I don't know how much value agents added over the past few years, navigating bidding wars, pocket listing access, etc. but I've never understood the justification for spending so much money on these fees.
The last time I sold a house was 2011, when the housing market was still down from the 2008/09 crash. I talked with multiple agents and never got a sense of them doing much to push the house other than listing it on MLS and coordinating showings. For the seller agent, they didn't even really want to be at the showings -- they'd just provide a lockbox and give the code to the buyer agent. So where is the value there? On a median home sale, the seller side agent/broker is netting $12,400. A lockbox and MLS listing are in the sub-$500 cost range, so where is the additional $12,000 in value?
I at least understand the incentive on the buyer side. A buyer can just ring up an agent and have them do their home search for them and coordinate everything. The buyer doesn't bear the cost at all, so why not utilize that convenience?
Anyway, after talking with a few agents in 2011, I had one recommended to me. He could get deals done quickly and was great to work with, so I was told. I met with him and he wanted to list the house at 8% below the price I thought the house was worth (no bidding wars back then so this was no good) and flat-out refused to reduce the total commission from 6% to 5%.
I said "good riddance" to the agents and did an MLS self-list for like $400. I set the buyer-side commission at 1.5%. I still got plenty of people looking at the house and sold it for the value I initially established it was worth. So I ended up saving over 10% from what the whiz-kid agent would have cost me in lost value and fees.
So back to my original point -- where is that seller value coming from? There isn't much legal stuff the agents help with. You need a purchase contract (boilerplate in most cases), some standard state/federal disclosure forms, and then the title agency handles everything else.
We’ve bought two houses, sold one, bought a lot to built a house for my parents. We’ve never hired a real estate agent. The seller had an agent for the first transaction, none of the other counterparties had an agent. Paying a lawyer by the hour to handle things is simpler, cheaper, and a random lawyer is dramatically more competent than a random agent (the most complex transaction ended up costing us maybe $4k in lawyer fees-the standard 6% on that sale would have been $40k!)
Canadian here. Sadly, it's common practice around these parts for buyer agents to completely ignore listings that don't have a selling agent attached; it's their form of industry protectionism.
As a result you end up losing out on a large surface area of buyers who rely on their buying agent to find properties, which puts you at a disadvantage.
^ this is good advice. There are really two things you need to rely on in real estate deals. The first is the legal aspect, which 100% absolutely should be handled by a lawyer. The second is negotiations, assuming you yourself aren't a skilled negotiator.
Neither of these things require an agent, and neither are worth $40K.
Canadian here too. I only ever bought one house, in 2005, and I'm still living in it. But I seem to recall that the agent - a good one, referred by friends, and referred onward - had a boilerplate contract in which I was responsible for his commission even if I independently bought a FSBO (pronounced "fizzbo" in realtor lingo, i.e. completely off-system For Sale By Owner house) during the contract period. I had that scratched out before signing.
For realtors it's very simple. Why spend time on something they won't get paid for? Why bother arranging a tour of a FSBO house, unless that one says "agents welcome" in its listing which means they will pay the buyer agent fee. But if that contract is standard, what's the disincentive? Just the unpleasantness of actually enforcing it when necessary?
Common here seem to be "flat rate MLS listing" services, where you pay a few hundred dollars and they list it, and you're your own selling agent. You still pay the 2.5% to the buying agent and say so in the listing.
And yeah, the dream customer of every selling agent is a clueless first-time buyer who just calls up the agent on the for-sale sign. Double commission!
This is the issue. If both sides had to pay their own agent, significantly fewer agents would be used. Instead the buyer externalizes the cost, and many sellers aren’t confident enough to deal with the buyer’s agent directly so they arm themselves with an agent.
Is there not U.S. states where both the buyer and seller pay commission fees? A quick search provided this:
The seller’s agent collects a listing fee for marketing and selling the home.
The buyer’s agent collects the buyer’s agent fee for bringing a qualified buyer to purchase the home.
In my understanding there is costs borne by both the buyer and seller for the services of a real estate agent.
Where I live (Denmark), the real estate guild has captured the market by building the de-facto listing portal and only making it available to registered brokers. Sounds great if the US portal (MLS?) is available to all listings.
For selling a small plot of land I got so angry about the fees for nothing that I paid an obviously rogue broker to proxy-list the thing. This guy was charging half of what the other brokers were (still way too much), and did not do anything except upload documents from me.
The MLSes in the US are all under the Realtor group. The selling agent has to agree to pay the buyer agent's fee in order to list. This is one of the main points of the trial. Sellers cannot list a house in the most popular (only?) listing system without committing to the buyer's-agent fee.
Contracts (which is what I assume you're talking about) are only "boilerplate" in fair-weather deals. But if literally anything goes wrong during the escrow period, then the wording of that contract suddenly becomes critical. When tens of thousands of dollars are at stake, I'd never rely on AI-generated output.
That being said, I also agree with you as for the value of agents, because they're the ones who write these contracts and to be honest, most of them are pretty stupid. We really need real estate lawyers to be drafting these things, not relying on templates. A good contract is worth a hefty fee.
It was worth it for me when buying cheap land. Since it's percentage based the amount was quite low; cheaper than a lawyer and I had a license to use the realtor association buyer contracts and connections to helpful people in the title office etc without having to hunt down and get these myself. When I calculate all the time I would have spent hunting down the right people, contracts etc it was a bargain against the buyer commission.
I wouldn't want to use a realtor for land worth more than 50k though. Use the percentage commission to work for you not against you.
Like any sales profession, the median salesperson is a moron. Many of the listing agents just try to sign as many as possible to get the shared commission. They’re easy to find because theirs is a volume game and they market heavily.
If you don’t ask for what you want or know what you want, you get those guys. If you do, you pay for the big leagues. You’re not going to find their business card at the coffee shop bulletin board or church bulletin.
When I sold my first house, I paid the full commission plus 50% of anything over ask if it closed within 45 days of signing.
This lady was a beast. She hung out at divorcee support groups and had a file of recently divorced women with cash settlements. All-cash offer, well over list, accepted the day before listing with no contingency; closed 10 days later.
Did I feel like a horrible person? Yes. Was the place sold to my needs? Yes.
