay it, but don't feel like you have to.

astrostl 3y ago
There are several states in which negotiation with realtors is legally restricted.

r00fus 3y ago

Almost no one has fixed rate mortgages except Americans, either. Our real-estate market has some unique features.

exabrial 3y ago

Real Estate agents have a very top secret elite club where nobody defects from the tribe or you're kicked out and shunned. Ultimate collusion experience!

mcoliver 3y ago

This comment is focused on USA. Some people need or want an agent, some people don't. For the majority the checklist for buying a home is fairly straight forward and could be automated with checklists, yelp, Plaid/UWM, and DocuSign. But not all. The bigger issue that I think almost everyone can agree on is the standardized percentage thing. Being an agent should be a flat negotiated fee or billed like the trades per hour / cost+. The good ones charge more, you pay for what you need, etc... One other thing. I'm not usually for more government intervention but at least in the USA, the government backstops the vast majority of mortgages (Fannie and Freddie), and collects rent in perpetuity through property taxes. They are so integral to the housing market that they should be providing the standardized forms and checklists that would cover most residential real estate transactions. Not Redfin/Zillow and definitely not NAR/MLS.

closeparen 3y ago
The title company is the one who sends and receives wires and executes the nuts-and-bolts transfer of ownership. You could imagine fintechs getting into that space even with traditional agents, and you could imagine title companies catering to for-sale-by-owner.
- rgbrgb 3y ago
  Title companies are already pretty efficient and relatively cheap... not a lot of margin or process to improve with technology.
  - closeparen 3y ago
    Exactly! I’m pretty sure Old Republic’s fee was a couple grand, nowhere near the mid-range luxury car price that the realtors collectively made on the transaction.
    - eldavido 3y ago
      Keep in mind this has to include downside protection to cover the very real risk of someone initiating a suit in case they screw up (which I'm sure happens from time to time). I think overall, what a lot of this entire discussion misses is that 90, maybe 99% of transactions are pretty straightforward, but the 1% where things go haywire, might cost 10, even 100x as much in wasted time, money, etc. Real estate brokerage is a regulated professional service which means by law, there's a minimum standard of care owed to anyone who uses these peoples' services. This costs money to provide which ultimately means a lot of the costs of the problem cases end up socialized/spread out, over everyone. This feels quite unfair if you've got your act together and everything goes smoothly, but it seems hard to know upfront which ones will be the hard cases, or not.

coding123 3y ago

If anyone wonders why housing prices keep going up - maybe because each time we sell we are adding cost to the transaction that makes no sense.

cschmidt 3y ago

The Economist also wrote an article about this last week, spurred by the class action lawsuit. Paywalled as well, but I'm hoping you have some free articles left, unlike the WSJ: https://www.economist.com/leaders/2023/11/08/time-to-take-a-wrecking-ball-to-realtors-fees-in-america https://www.economist.com/leaders/2023/11/08/time-to-take-a-...

fakedang 3y ago

5% in Asia so.....

psunavy03 3y ago

This is worth reforming, but almost no one except Americans also gets to get a 30-year fixed-rate mortgage. And this is a major boon for stability and predictability in American homeowners' finances.

mcoliver 3y ago
Wait till that becomes a 40yr fixed rate. I see two viable ways to unlock the current supply/demand stalemate in the US (please chime in if you can think of other alternatives). People can't afford the 30yr payment (interest rates), can't drop interest rates (inflation), supply dried up because who is giving up that low rate for a higher one. So push the payments out over a longer period of time and drop the monthly hit. That or allow people to carry their mortgage under the current rate to a new property.
- reducesuffering 3y ago
  > That or allow people to carry their mortgage under the current rate to a new property. This would probably increase the interest rate of new mortgages. Right now, lenders have data that these loans average around ~10 years, and thus have a premium over the 10 year treasury. If they get closed less often, because they can be carried around, we'll see the average as maybe ~15 years, which is a higher interest rate treasury (10-20) and will have higher interest rate costs.
- psunavy03 3y ago
  You can only go so far before you defeat the main purpose of the 30-year mortgage, which is to allow retirees to pay the house off and be able to retire on a smaller nest egg because they only have to pay property tax and maintenance.

deleted 3y ago

[deleted]

mNovak 3y ago

I thought for sure realtors would get the gig-economy treatment during the rise of Uber and AirBnb; just a person to handle showings while the mega-corp drops prices slightly and collects huge profits. Not sure if I'm happy or sad that they persist. But to me the craziest part of it, is that in my experience 90% of people don't comparison shop for a realtor, they just go with that person their friend used. Those social referrals are the vast majority of realtors' deal flow. Consider also that when realtors' make referrals among themselves, the receiving agent will typical give a 30% commission split back to the referrer. So what I'm getting at is, there's basically $10k+ value decisions being thrown around essentially at random, and without any metrics or qualifications.

