The 6% commission on buying or selling a home is gone | Hacker News Reader

The 6% commission on buying or selling a home is gone

cnn.com

28 pointsmooreds19 comments

After having worked in real estate for 8 years before washing my hands clean of that culture, this is much needed to bring more control into the hands of the buyers and sellers.

We were able to get a 3% commission when we bought our house ~10 years ago since the listing agent and our realtor were with the same firm. They were doing us a favor for sure and it was at a time when the market wasn't completely crazy as it is now so making the sale actually mattered.

A 6% commission today is like adding $30,000 to the price of a modest house (in my area anyway) which is bonkers. Time for a shake up.

Wasn't a favor, it's pretty standard. Same thing happened to me when I sold my first house ~8 years ago. I didn't even ask for it, the agent offered.

It's a welcome change, but barely a dent in the housing crisis prices. Build more houses.

Federal law needs to reign in local municipality NIMBYs. Let people build ADUs and second homes on their land without insane code requirements.

In theory, this could encourage people with larger houses than they need (eg empty nesters) to downsize, which could have an observable impact on shortages.

Obviously more supply is an important part of this too though.

Downsize, how exactly?

If you assume there is some population whose house size is mismatched to what they want (in particular, the house is too large), lowering the transaction costs could encourage more people to move, which would mean that more people end up with an appropriately-sized house.

There goes another way to make wealth. Yes I know that was high but there are not many way to make wealth anymore, only living.

It makes more wealth for the homeowner so it’s actually a net gain as there were realtor expenses.

More wealth is gained by society by giving homeowner an extra $20k in price than giving a realtor $20k for limited value.

Especially when the $20k to the realtor isn't the full story. A usual realtor's pay would be:

$20,000 commission:

- 30% ($6,000) split with brokerage (Keller Williams/Remax/Etc)

- 25% ($5,000) to set aside for taxes

- $799 for MLS fees (estimated at .12%)

- 20% ($4,000) for team splits

Leaving $4,201 for the agent, for what may be their only transaction for a month.

The reason NAR/brokers were so hellbent on not changing how the fees were handled is because this is going to hit them the hardest, a majority of these fees go to the broker/NAR.

I didnt know this and I assumed different. it's differeren in outside of USA. So my comment is not correct

Just think of it as a much more complicated, legally allowed pyramid scheme here in the US.

Why is 25% set aside for taxes if the realtor is only getting 20%. This seems odd. Wouldn’t they only be taxed on income net of all expenses?

It's true that they would (really) only be paying taxes on the amount they earn, but that's still only calculated after the 30% (or whatever it is) split with the brokerage.

The team split, MLS fees, photography, etc are part of the net income. So maintaining a steady 25% of the total commission allows for some wiggle room just in case.

That’s going to be way too much held over. If I have $4k in income then taxes will be 20-50% of that.

The realtor does not pay the taxes of the brokerage. And all fees are not part of net income and not taxable. They are part of gross income and will not be taxed.

I'm skeptical of the impact this will have on homeowners, if you define homeowners as someone who owns the house in which they live.

This comes at a time when residential property is increasingly being bought up by commercial interests, and it is interesting to note that, as per the linked article, this case was brought by a group of home sellers and not people looking to buy.

While this change may benefit some people looking to buy their homes, I believe that most benefits will be reaped by commercial interests looking to rent the houses for profit.

It literally reduces the price paid to commission. That will to either the seller as a saved cost or to the buyer as a reduced price.

How could it not increase their wealth?

It has become a parasitic way to make money. Technology has made it very little work with limited utility for consumers. Realtors gained wealth at the expense of consumers.

Ironically, technology also makes gatekeepers the rent-seekers that collect without value add.

So it's not about tech it's about gatekeeping, though tech forces changing of hands.

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