Fixed that for you. I wish when real estate comes up on HN, as it seems to weekly, that more members of this community would reflect upon the 10x programmer conversation. In any given profession, there are going to be skilled people and less skilled people, in the same way that Pareto's principle tells us that 20% of the people are doing 80% of the work. So I appreciate you making this observation.
May I ask - why did you feel like a horrible person? Sounds to me like you had a good sense of what you wanted to accomplish and you found someone who could help you reach your goals.
I just sold a house in the US and the thought of listing it ourselves did cross my mind, but in the end we used an agent and they did _everything_ for us while I was out of the country, and got us a great price. In the end the amount of commission we paid to our agent (3%) didn't feel excessive at all since I barely had to lift a finger (besides moving). Now, 3% for the buyer's agent? _that_ felt excessive.
The buyer's agent fee is basically subsidizing the hard work of buyer's agents (which is taking their clients to multiple properties, discussions about what they want, using time browsing MLS to find houses that meet criteria and arranging tours of them)
When I was looking to buy a house, my agent received no financial compensation from me at any point. Their work was entirely subsidized by the buyer's agent fee - and we looked at a lot of houses trying to find the right one.
The negative effect of that is that they're incentivized to offload us asap.
The thing about proportional pricing is that it doesn't scale up or down. Assuming your sale was near the median US home price, the seller's agent would net around $12k for their work. You believe that was worthwhile, let's assume that was money well spent.
Suppose the market was hotter when you sold and your property was worth 2x the median. Is the same work worth $24k? What if you sold in a hot market in a hot neighborhood, which should make it somewhat easier to move the property? Does it make sense that this would increase the amount the agent gets paid?
For similar reasons, proportional pricing doesn't work well at the lower end of the market, where listings are often under $100k.
Wouldn't you expect to pay a premium over someone who is home and heavily involved in the sale? If your service was worth 3%, maybe a regular one is worth 1%
> The buyer doesn't bear the cost at all, so why not utilize that convenience?
The buyer is (typically) the only one bringing money to the table at closing. They're paying for that convenience one way or the other. (To partially counter this, I negotiated a rebate of the commission I was paying [as a buyer] on our current house purchase. IIRC, the check I got back was four figures and started with a 8.)
That's not true, the agent fees come from the seller's money.
It's only true if you consider your employer to be paying for everything you have in your house, because they gave you the money you used to pay for your stuff.
The worst part of an agent is that they will not show you a house that is for sale by owner. They are actively limiting your options and you are paying them for that service
For the buyer, the value is clear: someone to go out with you to house after house, let you in, walk around with you, talk about whether you could fit a king-sized bed in that room, etc. It's a lot of work and the buyer gets a lot of value from it.
But for the seller, who pays the tab, the only value is that some buyers' agents will steer their clients away from you unless you offer a large commission. The individual realtors I know are nice people who work hard, but the industry as a whole is pretty obviously maintained by collusion, and I'm glad it finally seems to be crumbling.
I don't agree on the buyer side. I've been involved in purchasing three homes, and while I did find my realtor's help valuable, most of the work to narrow down listings fell to me. Even when my agent pro-actively pushed listings at me, most of them I had already found on Redfin or Zillow.
The offer process can be a little confusing, but ultimately it's a bunch of standardized forms that everyone should be allowed to download from some government agency or whatever.
The negotiation process is in some ways more frustrating when having to go through intermediaries. The only value the realtor provides there is frankly pretty shady: often the two realtors (who usually know each other and have a cordial relationship) will share information about their client that they really shouldn't. I've benefited from that type of information, but have felt dirty about it.
Ultimately all the legal stuff is handled by a title company (and/or a lawyer), and the realtor isn't involved there.
I think the main places where you can get a better outcome with a realtor are due to industry protectionism, not anything inherently difficult about the process that requires a trained, licensed agent with insider information.
That system seems very convoluted to me. In the UK, only the seller pays a commission on the sale price (typically ~1.5%) and the seller's estate agent is responsible for showing buyers around the property. The buyer doesn't need their own estate agent unless they're also selling a previous property at the same time.
My realtor was incredibly helpful with my purchase, even knowing some insider details like this HOA is in litigation or that warehouse is becoming a high rise. I would have gladly paid him the $200-300/hour I pay for other professional services. Given the size of the transaction though, his effective hourly rate was well over $1500.
I have gotten a lot of value from the two I've used as a buyer, and also the one I used as a seller.
On the buyer side, once we'd toured a few houses and they understood better what we wanted, the number of "No, not a chance" houses dropped to almost zero. Also, when we were just "tire-kicking" and said we had no intent to buy for a year or more, our realtor flat out told us she enjoys seeing new houses and even if we aren't ready it's good leg-work and research for her to do for other clients anyway. Once we found one she was excellent at getting us to the right people for financing, inspections, etc. - in a very small local market. She was also incredibly helpful when we were trying to find a temporary rental from across the ocean remotely, which is what led us to ask her to help find a house to buy eventually.
On the seller side, we left the country, and my realtor sold our house at an amount that covered his commission and then some with almost no effort from us at all. He had the place cleaned, staged, and photographed as part of his fee, and sold it in a day.
Yes, I'm sure like any occupation there are people bad at their job and just collecting cash for doing damn near nothing, but if you find a good one on either side, they can add a lot. Look for referrals from people who've had good experiences, and don't just pick a name from the phone book.
Our agent presumably got $23k for finding our house. But actually, she didn't find our house, we found it. (to be fair, it was outside of our self-avowed search criteria because we had to settle on a 3/1 when we wanted a 3/2).
But I suppose she got an easy sale. I'm not sure if she actually showed us any houses in person, or just showed us listings. She definitely had to spend a lot of time helping us sign the 150-or-whatever pages of the offer letter, going back and forth with the seller, etc.
But still, it was probably 5 hours of 'visible' work, so I'll be generous and say 20 hours total invested.
Had we spent 6 months showing us houses, she'd have invested a lot more. And, of course, not gotten a dime more out of us. So, you win some, you lose some.
You encountered a great example of how not only is the fee ridiculous, but also the agents are not incentivized to work for you. They are incentivized to move houses as fast as they can.
