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Comment by RHSeeger | Hacker News Reader

I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes to pay the agent(s); 6% I think. If there are two agents, they each get half. If one person doesn't use an agent... the other person's agent gets it all. The person without an agent doesn't get to keep their half... it just all goes to the other agent. Wtf...

So anyways, we wound up bringing in an agent to help us out with the last bits, because we had to pay the money anyways, it might as well go to someone that helped us in some way.

The real estate process is fairly broken, as far as I'm concerned.

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Technically, the 6% goes to the Seller agent. They promote on the listing how much they're willing to share with the Buyer's agent; half is customary but not set in stone.

There are agents for your situation. They'll collect the 3% (or whatever it is) and rebate it back to you at or after closing; less some fixed fee ($600 in my experience). They are not going to do much for you, but if you already found the house yourself and are familiar with the buying contracts/process. It's an option that can save you a lot.

This may differ by state of course. My experience is limited to Texas. But I've bought and sold property using these type of agents. When selling, you just do all the work (hire a photographer $200-500, write the description $0+, and they load it to the MLS for you as the listing agent). I'm of the opinion that for most properties, the only value added marketing is the MLS. When they talk about their websites and portals and ads they run in print media I roll my eyes.

In Oregon it is illegal, by statute, to give a refund to a real estate client.

It's like this throughout the real estate and real estate development industries to be honest. Building my own house I expected plenty of savings over buying (and to be fair, I still did of course), but even beyond permitting (which is also more about who you know than what you know) I encountered things like this (roughly from most mind-boggling to least):

- You can't build a septic system, you have to use sewer because you're in city limits (later rescinded when they realized they would have to pump my sewage up to the city sewer.

- You need to hire an engineer to make sure your lumber is ok (we milled our own lumber)

- You need to hire an architect to make sure your plans are ok

- You didn't finish in 6 months? Buy a new permit please.

I know there were a million more things like this, but it's been over ten years and some things you don't want to remember... Contractors act like I'm taking food out of their kids' mouths by wanting to do the work myself, and the municipality is on their side.

The municipality is on their side because many people who try to get variances on these things are legitimately cutting terrible corners that compromise both the safety of the inhabitants (present and future) and the neighbors. It's inconvenient, but these regulations save a lot of lives/QoL from bad/naive actors.

The municipality is on their side because they're overworked.

In even the smallest town, if any appreciable percentage of new builds required custom handling... the system would instantly be person-starved and start backing up.

Business-as-usual is the fast/efficient path from a paperwork standpoint. Anything odd is (a) discouraged and (b) looked at with annoyance because it takes more time.

One reason it's almost always cheaper to tear-down fire damaged houses with still viable framing. No one wants to take the time to quantify exactly how much the framing was damaged.

My town solved the guilty until proven innocent issue regarding permits by just giving people carte blanche. Imo this is far more rational: if the county can't/won't verify paperwork they should default towards freedom and let the property owner have at it rather than presuming guilt and saying you haven't the money/people to check it.

Granted people aren't rich where I live so we'd rather them live in potentially a subpar house and maybe have it fall in on them than be homeless and die from the elements.

Re below: USA / Arizona. Pick the right county and no code inspections.

Which country/state? Inquiring minds want to know!

Those examples sound pretty reasonable, what's the issue?

They want to be the reason why the laws are created, they don't want to have to follow them.

I will own this I guess. You are correct to some extent: I don't want to have to follow laws that cause unreasonable expense, when they are created to prevent disaster that I am going to prevent without your oversight. You'll just have to take my word for it: my house is better built than any for-profit house you'll find on the market today. It's for me and my family, of course I would make sure that it is! The wood that I milled is thicker, heavier, stronger than any Yellawood you'll find. Yet I can't be trusted to recognize a board that shouldn't be used as a joist. I have to higher a professional to look at it's fit for use. Which could legitimately be someone that's never worked with lumber before. You have to admit it's insane. By the way they definitely stamp and sell lumber that I would never use in a joist.

> You have to admit it's insane

All of this sounds way more reasonable than "trust me bro, I know better" from some random person building a house. That would be insane.

