Hacker News Reader

Comment by Nemi | Hacker News Reader

So this is the exact same problem with Realtors. They will say that they have a fiducial responsibility to represent you and that they will try to get you the best price (either the most or least, depending on whether they are on the selling or buying side, respectfully). And they will do that, to some limited extent. But really their incentive is to close the deal. And that means telling you that this is the best price the counter party is willing to extend if they secretly think you will still do the deal.

View on HN

According to Freaknomics, realtors get about 3% higher average closing prices on their own properties than when they're representing you as a customer. That is the delta when it is their money on the line vs yours.

3%? That's like a minor 'I want this to be done now' or someone else is coming for a second viewing tomorrow type bump, if that's even statistically significant, frankly that seems fine?

3% of a big number is... still pretty big. It's easily going to be five figures in most markets.

18k on a 600k house. Not anything to shrug at.

I'm not shrugging at it, I'm saying it's within the range of typical offers, e.g. that someone will offer 20k more to get it done.

Considering a house purchase is one of the biggest expenses for the average person, 3% can be quite a large amount indeed.

A lot of the time a seller is not really trying to maximize their sale price.

They start out trying to but then time drags on and they “just want it to be done.” At that point the seller is also prioritizing a deal over maximization.

Agents, since they’ve gone through a tonne of these processes, are more immune to the mental load the sale takes on them. I’d bet they’re less likely to try and blow through those final steps.

You can see this kind of thing play out across industries. In SW, a comparison may be the seasoned dev has no problem ripping apart their candidate solution and rewriting it since that process takes them less effort than the junior.

My rule is that nobody is working for the buyer or seller. Everybody is working for the sale.

Very much this. It is actually a real scandal that realtors make a share of the sale as opposed to a flat fee. The paperwork and all is the same regardless of if it's a condo or a mansion.

Paperwork is the same, but other work is not.

The time, and marketing, costs of a property tend to go up with price. If I'm buying a 12 bedroom mansion, I'm going to expect a lot more photos, better staging, and so on in the marketing compared to a 1 bed apartment.

Equally small, cheap, properties are likely to sell faster (bigger buying pool) than more expensive ones. That $20m mansion is going to take a lot more visits than the $200k apartment.

In other words, there is sufficient variability in the cost of selling to warrant a sliding fee. And generally the best way to do that is as a % of the sale. A % BTW which is negotiable based on how fast the realtor thinks the property will sell, and the sale price expected.

It is very dependent on the market. Right now in many parts of the US, the market is still flaming hot. Minimal effort is required.

It sure isn’t worth 6% of the sale price, especially considering that the sale price is literally double what it was 2 years ago.

If you don't believe the realtor is worth 6%, then by all means skip past them. There are plenty of fixed-fee sites that guide you through the process, provide legal form docs, and so on.

Clearly not everyone needs, or wants, a realtor. But presumably there are enough who do to keep them in business. There are enough who don't to keep the "do it yourself" market in business as well.

Choice is good. What is good for you might not be good for the next person, and vice versa.

Realtors in the USA can charge 6% because they're part of a cartel. In other countries where I've lived (UK and China) real estate agents typically charge between 1% and 3%.

Indeed, "realtor" is a brand name.

Damn! Having to take 36 photos instead of 24! Totally worth the difference for the trouble.

It's not the number of photos, as much as the quality. Not just of the photo itself (any phone can take good pics) but in terms of how the shot is framed, how the room is styled, and so on. Basically you need a better photographer, to spend more time, and you also need to dress the room in the best way.

Reply on news.ycombinator.com