After turning-out IBEW, I spent the remainder of my electrician career specialized in residential pre-sale renovations ("make ready").
Despite peak earning years just pre-CoVid, essentially just updating circuit panel violations and replacing GFCIs [read: well-paid work without much mental strife], I hung up the towel.
Realtors are nice simple people, the masters of soft skills (which I lack) — but ultimately I realized that "when you're the only person that gives a shit, you're gonna have a bad time." For their efforts, I think total sale comp should be 1-3% (both sides), depending upon their accessibility.
>They are incentivized to move houses as fast as they can.
Being told to "not worry about other sub-contractor craftsmanship, especially don't POINT IT OUT TO CLIENTS" — I just couldn't be part of a team that cared so little as to hand over duds for [typically] seven-figure homes/investments. "We carry professional insurance FOR A REASON."
The buyer agents are useless in nearly all cases. The useful ones are called real estate attorneys, and only when it's the buyer's market. A standard buyer agent is a kid who finished a 2 week course on how to fool the buyer. His or her core competencies include: subscribing your email to an automated mls search that spams you with irrelevant listings every week, actually reviewing the listings according to your criteria is beneath them because it's real work; on the showings the agent persuades you to write an offer for the listed price, and never bothers to look for possible defects that may ruin the deal, such as foundation cracks; the agent has a inspector buddy who can write a stellar inspection report, after having inspected its lawn only; the agents are gravely offended by the idea of reducing their commission to something more sensible; they show a great resolve at pushing you to sign an exclusive contract for a very long term, and insist on bearing no responsibility.
> I don't know how much value agents added over the past few years, navigating bidding wars, pocket listing access, etc. but I've never understood the justification for spending so much money on these fees.
The question that this raises is even more puzzling: why hasn't there arisen agents that undercut the status quo? Are there guild or cartel effects at play?
I've been using a flat fee agent since 2012. $500 to list, $500 to close, but still have to pay the conventional 2.5-3% to the buyer's agent. Still a huge improvement.
They do exist. When I sold in NYC a few years ago, I paid 2.5% all in. When I bought, I used the same broker and got a 2/3 buyer's commission rebated to me at closing. It was a decent chunk of money and helped me pay the closing costs. I recommended it to all my friends and several got the rebates as well.
This was the Redfin model and it had mixed results, I think they thought their non commissioned agents would upend the market, but that didn't really happen.
The staying power of the Realtor Association may have something to do with it as well
I had to sell my home while coordinating a cross-country move. The agent handled everything for me and did a good job on the negotiation given the fact that prices were coming down while this happened.
Hell, realtors have not provided anywhere near that much value to me on that buying side, either. Certainly things were easier than without them, but not $20k easier.
For my most recent home purchase, my realtor easily made $1k/hour, even after taking into account whatever percentage her firm takes.
I'm strongly considering a DIY approach the next time I buy a house. I may eventually give up and get a realtor, but I'm curious to see if I really need one.
>I said "good riddance" to the agents and did an MLS self-list for like $400. [...] So back to my original point -- where is that seller value coming from?
It's a puzzle to you because you had the personality & motivation to do the work of marketing+showing+negotiating the house yourself. You have inadvertently projected your DIY savvy onto other homeowners to do the same thing. But, a lot of home sellers don't want to DIY a home listing.
- some homeowners don't want to deal directly with potential buyers (pre-qualify buyer's bank financials, show them around the property, etc). Some homeowners are uncomfortable wearing a "salesmen" hat.
- some homeowners are not savvy about how to present and market their home. Sure there are endless books and youtube videos on jazzing up "curb appeal" but some people simply want a "professional" to advise them.
- some homeowners feel uncomfortable with legal aspects and even hiring an attorney specializing in real estate feels "weird". It's just more "normal and easier" to use a real estate agent.
Analogous situation in people selling things on ebay. What's the value in a service like iSoldIt[1] charging a commission for ebaying on sellers behalf when the seller can save money by DIY by taking own photos, using ebay website to upload the photos and list the item, and then pack & ship the item themselves?!? The value is that some people don't want to DIY certain tasks. I had a friend sell his camera via iSoldIt. I sell stuff myself on ebay all the time and thought he was crazy for paying the iSoldIt commission. He was a young programmer so he's not an old grandfather that would find ebay's website intimidating. He simply didn't want to deal with the whole ebay workflow and wanted some cash as quickly as possible. Consider that ebaying a camera is way simpler than selling a house and yet some still offload it to a service to handle it for them.
EDIT to replies:
>, but I don't think most people would be willing to spend 12k just to be more comfortable,
>Agents provide value. [...] Do agents provide tens of thousands of dollars of value?
To be clear, I wasn't trying to justify their 6% commission rate. I was explaining why most homeowners don't go the DIY route to save money which seemed more "logical" to the gp.
For decades, I saw endless commercials on tv for FSBO (For Sale Buy Owner) services trying to educate viewers on "don't pay seller commissions and pocket the thousands in savings yourself!" And yet, real estate agents persist. People are already aware of "selling by owner"; they just don't want to do it and would rather pay a commission.
> It's a puzzle to you because you had the personality & motivation to do the work of marketing+showing+negotiating the house yourself. You have inadvertently projected your DIY savvy onto other homeowners to do the same thing. But, a lot of home sellers don't want to DIY a home listing.
I might have implied I did much of this work. I didn't, outside of negotiating. The marketing is simply getting the house on real estate sites and in-front of buyer agents, which is what MLS self-listing services do for you for a flat rate. The showings were still handled by the buyer agents. The only thing I had to do was represent myself in negotiations, which was not that difficult.
Understood that some may want to do that, but the price difference is insane. If you save 4.5% (assuming buyer agent gets the 1.5% difference from 6%) on a $400k house, that's $18,000.
Regarding FSBO, this is where MLS self-listing plays a huge role. I tried selling my house for a few months by listing on Zillow (assuming Zillow is way more popular a decade later, but still) and sticking a sign in my front-yard. MLS gets you on every real estate site and at the fingertips of buying agents.
Lastly, as you say in your replies, the issue is justification of the 6%. There are lots of issues here -- super expensive, there is already a very serious principle-agent issue incentive misalignment, and the value is questionable. When housing prices skyrocketed, did their value skyrocket in tandem?
