Hacker News Reader

Comment by xfour | Hacker News Reader

In California you have Prop 13 causing people to stay put. If you bought a house anywhere close to the coast more than 6 years ago you’ve likely seen 50-100% in value increase. Therefore if you move you’d pay that same increase proportionally in property tax.

In addition you have 6% Realtors fees to sell plus staging and being out of the house for open houses etc. the math just doesn’t add up.

View on HN

> 6% realtors fee

I have a feeling that will get automated away in the next 5-10 years something fierce. More than it already is being by Redfin, etc.

Realtors don’t deserve more than $25-40/hr in most cases, let alone 6% of my home value.

Wouldn't you want to say "My Zillow prediction is $1.2 million, you get 20% of any more than that if you sell by June but only this low rate otherwise"? Anyone with true ability would take the deal.

Aligning the incentives etc.

If you flatrate it, they don't have an incentive to find you a big buyer.

Not sure how many purchases go for cash only but I gather that bank won't give mortgage if price of the house higher than appraised one, since it won't recover the value in case of the default ?

They won't loan you more than X% of the appraised value, but you can make that up with the down payment (or pay the whole thing in cash, as you say).

But magically, if you know the right collection of real estate agent, appraisers, and mortgage brokers, the house always appraises for what you need it to in order for the loan to go through.

True, but that right collection will also ensure the price you need isn't unreasonable. If the house is worth $300,000 and you need $301,500 that is in the margin of error (which I doubt is statically calculated, but if it was). If you need $500,000 on the same house you won't get it.

Maybe they will post 2008. But you would be surprised at how those same combination of people would be complicit in the loan process far outside the margin of error back then.

There's something in here but 1) Zillow/Redfin predictions bounce all over the place based (I think) on recent local sales 2) Good real estate agents are good at estimating actual selling prices. I don't know if "ability" in a real estate agent results in a house being sold for more than it's worth.

On avg they make $24.18/hr, so $25-40 would actually be a pay bump.

https://www.bls.gov/ooh/sales/real-estate-brokers-and-sales-...

Not only that, but an actually hourly rate would allow folks to have more financial security. Unfortunately, folks in a range of sales positions can have weeks without pay if they don't sell anything. This is especially bad with car and house sales - thousands one pay period and absolutely zero the next.

Had a friend doing real estate for awhile. The owner knew damn well which were the easy sales and which were hard, slow, and/or required a ton of work.

As a result a few favorite agents made a ton of money, drove luxury cars never more then 2 years old, and worked minimal hours.

The large majority of the agents made minimal money and had to fight of the scraps.

The glengarry leads are for closers only.

That’s one of the best movies of all time! Somehow I knew it would come up as soon as we started talking about real estate agents.

> As a result a few favorite agents made a ton of money, drove luxury cars never more then 2 years old, and worked minimal hours.

> The large majority of the agents made minimal money and had to fight of the scraps.

This mirrors the structure of the broader economy so in a perverse way, it makes sense.

Heh, yes that's what they get paid. As usual, it's the middleman that makes all the profit. So the profitable thing is to own the real estate agency, then you pay the agents as little as possible and charge customers 6% as you exploit the network effect.

That's because most of those hours are inefficient A lot of time spent coordinating meetings and walking with people showing the things they could see/read themselves. In most cases you only really need realtor at the very end, after you spend lots of hours seeing or showing homes, and now it's time to make the deal. It's not 1980s anymore, you can use internet to search for places yourself or to advertise your property yourself. If you remove those inefficient hours, there should be 5x less realtors but they might earn more and do better job.

And those 5x less realtors will pay far higher taxes to pay for UBI.

homie.com is already doing that.

This is a rather unique situation that only benefits a small fraction of people in the US. The article is mostly focusing on trends in the American midwest, and the effects of people being priced out of superstar cities and forced to stay where they are where the CoL is still reasonable because they did not get in on the bubbly pyramid scheme soon enough.

Heh, that's exactly why I'm not moving. I bought in 1998, a small "first" home. I paid it off pretty quick. Now I'd have to pay 3-4X what I paid for a noticeable upgrade (1000 ft^2 to 1400 ft^2), which I could afford. But the increase in taxes would be pretty substantial.

Seems whacky that two neighbors with identically valued homes could easily pay different property taxes by 10x. That seems to be the real problem, nobody wants to move and get nailed by the increased taxes.

This is also clogging the roads with traffic, wasting our time in traffic, and polluting the air. If you can't afford to move closer to a new job, you'll have to commute.

Rent control has a similar effect as well.

Yes I live in an European capital with fairly strong rent control, and a competitive housing market, and everyone I know is pretty convinced they will die in their current apartment.

Are realtor fees higher now than the were in the past? If not, that's not an explanation.

Do Californians move less than people from other states? If not, Prop 13 isn't an explanation.

It was quite a few years ago now but I think I paid 1.5% on the sale of my previous house in the UK. I'm always surprised you don't have a more competitive market in the US.

The US has cartelized markets and an inefficient title system.

US title insurance really is the worst. Who exactly has ever collected on that contract for a residence--maybe one in 10,000?

Reply on news.ycombinator.com