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The buyer is paying the agent in the addition to the sale price. The buyer is also paying additional taxes for many years afterward on the higher assessed valu

by koolba 3y ago

The buyer is paying the agent in the addition to the sale price. The buyer is also paying additional taxes for many years afterward on the higher assessed value (as it includes the commission!).

voisin 3y ago
> The buyer is paying the agent in the addition to the sale price. Well I guess this gets a bit philosophical. Who pays the cost (the actual payment goes from the buyer to the seller’s lawyer which remits a portion to the agent) differs from who bears the cost (called the “incidence” [0]), which depends on the price elasticity of demand versus the price elasticity of supply, and this burden obviously shifts depending on the cycle of the housing market. You are correct that the incidence would fall to the buyer for quite some time now but perhaps this is shifting now. [0] https://en.m.wikipedia.org/wiki/Tax_incidence https://en.m.wikipedia.org/wiki/Tax_incidence
seanmcdirmid 3y ago
Home assessments are based on property value, not sales prices, in many jurisdictions.
- koolba 3y ago
  Sales prices (for an arms length sale) are de facto assessments. Every jurisdiction accepts or at least factors them in if you request an assessment to lower your property taxes. In some jurisdictions where the growth rate is capped (like CA), a 3-6% drop in price will be locked in essentially forever.
  - seanmcdirmid 3y ago
    Not in my jurisdiction (seattle), and my assessment hasn’t come close to hitting the price I paid yet since they are weighting land more than buildings in property taxes now (so…we never expect it to ever actually match, and that’s by design).
cgh 3y ago
Correct. There’s only one party putting money on the table here. “The seller pays the commission” is real estate agent doublespeak.
- tylersmith 3y ago
  Money is only one half of a trade. Giving up some value of an asset when trading it is also form of payment.
- poulsbohemian 3y ago
  Um - for years now real estate agents have been specifically told by their lawyers to not use that language, because it's been well-established that it is not true. If you've heard that language from an agent, it's a good sign they were either new to the business or dropping soundbites to sound knowledgable.
kelnos 3y ago
This pisses me off quite a bit. A simple fix could be to have the realtors bill for their services outside the purchase contract (which could still spell out those fees in a legally binding manner). The closing costs we pay to the title company aren't included in the purchase price, so it doesn't make sense that the realtor fees should be either.

by koolba 3y ago

The buyer is paying the agent in the addition to the sale price. The buyer is also paying additional taxes for many years afterward on the higher assessed value (as it includes the commission!).

voisin 3y ago

> The buyer is paying the agent in the addition to the sale price. Well I guess this gets a bit philosophical. Who pays the cost (the actual payment goes from the buyer to the seller’s lawyer which remits a portion to the agent) differs from who bears the cost (called the “incidence” [0]), which depends on the price elasticity of demand versus the price elasticity of supply, and this burden obviously shifts depending on the cycle of the housing market. You are correct that the incidence would fall to the buyer for quite some time now but perhaps this is shifting now. [0] https://en.m.wikipedia.org/wiki/Tax_incidence https://en.m.wikipedia.org/wiki/Tax_incidence

seanmcdirmid 3y ago

Home assessments are based on property value, not sales prices, in many jurisdictions.

koolba 3y ago
Sales prices (for an arms length sale) are de facto assessments. Every jurisdiction accepts or at least factors them in if you request an assessment to lower your property taxes. In some jurisdictions where the growth rate is capped (like CA), a 3-6% drop in price will be locked in essentially forever.
- seanmcdirmid 3y ago
  Not in my jurisdiction (seattle), and my assessment hasn’t come close to hitting the price I paid yet since they are weighting land more than buildings in property taxes now (so…we never expect it to ever actually match, and that’s by design).

cgh 3y ago

Correct. There’s only one party putting money on the table here. “The seller pays the commission” is real estate agent doublespeak.

tylersmith 3y ago
Money is only one half of a trade. Giving up some value of an asset when trading it is also form of payment.
poulsbohemian 3y ago
Um - for years now real estate agents have been specifically told by their lawyers to not use that language, because it's been well-established that it is not true. If you've heard that language from an agent, it's a good sign they were either new to the business or dropping soundbites to sound knowledgable.

kelnos 3y ago

This pisses me off quite a bit. A simple fix could be to have the realtors bill for their services outside the purchase contract (which could still spell out those fees in a legally binding manner). The closing costs we pay to the title company aren't included in the purchase price, so it doesn't make sense that the realtor fees should be either.