No one is arguing against agents, they're arguing against a fixed, non-negotiable 6% fee. The reason people are talking about DIY sales is because that is the only option left to them.
Everything you're saying is true to some degree, but I don't think most people would be willing to spend 12k just to be more comfortable, if they understood that's really all they're paying for and understood clearly upfront that's how much they're paying.
It's sort of analogous to the American tax situation - many, many people I've talked to refuse to do their own taxes (even a very simple 100EZ) - or even use software to do it - because they've been convinced culturally that filing taxes is so incredibly complex and if they screw up they're going to be severely punished, so instead they pay an accountant a few hundred bucks to file a 1040EZ and get their tax refund - which they don't really feel because they just take it out of the refund.
Not OP but I think both perspectives are valid. Real estate agents are not incentivized to increase your house price at the margin as much as the owner, they would rather just keep their fee high and sell your house at an ok price.
Maybe real estate agents should structure their commission more like M&A bankers and account executives, which often have tiered or ramped fees that encourage the best prices, e.g. if the selling price is below X you get 5%, everything above X you get 10%, etc
In coastal California the commission situation becomes ludicrously lucrative to the top agents. This week a home in my community sold for $25,0000,000. One of my friends had the buy side, another had the sell side. The buy side agent will be involved in ~200,000,000 in transactions this year, a down year. In this community there are plenty of transactions north of $20,000,000. He just did another and had both sides of the deal for $50,000,000.
At this level the commissions are usually 2.5%/2.5%. 5% of 25,000,000 is $1,250,000.
The irony? High end home sales require much less work/effort than low end. Far fewer showings. No open houses, ever.
I used to work at a major real estate company and I know very well how intent they are on holding the listing service monopoly together. Redfin, Zillow, etc were all bets on the opening of the listing services that misunderstood the regulatory capture of the National, State and Local Realtor associations. They ended up selling ads to Realtors rather than opening up a new way for owners to sell their homes directly.
AFAIK, there is zero regulatory capture associated with realtor associations. They have no special priviledge under the law, and are not required for real estate transactions.
The one thing they do have is control over access to the MLS, plus social inertia.
People should not be surprised we have realtors when we have companies like turbotax raking in millions for 3 pages of boilerplate tax return form fills. You could tell people all day how they can do it themselves yet they will still gladly pay for someone or a service to hand hold them because thats what they really want. Not the ability to do something but to feel fussed over and to minimally think.
>They ended up selling ads to Realtors rather than opening up a new way for owners to sell their homes directly.
Doesn't it always go that way with goals like that?
How many times have we seen "automated recruiting" platforms pop up, only for them to pivot a year later into selling access and ads directly to recruiters.
The market for "middle-men" seems to always be thriving when there's little to do and much to gain.
In Germany the Maklerprovision (comission for the Real State agent) is 7%.
Typically, the seller pays half of it, but there are cases where the buyer pays it all.
You also need to pay a notary, government taxes, making the cost of buying a property over 12%+.
Furthermore, you shouldn't sell that property for around 10 years, otherwise, you'll need to pay Capital gains taxes.
The good part is that you don't pay any taxes if you own it for over 10 years and sell it.
Also property taxes are quite low, so once you get through this, it's usually great. Given that health insurance is public, there's quality public transport and the supermarket bill is cheap enough, it makes worth it!
Except it is wrong. It’s not “except Americans”, it’s “except Germans” and "except Japanese" and hundreds of millions of others. It’s not about the exact number because the whole premise is that it’s too high.
"Almost No One is Poor in the United States–Except Lazy People"
That sounds like some great tax policies in favor of long term home owners.
I was surprised that taxes ended up being over 50% of the total cost of home ownership, at least in New York (not NYC).
Bought my first house in 2021. My mortgage payment is less than my annual school + property taxes. It’s quite insane.
A big problem is my town’s property assessments arent done fairly. Anyone who hasn’t bought or sold their house in the last 10 years are enjoying extremely low assessments (e.g. a house down the street sold for $800k while the assessment was $270k). The tax assessor seems to wait until a specific house is sold before adjusting the assessed value.
Meaning grandma’s $2 million dollar house is still paying taxes based on the value of the house 30 years ago.
In California, if you make improvements to your home you are forced into a reassessment and higher taxes. Many homes in California are not maintained and updated for this very reason, since the taxes are set from when the home was purchased.
Just the property taxes were about 30% of the rent I paid at the place I rented before buying our house. Property taxes are paying for local services; renters are paying them as well, but the landlord handles the money in between.
That's why Germany has some of the highest homeownership rates in the world!
Oh wait...
Turns out encouraging illiquidity, high entry costs, and limiting people's options when it comes to selling without paying extortionate amounts of taxes doesn't actually do that.
In Spain, not only are that vast majority of properties sold through agents (anywhere from 3 to 10% commission, and there's a transfer tax of 10% on top of it all) but even apartment rentals are almost all done through agents and renters used to pay directly that fee, but the law changed and it has to be absorbed by the owner.
In Brazil it is 6%, some agents used to charge even 8% or 10% but the trend is towards 5% (since real estate became expensive here as well in the last 12 years).
I was about to say the same. I'm currently buying a place in Germany and the fees are 3.57% per broker. So if you just use the seller's agent then it's 3.57, but if you have your own then it's about 7% total.
100 000 times this. Same in neighboring Belgium and AFAICT same in France. 6% fees and up to 12.5% as a gift to the notary and the state in Belgium although to hide the rip off the seller shall be owned by the real estate fees and the buyer by the state fees. But one buy/sell and it s 18% lost. In France it s 44% tax on added value if you sell but then each year passing by this goes down by 2%. Something like that.
People are insane if they think thevhighly socialist EU doesn't screw people gigantic times on real estate.
I think something that is partly to blame is the expansive licensure scheme, and how those licenses have become a monopolistic edge to protect and expand. Many professions have required a license, and it is the responsibility of the organization that issue those license to protect an expand their authority, preventing competition, and pushing up prices higher.
The license requirement creates a perpetuating lobby, which I think is partly to blame for real estate agent commission issue.