> You'll just have to take my word for it

Building codes (paid for in blood) are written so we don't have to take your word for it

Your list of “mind-boggling” items all seem extremely reasonable to me.

Your city and neighbors don’t want to be responsible for or have to deal with your house falling down because it was improperly constructed. And having lived in neighborhoods with septic systems most of my life, a little neglect can go a long way.

Unless you’re building in the middle of nowhere (far from anything labeled a “city”), there are obligations to those around you.

Signed, someone whose neighbors properties have dilapidated buildings in various states of disrepair.

> Your city and neighbors don’t want to be responsible for or have to deal with your house falling down because it was improperly constructed.

Why on earth would the city or the neighbors be "responsible" for that?

They usually aren't it's an argument used to scare people into making housing stock replenishment more expensive and lock in property values.

I'm building a house now. I sent the county... A picture of a square on a map. No plans no inspections nothing. Fuck all that. I build based on what seems reasonable after a cool Busch Light and then I just do it without asking permission from anybody.

Half my county did the same. It's not rocket science, and the world here hasn't fallen apart or burned down. But you will be told the opposite to get locked into expensive contractors and corrupt inspectors and the cash extracting nightmare licensing and permitting systems that surround that.

And before anybody gets too excited... this is all 100% legal if you pick the right spot.

When my neighbor's house fails and causes damage to my property, I'm not legally "responsible" but I still have to deal with a whole lot of negatives. Hence the "or deal with it" part of OP's statement. Far better to reduce the risks by making sure the project isn't being half-assed up front.

Depends on the specific thing, but generally it's because there might be consequences to doing things poorly that would spill onto your neighbors, or which might cost the local government money to fix after it hurts or kills you. It's the same kind of reason that laws requiring motorcycle helmets or seatbelts exist.

The sewer one is obvious, since it could be a public health issue -- if you screw it up you could wind up contaminating local water sources (or just stinking up the area). Issues with the lumber you use, or with your building plans, could potentially result in your house collapsing in such a way that it might damage your neighbor's property. And getting a new permit if you take too long is probably just a way to force you to check in and make sure that you're not deviating from the earlier plans you filed.

If my neighbor doesn't wire their home to code and it burns down and the fire spreads to my house it doesn't matter who is "responsible", I'd still lose my stuff (or my life).

Hell, if my neighbor's tree falls into my property and causes damages I can't be sure I'd be fully compensated for my losses. You can take someone to court, but they can't give you what they don't have.

People also just don't want to live in slums filled with run down barely standing shacks since it hurts their property value too. Part of living in a community means giving consideration to other people around you. The closer you are to others the more responsibility you have to be considerate of your impacts on those others.

How many lives of man hours are lost from overhead for these costs and compliance? The issue is people enforcing these regulations see the dead bodies from the burned out home but not the dead bodies of the homeless or the kids with less food or the dude with untreated cancer because regulatory costs and materials safety margins sucked away money that could've been spent on other life critical things.

At this point it seems completely plausible more lives would be saved through complete deregulation including setting loose uncle joe the methhead electrician.

RE:

>cities to turn into dangerous shanty towns where anyone who can lean a piece of corrugated sheet metal against a mud pile can call themselves a home builder.

My whole county did this. No inspections or building plans. It turned out fine. I became a legal 'home builder' with nothing more than filing my signature with the county. It's the only way I can even afford a house.

re county: believe the options are unincorporated burrows of Alaska, greenlee or cochise Arizona, Jackson Wayne and several other county in Tennessee, bunch of others.

If kids can't get food that's a problem entirely separate from the costs of an electrical inspector. No one builds a house and then becomes homeless because of how much it cost to make sure it was up to code.

I'd agree that those costs shouldn't be excessive, and they may even be higher than they should be right now, but we've got plenty of examples of what deregulated construction leads to and it's never the utopia you'd imagine. It's much better to have sane standards than to deregulate and allow our cities to turn into dangerous shanty towns where anyone who can lean a piece of corrugated sheet metal against a mud pile can call themselves a home builder.

I'm certain that I can find more evidence that a lack of regulation leads to deaths than you could of code compliance causing untreated cancer. In fact, some regulations prevent building homes using materials that we know have caused cancer. Feel free to try to find a study or evidence that suggests otherwise though.

