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Why is real estate (selling/buying) become a bonanza for real estate brokers, not for a buyer/seller. Real estate brokers who have no steak in your home end up eating big piece of home appreciation pie (50 percent or more...) if you are selling or end up paying lot more than its real worth if you are buying.
Either way, it is a loose - loose situation for both sellers and buyers. The same scenario from home builders who skyrocket the new home prices under false pretense of bright future and creating a false heaven on the earth!
This is crazy and not making any sense to me. Whether you are selling/buying an existing home or a new home, why is it consumer getting a stick at the end? Is anything can be done?
Are you from some socialist country( Third world by CD standards? ) ??
But thats how it is in USA. Except for grocery shopping, you have middlemen for everything.
Deals falling through has nothing.. I repeat NOTHING to do with the high fees....
How can I prove it????
Well deals fall through in countries everywhere and they manage to complete RE transactions every day for much lower fees.
The real reason fees are so high is that there is zero competition. All the competition is INTERNAL , inside the companies that OWN the MLS in each area. they compete only with other members of the same club.
The do not compete on price. they simple compete as to how to split the pie within the family.
The reason agents think the rates are not high is because the 6% is shared with too many people. It has too many splits and often an agent ends up with 1%-2% so from their vested interest point of view the fee seems OK.
But there is simply no way on earth it is reasonable to take $35,000 to sell an average priced home.
Let's break it down.
You had mentioned the UK so let's go with that example. The average commission in the UK is 1.8% according to a couple of online sources. That is the seller fee only. Places like the UK and Australia don't really have buyer agents the way that the US and Canada do. So if we went with doubling that to compensate for a buyer that wants a buyer agent, then we are looking at 3.6% for a total buyer/seller compensation situation involved in a transaction. They don't do business that way there, but we need to compare apples to apples. Comparing just the sale side commission to a commission that pays for two sides is apples to oranges. BUT, let's just look at one side of the equation since that is how they do it in the UK.
The average in the US is 5.4% so that means that if one side gets 2.7% we are still .9% higher on average than the UK. Now in England the seller needs to pay a VAT (Value Added Tax) on the commission dollars. So if you pay your seller's agent 1.8%, then you need to pay a 20% tax of that 1.8% which adds an additional .36% tax to the 1.8% bringing it up to 2.16% for one side. That is still less than our 2.7% average here in the US by .54%. Sellers don't have to pay a VAT on our commission dollars here.
It is more common in the UK for a seller to pay an upfront cost or pay for the marketing of the property. This reduces the risk that the estate agency has for business loss. Attorney's do the contracts in the UK, while there are only a few states where attorneys write up the contracts. So that will be an additional fee that the seller pays on top of the estate agent commission, that most sellers here won't pay since we have state generated contract forms that real estate agents fill out. I don't know what those fees are in the UK, but if they were .25 or .5% of the sales price, I don't think that would be outrageous. You know what happens if we add .25 or .5 to our 2.16%? Yep, it gets us almost exactly to one side of the transaction here.
Also, most estate agents in the UK are actually employees with a starting salary. So they get to have money coming in even when they aren't selling any homes. It is amazing how much it reduces your risk when you have money to pay the bills every month. Agents in the US are independent contractors who get diddly squat from their brokerages in terms of income to start. Since they are employees, some estate agencies have company cars or they pay out a car allowance. Again, this lowers the risk to the individual agent because they are getting expenses reimbursed so they aren't paying those out of pocket. They work more like traditional retail here where you get a salary and then a small commission on sales. They don't spend any money out of their own pocket as that is all paid for by the estate agency.
You are comparing a job in the UK that is employee based to a job in the US that is independent contractor based. The risks associated with the job in the US are HUGE compared to the lack of risk for an estate agent in the UK. Don't sell a home for three months in the UK? No problem you get a base salary to pay your rent while you learn the trade. Not so in the US.
Spend three months driving a buyer around looking at homes in the US? Nice gas bill you have at the end of that. Take that business loss and quit your whining. In the UK, you get to drive the company car so you aren't out any money at the end. Take your employee check and go get a beer.
You can't go with all the conspiracy theories that you want, but there is high risk in the US real estate agent model and as such fees will be high. It is that whole math thing again.
If brokers are that honest (Not making much), why are the most brokers richest and have more homes than anyone else? Why do brokers get best homes for themselves in the auction and doing a disservice to the clients? Same homes they bough repair and sell it at higher price or rent it out? Isn't this show they are interested in making themselves rich rather than clients?
Many home buyers struggling to make their ends meet with one home, where as most agents I know have multiple homes. What is wrong with this picture? EZ money at buyer/seller expense, isn't it?
Why do agents buy the homes for themselves in auctions, instead of offering these to actual buyers? Why are the agents creating a bubble/hype, in reality economy is in recession or folks out of jobs and are struggling to make payments?
Many home buyers struggling to make their ends meet with one home, where as most agents I know have multiple homes. What is wrong with this picture? EZ money at buyer/seller expense, isn't it?
Why do agents buy the homes for themselves in auctions, instead of offering these to actual buyers? Why are the agents creating a bubble/hype, in reality economy is in recession or folks out of jobs and are struggling to make payments?
Most agents do not own multiple houses and certainly don't buy them at auction.
Most investors who buy a lot of homes are not usually licensed Brokers / Agents.
Why do agents buy the homes for themselves in auctions, instead of offering these to actual buyers?
Auctions are typically cash only and open to the public. An auction is also not something they would be attending for their job as a real estste agent. Its somehing they would do on thier own time.
Why is real estate (selling/buying) become a bonanza for real estate brokers, not for a buyer/seller. Real estate brokers who have no steak in your home end up eating big piece of home appreciation pie (50 percent or more...) if you are selling or end up paying lot more than its real worth if you are buying.
Either way, it is a loose - loose situation for both sellers and buyers. The same scenario from home builders who skyrocket the new home prices under false pretense of bright future and creating a false heaven on the earth!
This is crazy and not making any sense to me. Whether you are selling/buying an existing home or a new home, why is it consumer getting a stick at the end? Is anything can be done?
questioning realtors on a real estate orientated message board, this will end well
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