Do we really need to enshrine into law every professions market corner? A certification law would do just as well, but it would not have the effect of blocking competition, preventing market, disruption, and forcing people who want to practice that particular profession to constantly pay a private association for the right to be licensed.
A real estate license mostly teaches what you need to know about the laws around real estate transactions. It's pretty easy to get. Take the courses, pass the test, and you're in, there's no restricted access. You can set up your own brokerage and everything.
But if you want your brokerage to have access to the MLS system, you have to join the Realtor organization. That's where the monopolistic behavior creeps in.
Your location may be different, but what you are describing is not universal or even common in my experience working in multiple states. Yes, it is absolutely true that there should be a higher barrier to entry and even after "first renewal" (which is normally a second round of education), there isn't enough training before we let new agents loose into the world. That said - in every state I'm aware of, you work under a licensed broker who has additional licensing, training, and legal responsibility. Until you've reached that level of licensing it is not possible to set up your own brokerage. I've seen a work around where a non-licensed business owner paid someone to be their broker, but that regardless there has to be someone with the right licensing running the business.
Also - whether MLS members must also be Realtors is a rule of the MLS and not a universal requirement. The NAR, nor MLSs, do not set commissions. In fact, much of the MLS rule changes in recent years that I've observed have been about making sure non-Realtor licensees have market access. It's right there in our paperwork that I show clients where we ask permission so that the seller knows who will be entering their home.
Most states require some years of experience before you can become an independent broker, in Florida it's 2 years of active work / 5 years in the system.
We should always have several competing licensing bodies.
1 licensing body: never considers the cost of gatekeeping, only the self-benefit.
2 licensing bodies: they are forced to weigh the cost of gatekeeping against the self-benefit, but you might get a race to the bottom.
3 licensing bodies: they are forced to weigh the cost of gatekeeping against the self-benefit, and if they race to the bottom too hard we can decertify one and retain competition until we can bud off a replacement.
Is there mention of this recent lawsuit? Should have some impact. (No WSJ subscription)
Americans are taxed $60 billion in real-estate commissions, says attorney who just won a $1.8 billion mega-verdict against National Association of Realtors
I thought because I literally haven't seen a single "what do real estate agents even do" post on here, I'd post my positive experience --
We bought a house this year in a competitive, expensive market (DC). Our agent found the listing through word of mouth before it went on MLS, and got us lined up for an early tour so we had the chance to look at it before the open house. We liked it enough to get a pre-inspection on his advice (The market is too hot here for inspection contingencies, which is insane on a 100 year old house!). By the time the open house ended we had seen it twice and walked through with an inspector, which made us confident enough to bid.
The agent talked to the seller's agent at length and figured out what was most important to them (close time over raw cash, because they were carrying two mortgages), and it turned out that the seller's agent knew our mortgage broker (who our agent originally referred us to) and trusted how fast he worked.
We ended up beating over a dozen other offers, some of which were substantially higher. There's zero chance we'd have gotten this house (or anything competitive in DC) without a good agent, unless we were already in the industry and hyper connected, or bidding well into the six figures over ask.
We looked at many places, and bid on two other houses we didn't win (post-covid market), so per hour he probably didn't make a crazy high salary, though in line with a good salesperson or manager.
When we sold our old place, he helped advise us on pricing, set us up with good options for staging, arranged the floor plan maker and photographer, etc etc. For 3% of the sales fee I certainly could've done all that myself, but I know people who would've never gotten all that organized while also moving. We barely did even with the help!
Now all that said, your median realtor in America just forwarding MLS listings and lockbox codes is probably not earning their share, but in competitive markets I think realtors can make a lot of sense.
The pro tip is to become an agent yourself. You'll have to become active with a broker whenever you want to buy, which is 50-100/month in fees, but then you'll get the "buyer's agent" 3% at closing (or after closing, depending on how the brokers negotiate payment).
We bought three houses and sold two through the same agent. The first few transactions were pretty straightforward so he really just acted as a coach. Probably not worth the 6%.
In our latest sell/buy, the house were selling had a significant unaddressed issue and the house we were buying had easement issues and a hard to work with seller/agent. His experience was crucial in getting it all over the finish line, we would never have been able to do it successfully ourselves and I would say he earned his money.
In the UK we also have one of the worst systems for buying and selling property which on average takes 3 months or more for a single transaction and everyone can walk away at any point until exchange of contracts for whatever dumb reason.
As a buyer you will spend thousands on legal and survey fees before you even know if there is anything wrong with the property.
Legal fees are more like 2k+ these days (source: buying a house)
It's important to note that (in general) sellers pay the estate agents fee and buyers pay stamp duty. If you are both buying and selling then you'd pay both, but on different properties. However if you're moving to/from rentals, dead or moving abroad then you'd pay only one.
Also it's possible to cut out the estate agent if you really want to save money. There are a bunch of websites that for a minimal flat fee will let you DIY it, but be prepared to make your own for sale sign, photograph your own property, and show prospective buyers around.
A nortary makes sure the sale ia properly exevuted and titles properly transferred, he is certifying the transaction and takes on some legal riks dor doing so. This provides legal security for seller and buyer, a service woth paying for in transactions most people only do once in their life (we talk about Germany here). For all others, it is just coat of doing business.
No idea why it is always everybody else who should work for free.
Because they have a captive market: In general the use of a notary is mandated by law, and being a notary can be extremely regulated with limited numbers of notaries/licenses.
They could open this to competition and let lawers do the job as well, but that would go down badly with the notaries who make a fortune.
Because there isn't a default real estate purchase contract, so you need to trust that you'll receive the property. It's like paying a lawyer to mediate an expensive purchase, and they carry some legal risks with it.
They also do the bureaucracy with the government to add your name to the Grundbuch (it's a book from the government about who owns what % of a property), and also clean up the previous debts that it had (they are written there).
Germany has high fees when buying a house, but compared to the US it is dirt cheap to actually own the house. „Ground tax“, similar ro „property taxes“ in the US is usually just a few hundred Euro a year. Which, compared to the US, is change money. A German house, when the mortgage is paid, feels like real property.
The tax man gets his one way or another. Imagine the shock of an American living without sales tax when they go to Germany and everything has a 20% government markup...