> My whole county did this. No inspections. It turned out fine.

Would you be willing to provide us with the name of the county so that we can determine for ourselves how it turned out?

> The issue is people enforcing these regulations see the dead bodies from the burned out home but not the dead bodies of the homeless or the kids with less food

Right. It's exact same problem as the FDA. If the FDA approves a drug and it kills people, they look bad. If they don't approve a drug and that kills people, no one blames the FDA because the FDA's victims in that case are invisible.

> People also just don't want to live in slums filled with run down barely standing shacks since it hurts their property value too.

Someone else's property value is their problem, not mine. You're not guaranteed that the value of an investment is going to go up. It's called "risk", dude. Your opinion of what I should do with my property does not trump my opinion of what I should do with my property.

At one time, people claimed that their property values went down when a black family moved into the neighborhood. Guess what? They eventually had to suck it up and live with it.

> Someone else's property value is their problem, not mine.

On an individual level, sure, but if we have a repeat of 1929 or 2001 or 2008 or 2020 (we'll see about 2024), even if you're not personally directly affected, there are going to be ramifications that affect society beyond a couple of unlucky individuals. We don't really need another once-in-a-lifetime economic event.

> Your opinion of what I should do with my property does not trump my opinion of what I should do with my property.

This is true in some ways, and false in multiple other ways.

1. Fire (and similar) codes exist because other people don't want their homes to burn down because you didn't want to spend the money to safely build your electric/gas/whatever system.

2. Certain codes exist related to upkeep because, if your building become derelict and infested with rats, it's going to negatively impact the livability of the ones around you.

3. Some places you can run a business, other places you cannot. Zoning rules are extremely common. In fact, they are widely considered _too_ common, but even most people pushing back against them don't think they should not exist at all; just not be so strict.

4. Some places have rules set up as to what's allowed (length of grass growth being an example); sometimes as an HOA rule, sometimes as a government rule. And these exist both for health and for "this is what we think is nice".

If enough people in your area want _everyone_ in your area to uphold a certain standard, then yes... their opinion _does_ trump yours. Because that's how society works; people decide, as a group, what is allowed and what isn't.

> If enough people in your area want _everyone_ in your area to uphold a certain standard, then yes... their opinion _does_ trump yours.

And yet, weirdly, you're no longer allowed to prevent someone from selling their house to a black family, no matter how many "people in their area" want to forbid it. How do you explain that?

Majority rule isn't the only rule, dude. Individual rights are still a thing.

Because it damages their property values. Would you want to buy a house next to a dilapidated pile of abandoned rubble?

What makes you think you're entitled to an increase in your "property value" at the expense of someone else?

Maybe you should look at your house as a place to live rather than an investment vehicle.

Or maybe you should just accept that investments come with risks.

No one's entitled to returns on any investment, of course. But would you expect investors to stand idly by while their investments lose ground? Or would you expect them to take whatever opportunities are available to them to protect their investments?

> What makes you think you're entitled to an increase in your "property value" at the expense of someone else?

The exact same thing that makes me think I can't just walk into your home and take what I want, because I want it and you're not using it. The rules set forth by the society we live in, as decided by the people living in that society. Sure, not all the rules are great; many of them are awful. But the solution to that is to fix the rules, not to say there shouldn't be _any_.

> The exact same thing that makes me think I can't just walk into your home and take what I want

No, it doesn't work that way. My house is not your house. My land is not your land.

If you're going to restrict my use of my property to increase your property value, you should pay me for that privilege.

No, that's not the way it works. When you move into a neighbourhood, a city, a state/province, and a country, you implicitly agree to abide by the rules. If the rules say you're not allowed to build your own house without approval of the design from an architect and an engineer and then you ignore them at your legal peril.

You're talking about "rules" as if they were some immutable dictate sent down from the gods.

The rules in many areas used to forbid selling houses to black people.

Those rules were changed. By force.

If you don’t like the rules then go ahead and change them where you live!

> - You can't build a septic system, you have to use sewer because you're in city limits (later rescinded when they realized they would have to pump my sewage up to the city sewer.