cyanydeez 3y ago
I think they're mostly esoteric social network parasites. the easy part is getting the license but the hard is finding clients and your skills are all intangible unless you can demonstrate those connections (easier I guess with social media). it's just not a commodity a app can just sweep in and try to corner. but it has been "disrupted" with companies like Zillow effectively trying to be buyers and sellers of real estate, driving up prices

fatzeus 3y ago

The real issue to me is that normally the seller pays for the buyer agent as well. This creates a few problems: 1-The buyer will get an agent even if they don't think it's very useful, since they don't pay for it 2-The buyer agent has an incentive to show/promote properties that also have a seller agent, especially if it has the full 3% commission I think having buyers pay for their own agent (if they want one) would result in lower fees for everyone

jerich 3y ago

I think AirBNB has the infrastructure to upend the Realtor market. If they just add an “AirBNB listings” buyers can search and scroll through pictures. They’d have to show exact location, but otherwise pretty much the same as what’s there. Seller pays an upfront listing fee, gets referrals for staging and photos if they want to stand out. Simply add a “30 minute viewing” rental for $25-$50 (AirBNB keeps $10-25), available to registered users (with already-verified ID). Maybe rent the homeowner a bundle of cams for viewings for extra security. If a buyer is really interested, have an above-market-rate nightly rental—I’d love to spend a night in a house before paying a million+ dollars for it (without the cams, of course). Maybe half refunded with an offer made thru AirBNB Listings; full refund with an accepted offer (again, less AirBNB fees). Maybe partner with Redfin or Zillow to set prices, provide school and property info, and finish the deals. Do it all cheap enough to make it worth sellers forgoing an MLS listing; should be a flat fee, a tiny fraction of 6% in most cases. A startup couldn’t do it, but AirBNB has the name recognition, and the pieces already there, right? I’m available for consulting, or send me a fruit basket if it all works out, a nice one, without a lot of melon.

rgbrgb 3y ago

FWIW in America you can totally ask for a refund on agent commission when looking for an agent to buy with. Not all agents will do it but it is straightforward for them to credit their commission against the closing costs. With online listings, agents today do so much less than they did when those commissions were set and home prices have obviously ballooned faster than inflation. The end-state of our startup, Open Listings, was basically a (magnificent) listings site + easy way to connect with vetted buyers agents who had pre-negotiated refunds (50% of their commission). For anecdata, I bought a home recently in a market our service never supported. We googled and quickly found a great agent who was happy to refund half their commission.

RealAgentAI 3y ago
Working on a similar product at https://realagent.ai https://realagent.ai, check us out.

mbostleman 3y ago

Yea, it's time for this whole NAR thing to be disassembled. It's unfortunate how much we undervalue the impact of collusion on the health of a free market. And worse, how out in the open and right in front of everyone this was. There are a lot of shady corners of industries that the mainstream doesn't know about or have regular exposure to, so it's not surprising that monopolies and regulatory capture shenanigans exist like this, but this is something that almost everyone uses multiple times in adulthood.

queuebert 3y ago

While caring about what the rest of the world is certainly what Americans do best (j/k), another take would be that this isn't a free market, and there is no reason for it not to be. If 6% is what the market determined to be optimal then fine, but all signs suggest a truly free market would push the rate down a few points.

poulsbohemian 3y ago
What do you believe is not free market about it? -- You as a homeowner have the legal right to sell your home yourself without a lawyer, escrow officer, or real estate agent involved. -- You as a buyer have the legal right to represent yourself in purchasing a home. -- You, as buyer or seller, likely have multiple options either lawyers or real estate agents in the place you live who could facilitate a transaction. -- If you choose to work with a brokerage / agent, you will likely find a range of commission price points as well as levels of service available to you. Want a "listing only" service? I've seen people in my community offer that for a nominal fixed price. Want the full monty or have a unique property? I've seen 10% commissions to both sides. -- Think it is unfair that you can't list your property directly with an MLS? Become a licensed agent, pay your membership dues, and you too can have direct access to the MLS. Listing services are owned by (read: costs paid by) real estate brokerages, just like any other market, IE: Nasdaq, NYSE, etc.

thunkshift1 3y ago

This biggest drawback in my opinion is not the commission percentage, it is the gate keeping that realtors do wrt the inventory in market. Only realtors have access to and complete picture of what is on the market and for what price. I think this is the MLS database? Its weird that the person actually shelling out the money has to go through these middle men to even gain an understanding of what his hard earned money can get him.

alberth 3y ago

On a positive note, 30-year fixed rate mortgages are super common in US. Not so much in other parts of the world.