In Germany, the net average tax rate on a worker is 37.4%, in America it is 24.8%. That's a dramatic difference in taxation!
I would hate the high US property taxes. It’s like you never really own the property if you are being taxed on it continually. It must play havoc with retirement planning?
Readit News
The last time I sold a house was 2011, when the housing market was still down from the 2008/09 crash. I talked with multiple agents and never got a sense of them doing much to push the house other than listing it on MLS and coordinating showings. For the seller agent, they didn't even really want to be at the showings -- they'd just provide a lockbox and give the code to the buyer agent. So where is the value there? On a median home sale, the seller side agent/broker is netting $12,400. A lockbox and MLS listing are in the sub-$500 cost range, so where is the additional $12,000 in value?
I at least understand the incentive on the buyer side. A buyer can just ring up an agent and have them do their home search for them and coordinate everything. The buyer doesn't bear the cost at all, so why not utilize that convenience?
Anyway, after talking with a few agents in 2011, I had one recommended to me. He could get deals done quickly and was great to work with, so I was told. I met with him and he wanted to list the house at 8% below the price I thought the house was worth (no bidding wars back then so this was no good) and flat-out refused to reduce the total commission from 6% to 5%.
I said "good riddance" to the agents and did an MLS self-list for like $400. I set the buyer-side commission at 1.5%. I still got plenty of people looking at the house and sold it for the value I initially established it was worth. So I ended up saving over 10% from what the whiz-kid agent would have cost me in lost value and fees.
So back to my original point -- where is that seller value coming from? There isn't much legal stuff the agents help with. You need a purchase contract (boilerplate in most cases), some standard state/federal disclosure forms, and then the title agency handles everything else.
As a result you end up losing out on a large surface area of buyers who rely on their buying agent to find properties, which puts you at a disadvantage.
Neither of these things require an agent, and neither are worth $40K.
For realtors it's very simple. Why spend time on something they won't get paid for? Why bother arranging a tour of a FSBO house, unless that one says "agents welcome" in its listing which means they will pay the buyer agent fee. But if that contract is standard, what's the disincentive? Just the unpleasantness of actually enforcing it when necessary?
Common here seem to be "flat rate MLS listing" services, where you pay a few hundred dollars and they list it, and you're your own selling agent. You still pay the 2.5% to the buying agent and say so in the listing.
And yeah, the dream customer of every selling agent is a clueless first-time buyer who just calls up the agent on the for-sale sign. Double commission!
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This is the issue. If both sides had to pay their own agent, significantly fewer agents would be used. Instead the buyer externalizes the cost, and many sellers aren’t confident enough to deal with the buyer’s agent directly so they arm themselves with an agent.
The buyer is also paying additional taxes for many years afterward on the higher assessed value (as it includes the commission!).
The seller’s agent collects a listing fee for marketing and selling the home. The buyer’s agent collects the buyer’s agent fee for bringing a qualified buyer to purchase the home.
In my understanding there is costs borne by both the buyer and seller for the services of a real estate agent.
For selling a small plot of land I got so angry about the fees for nothing that I paid an obviously rogue broker to proxy-list the thing. This guy was charging half of what the other brokers were (still way too much), and did not do anything except upload documents from me.
Contracts (which is what I assume you're talking about) are only "boilerplate" in fair-weather deals. But if literally anything goes wrong during the escrow period, then the wording of that contract suddenly becomes critical. When tens of thousands of dollars are at stake, I'd never rely on AI-generated output.
That being said, I also agree with you as for the value of agents, because they're the ones who write these contracts and to be honest, most of them are pretty stupid. We really need real estate lawyers to be drafting these things, not relying on templates. A good contract is worth a hefty fee.
I wouldn't want to use a realtor for land worth more than 50k though. Use the percentage commission to work for you not against you.
If you don’t ask for what you want or know what you want, you get those guys. If you do, you pay for the big leagues. You’re not going to find their business card at the coffee shop bulletin board or church bulletin.
When I sold my first house, I paid the full commission plus 50% of anything over ask if it closed within 45 days of signing.
This lady was a beast. She hung out at divorcee support groups and had a file of recently divorced women with cash settlements. All-cash offer, well over list, accepted the day before listing with no contingency; closed 10 days later.
Did I feel like a horrible person? Yes. Was the place sold to my needs? Yes.
Fixed that for you. I wish when real estate comes up on HN, as it seems to weekly, that more members of this community would reflect upon the 10x programmer conversation. In any given profession, there are going to be skilled people and less skilled people, in the same way that Pareto's principle tells us that 20% of the people are doing 80% of the work. So I appreciate you making this observation.
May I ask - why did you feel like a horrible person? Sounds to me like you had a good sense of what you wanted to accomplish and you found someone who could help you reach your goals.
When I was looking to buy a house, my agent received no financial compensation from me at any point. Their work was entirely subsidized by the buyer's agent fee - and we looked at a lot of houses trying to find the right one.
The negative effect of that is that they're incentivized to offload us asap.
Suppose the market was hotter when you sold and your property was worth 2x the median. Is the same work worth $24k? What if you sold in a hot market in a hot neighborhood, which should make it somewhat easier to move the property? Does it make sense that this would increase the amount the agent gets paid?
For similar reasons, proportional pricing doesn't work well at the lower end of the market, where listings are often under $100k.
I had an agent get halfway through listing my house for sale and tell me his fee was 7%. Noped out of that one.
The buyer is (typically) the only one bringing money to the table at closing. They're paying for that convenience one way or the other. (To partially counter this, I negotiated a rebate of the commission I was paying [as a buyer] on our current house purchase. IIRC, the check I got back was four figures and started with a 8.)
The buyer is the only one bringing money into the deal so they pay for both agents
It's only true if you consider your employer to be paying for everything you have in your house, because they gave you the money you used to pay for your stuff.
But for the seller, who pays the tab, the only value is that some buyers' agents will steer their clients away from you unless you offer a large commission. The individual realtors I know are nice people who work hard, but the industry as a whole is pretty obviously maintained by collusion, and I'm glad it finally seems to be crumbling.
The offer process can be a little confusing, but ultimately it's a bunch of standardized forms that everyone should be allowed to download from some government agency or whatever.