You got lucky. Houses with lift stations are a thing. Usually a bunch of houses will go to a common lift station, but that's not always the case.

My dad runs a company installing and servicing various sewage treatment solutions and I spent a lot of weekends as a child going to nice houses on service calls because their lift station threw an alarm and it wasn't pumping their sewage.

Why is number one the most boggling? Not dealing with sewage correctly is a public health hazard. In most places if there is a sanitary sewer hookup you must, by law, connect to it. Now in your particular case they don't have a sewage lift, but if one is ever installed it is likely you will have to connect to it if you ever need to do septic maintenance again. I certainly hope your municipality requires regular inspections of your septic so you're not flowing shit water into the local environment.

Your list seems fairly reasonable.

I looked into building where I was (because land was surprisingly cheap compared to houses) and was told to allocate 2 years and $250k for permits. A significant chunk of that was paying an architect to respond to the city and resubmit the plans. This was back when most houses were under $1M, and the lots we were looking at were around $200k, so the permits were literally more valuable than the land, and a pretty large fraction of the value of the improvement.

I used an attorney specializing in real-estate to represent our side of the house during my first home purchase. We subsequently reduced the bid by 3% with an explicit note about why (no buyer's agent commission to pay). The seller's agent was a broker and was apparently motivated because they accepted our deal along with fixing a list of little items uncovered during inspection. We paid our lawyer a $2-3k iirc.

I'll never know if that broker got 6% from the seller or took 3% to close the deal, but our strategy worked: I paid 5 figures less for the home than what was being asked for at a time when houses were selling for over asking price in this area.

It's worth a shot I guess. 2 warnings: Some seller's agents will get very pissed at you (b/c this and other things like Redfin's 1% is disrupting their cash cow and they're not stoked about it). It might be difficult to find an attorney since most RE attorneys focus on commercial deals.

Same, we used a notary public for most of the paperwork and a lawyer for a bit of it. I think I calculated that we saved around $20,000.

> I bought a few years back and we didn't really use an agent to find the house at all. Looking into it, I found that a certain percentage of the sale amount goes to pay the agent(s); 6% I think. If there are two agents, they each get half. If one person doesn't use an agent... the other person's agent gets it all. The person without an agent doesn't get to keep their half... it just all goes to the other agent. Wtf...

In hot markets this is a way people often get an advantage as a buyer: tell the selling agent you want to use them as your agent too, so they get the whole 6% if the seller picks your offer. So if the bids end up being close, the agent ends up lobbying for you (or lobbying you to make your offer closer).

Some selling agents refuse to do this because it's pretty shady, but definitely not all.

I've also heard of similar things including negotiating down the selling agent's cut as part of it but haven't seen as much of that firsthand.

> Some selling agents refuse to do this because it's pretty shady, but definitely not all.

This is a blatant conflict of interest. My god.

The entire thing is a bit of a racket.

It's only a conflict of interest if either the seller or the buyer expect their agents to negotiate price for them.

Generally agents steer well clean of that, for legal and time reasons.

A realtor is there to put properties in front of you / put your properties in front of others, and then close the deal when you tell them which property you're interested in.

Volume pays realtors, not price-over/under-replacement.

It’s a conflict regardless of negotiating price.

Your realtor (as the seller) is now going to give preferential treatment to one buyer for their own personal gain.

The realtor doesn't care which side of the party "wins", as long as the deal goes through.

So they're only preferring whoever is bitching the loudest?

>It's only a conflict of interest if either the seller or the buyer expect their agents to negotiate price for them.

There are other details that come up through a transaction that many people wouldn't even think about. Are appliances included? Window treatments? Leftover paint? What year the transaction closes could impact taxes or incentives for either party. Inspections (what types of inspections are permitted, their timeline, what will be repaired prior to sale).

If there are disagreements about any of those, or if the property was materially misrepresented by the selling agent, it's way more messy than if another agent is involved and it's clear who represents who.

It will be presented to both parties. It's not a hidden conflict.

Hidden or not it still is one.

I guess my point was, if it’s transparent the seller can easy take that into consideration when evaluating the offers. I’ve never given much thought to an agents opinion once I’m at that stage. I can evaluate the offers, their job is to bring them to me.