The negotiation process is in some ways more frustrating when having to go through intermediaries. The only value the realtor provides there is frankly pretty shady: often the two realtors (who usually know each other and have a cordial relationship) will share information about their client that they really shouldn't. I've benefited from that type of information, but have felt dirty about it.
Ultimately all the legal stuff is handled by a title company (and/or a lawyer), and the realtor isn't involved there.
I think the main places where you can get a better outcome with a realtor are due to industry protectionism, not anything inherently difficult about the process that requires a trained, licensed agent with insider information.
On the buyer side, once we'd toured a few houses and they understood better what we wanted, the number of "No, not a chance" houses dropped to almost zero. Also, when we were just "tire-kicking" and said we had no intent to buy for a year or more, our realtor flat out told us she enjoys seeing new houses and even if we aren't ready it's good leg-work and research for her to do for other clients anyway. Once we found one she was excellent at getting us to the right people for financing, inspections, etc. - in a very small local market. She was also incredibly helpful when we were trying to find a temporary rental from across the ocean remotely, which is what led us to ask her to help find a house to buy eventually.
On the seller side, we left the country, and my realtor sold our house at an amount that covered his commission and then some with almost no effort from us at all. He had the place cleaned, staged, and photographed as part of his fee, and sold it in a day.
Yes, I'm sure like any occupation there are people bad at their job and just collecting cash for doing damn near nothing, but if you find a good one on either side, they can add a lot. Look for referrals from people who've had good experiences, and don't just pick a name from the phone book.
But I suppose she got an easy sale. I'm not sure if she actually showed us any houses in person, or just showed us listings. She definitely had to spend a lot of time helping us sign the 150-or-whatever pages of the offer letter, going back and forth with the seller, etc.
But still, it was probably 5 hours of 'visible' work, so I'll be generous and say 20 hours total invested.
Had we spent 6 months showing us houses, she'd have invested a lot more. And, of course, not gotten a dime more out of us. So, you win some, you lose some.
Despite peak earning years just pre-CoVid, essentially just updating circuit panel violations and replacing GFCIs [read: well-paid work without much mental strife], I hung up the towel.
Realtors are nice simple people, the masters of soft skills (which I lack) — but ultimately I realized that "when you're the only person that gives a shit, you're gonna have a bad time." For their efforts, I think total sale comp should be 1-3% (both sides), depending upon their accessibility.
>They are incentivized to move houses as fast as they can.
Being told to "not worry about other sub-contractor craftsmanship, especially don't POINT IT OUT TO CLIENTS" — I just couldn't be part of a team that cared so little as to hand over duds for [typically] seven-figure homes/investments. "We carry professional insurance FOR A REASON."
The question that this raises is even more puzzling: why hasn't there arisen agents that undercut the status quo? Are there guild or cartel effects at play?
There are a bunch of these brokers now.
The staying power of the Realtor Association may have something to do with it as well
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For my most recent home purchase, my realtor easily made $1k/hour, even after taking into account whatever percentage her firm takes.
I'm strongly considering a DIY approach the next time I buy a house. I may eventually give up and get a realtor, but I'm curious to see if I really need one.
It's a puzzle to you because you had the personality & motivation to do the work of marketing+showing+negotiating the house yourself. You have inadvertently projected your DIY savvy onto other homeowners to do the same thing. But, a lot of home sellers don't want to DIY a home listing.
- some homeowners don't want to deal directly with potential buyers (pre-qualify buyer's bank financials, show them around the property, etc). Some homeowners are uncomfortable wearing a "salesmen" hat.
- some homeowners are not savvy about how to present and market their home. Sure there are endless books and youtube videos on jazzing up "curb appeal" but some people simply want a "professional" to advise them.
- some homeowners feel uncomfortable with legal aspects and even hiring an attorney specializing in real estate feels "weird". It's just more "normal and easier" to use a real estate agent.
Analogous situation in people selling things on ebay. What's the value in a service like iSoldIt[1] charging a commission for ebaying on sellers behalf when the seller can save money by DIY by taking own photos, using ebay website to upload the photos and list the item, and then pack & ship the item themselves?!? The value is that some people don't want to DIY certain tasks. I had a friend sell his camera via iSoldIt. I sell stuff myself on ebay all the time and thought he was crazy for paying the iSoldIt commission. He was a young programmer so he's not an old grandfather that would find ebay's website intimidating. He simply didn't want to deal with the whole ebay workflow and wanted some cash as quickly as possible. Consider that ebaying a camera is way simpler than selling a house and yet some still offload it to a service to handle it for them.
EDIT to replies:
>, but I don't think most people would be willing to spend 12k just to be more comfortable,
>Agents provide value. [...] Do agents provide tens of thousands of dollars of value?
To be clear, I wasn't trying to justify their 6% commission rate. I was explaining why most homeowners don't go the DIY route to save money which seemed more "logical" to the gp.
For decades, I saw endless commercials on tv for FSBO (For Sale Buy Owner) services trying to educate viewers on "don't pay seller commissions and pocket the thousands in savings yourself!" And yet, real estate agents persist. People are already aware of "selling by owner"; they just don't want to do it and would rather pay a commission.
[1] https://www.i-soldit.com/how-it-works/
I might have implied I did much of this work. I didn't, outside of negotiating. The marketing is simply getting the house on real estate sites and in-front of buyer agents, which is what MLS self-listing services do for you for a flat rate. The showings were still handled by the buyer agents. The only thing I had to do was represent myself in negotiations, which was not that difficult.
Understood that some may want to do that, but the price difference is insane. If you save 4.5% (assuming buyer agent gets the 1.5% difference from 6%) on a $400k house, that's $18,000.
Regarding FSBO, this is where MLS self-listing plays a huge role. I tried selling my house for a few months by listing on Zillow (assuming Zillow is way more popular a decade later, but still) and sticking a sign in my front-yard. MLS gets you on every real estate site and at the fingertips of buying agents.
Lastly, as you say in your replies, the issue is justification of the 6%. There are lots of issues here -- super expensive, there is already a very serious principle-agent issue incentive misalignment, and the value is questionable. When housing prices skyrocketed, did their value skyrocket in tandem?