If people are out there just doing what their agents say with no questions asked, well, then yeah probably insist your agent doesn’t represent the other party too. That even gets murky given a large number of agents represent a few brands and they’re completely incentivized to have one of their partner agents on the other side of the transaction.

We used a real estate lawyer instead of an agent and the seller worked it out with their agent to keep the 3%. The seller's agent told us that's what ended up making our bid the most attractive.

It was 6% when I bought, but I can tell you that my ex put our realtor through hell during the process - same questions over and over, daily phone calls for status updates once under contract, etc. I would have felt bad, but I knew how much she stood to make, so I didn't say anything and just let it all happen. I feel she earned it, lol.

Yep, I learned that the hard way when we bought our first house a long time ago. I naively thought I would be a more attractive buyer because they don't have to pay my agent. There ended up being two other offers. Anyway, I remember seeing in the closing documents the amount allotted to their agent, the full 6%. Wtf, indeed.

It doesn't sound like you negotiated well and is a sign you could use an agent :)

But seriously, imagine you and I are both bidding $1,000,000 on a house. You have an agent, so if your bid is accepted, your agent and the sellers agent each get $30,000.

I don't have an agent. In my offer, I write "the sellers agent gets the usual 3%, and I am allocating the 3% that the buyer's agent would get towards the seller instead." That means for the seller's agent there's no difference whether I use an agent or not, but to the seller themselves, my offer looks $30,000 better than yours because I am sweetening the deal using that $ I'd otherwise give my realtor.

All that said, I used a realtor on my house purchase despite being financially savvy and a good negotiator because they actually helped us find the right house, and they were well worth the fee.

The commission is spelled out in the listing contract between the seller and their agent. The buyer is not a party to that contract and can’t dictate changes to it.

Well, sorta.

The contract between the seller and their broker/agent definitely reserves (typically) 3% for the buyer side broker/agent. What happens to that 3% is definitely under the influence of the buyer. We negotiated a 50/50 split of the 3% back to us as the buyer in the most recent house that we bought. I guess we could have instead offered it as an incremental incentive to the selling party to sweeten the deal.

Yeah totally it's the same thing. The bottom line is you now have an extra 3% to "play with" between you, the seller's agent, and the seller that would have previously gone to the buyer's agent. How you split up that 3% depends on who's got most of the leverage in the scenario.

FYI, here's what an example seller's contract from northeast FL MLS looks like:

>> Broker will cooperate with and compensate, as stated below, NEFMLS brokers and any broker who reciprocates with NEFMLS. For finding a buyer ready, willing and able to purchase the Property, SELLER will pay BROKER, no later than the date of closing, a broker transaction fee of 5% of the Purchase Price, whether a buyer is secured by BROKER, SELLER, or any other person. BROKER agrees to offer cooperating broker compensation of: 2.5% of the Purchase Price to a single agent for a buyer; or 2.5% of the Purchase Price to a transaction broker for a buyer; or 1% of the Purchase Price to a non-representative broker.

>> If no cooperating broker compensation is offered, the Property cannot be placed in NEFMLS. SELLER hereby directs closing attorney/settlement agent to disburse at closing all compensation to brokers payable hereunder

So in this case, the seller's broker is entitled to 5%, of which 2.5% is required to be shared with a buyer's broker, if existent.

In the event that no buyer's broker exists... it would be a conversation with the seller's broker as to how to dispose of the 2.5% (refund to the deal, etc.).

Yeah agree! Great reference to the contract language. Point being is that there's now a 30K that's freed up for creative use.

Happened to have a recent contract handy. ;)

Correct, but I can make the offer with that language and the seller can review that w their agent. If the agent is "just as well off" or even ahead of the game they can direct the ~3% I whatever way makes sense to get the deal done.

Yea, it’s fucked. As a buyer, I had an agent for a while, thinking that since the same commission is coming out from the seller’s side anyway, it can’t hurt. Wrong. I kept having my offers turned down without any good reasons, getting slow walked on offers that were for the seller’s full asking price, etc, until I dropped the buyer’s agent and just went directly to the seller’s agent and it was amazing how fast the offer was accepted.

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