It's sort of analogous to the American tax situation - many, many people I've talked to refuse to do their own taxes (even a very simple 100EZ) - or even use software to do it - because they've been convinced culturally that filing taxes is so incredibly complex and if they screw up they're going to be severely punished, so instead they pay an accountant a few hundred bucks to file a 1040EZ and get their tax refund - which they don't really feel because they just take it out of the refund.
Maybe real estate agents should structure their commission more like M&A bankers and account executives, which often have tiered or ramped fees that encourage the best prices, e.g. if the selling price is below X you get 5%, everything above X you get 10%, etc
Do agents provide tens of thousands of dollars of value?
How did you handle that?
I finally got a traditional agent just to field the phone calls.
A lot of anecdotal evidence they encourage this.
I used to work at a major real estate company and I know very well how intent they are on holding the listing service monopoly together. Redfin, Zillow, etc were all bets on the opening of the listing services that misunderstood the regulatory capture of the National, State and Local Realtor associations. They ended up selling ads to Realtors rather than opening up a new way for owners to sell their homes directly.
The one thing they do have is control over access to the MLS, plus social inertia.
That's true of most work. Software engineering is much less work/effort than a minimum wage job. The higher you go, the easier it is.
Doesn't it always go that way with goals like that?
How many times have we seen "automated recruiting" platforms pop up, only for them to pivot a year later into selling access and ads directly to recruiters.
The market for "middle-men" seems to always be thriving when there's little to do and much to gain.
In Germany the Maklerprovision (comission for the Real State agent) is 7%.
Typically, the seller pays half of it, but there are cases where the buyer pays it all.
You also need to pay a notary, government taxes, making the cost of buying a property over 12%+.
Furthermore, you shouldn't sell that property for around 10 years, otherwise, you'll need to pay Capital gains taxes.
The good part is that you don't pay any taxes if you own it for over 10 years and sell it.
Also property taxes are quite low, so once you get through this, it's usually great. Given that health insurance is public, there's quality public transport and the supermarket bill is cheap enough, it makes worth it!
> Almost No One Pays a 6% Real-Estate Commission–Except Americans (wsj.com)
and you've cited an example which fits neatly into the word "almost", _right there as the first worth in the sentence_
It's like opinion articles saying "many people think blabla" where "many" is 3 tweets.
"Almost No One is Poor in the United States–Except Lazy People"
Author: Ha! I used the mighty "ALMOST"! Don't you plebs know the rule of the mighty "ALMOST". I win. I am so smart.
I was surprised that taxes ended up being over 50% of the total cost of home ownership, at least in New York (not NYC).
Bought my first house in 2021. My mortgage payment is less than my annual school + property taxes. It’s quite insane.
A big problem is my town’s property assessments arent done fairly. Anyone who hasn’t bought or sold their house in the last 10 years are enjoying extremely low assessments (e.g. a house down the street sold for $800k while the assessment was $270k). The tax assessor seems to wait until a specific house is sold before adjusting the assessed value.
Meaning grandma’s $2 million dollar house is still paying taxes based on the value of the house 30 years ago.
https://www.sccassessor.org/faq/understanding-proposition-13
Oh wait...
Turns out encouraging illiquidity, high entry costs, and limiting people's options when it comes to selling without paying extortionate amounts of taxes doesn't actually do that.
People are insane if they think thevhighly socialist EU doesn't screw people gigantic times on real estate.
Almost no one != no one
That's why I started my post with "Wrong" because it is a response of a similar caliber.
Dead Comment
The license requirement creates a perpetuating lobby, which I think is partly to blame for real estate agent commission issue.
Do we really need to enshrine into law every professions market corner? A certification law would do just as well, but it would not have the effect of blocking competition, preventing market, disruption, and forcing people who want to practice that particular profession to constantly pay a private association for the right to be licensed.
But if you want your brokerage to have access to the MLS system, you have to join the Realtor organization. That's where the monopolistic behavior creeps in.
Also - whether MLS members must also be Realtors is a rule of the MLS and not a universal requirement. The NAR, nor MLSs, do not set commissions. In fact, much of the MLS rule changes in recent years that I've observed have been about making sure non-Realtor licensees have market access. It's right there in our paperwork that I show clients where we ask permission so that the seller knows who will be entering their home.
1 licensing body: never considers the cost of gatekeeping, only the self-benefit.
2 licensing bodies: they are forced to weigh the cost of gatekeeping against the self-benefit, but you might get a race to the bottom.
3 licensing bodies: they are forced to weigh the cost of gatekeeping against the self-benefit, and if they race to the bottom too hard we can decertify one and retain competition until we can bud off a replacement.
Dead Comment
Americans are taxed $60 billion in real-estate commissions, says attorney who just won a $1.8 billion mega-verdict against National Association of Realtors
https://fortune.com/2023/11/02/national-association-realtors...
Jury Finds Realtors Conspired, Awards Nearly $1.8B in Damages
https://news.ycombinator.com/item?id=38089356 (276 comments)
And from 5 years before (same lawsuit? Began in 2019)
https://news.ycombinator.com/item?id=19431927 (336 comments)
We bought a house this year in a competitive, expensive market (DC). Our agent found the listing through word of mouth before it went on MLS, and got us lined up for an early tour so we had the chance to look at it before the open house. We liked it enough to get a pre-inspection on his advice (The market is too hot here for inspection contingencies, which is insane on a 100 year old house!). By the time the open house ended we had seen it twice and walked through with an inspector, which made us confident enough to bid.
The agent talked to the seller's agent at length and figured out what was most important to them (close time over raw cash, because they were carrying two mortgages), and it turned out that the seller's agent knew our mortgage broker (who our agent originally referred us to) and trusted how fast he worked.
We ended up beating over a dozen other offers, some of which were substantially higher. There's zero chance we'd have gotten this house (or anything competitive in DC) without a good agent, unless we were already in the industry and hyper connected, or bidding well into the six figures over ask.
We looked at many places, and bid on two other houses we didn't win (post-covid market), so per hour he probably didn't make a crazy high salary, though in line with a good salesperson or manager.
When we sold our old place, he helped advise us on pricing, set us up with good options for staging, arranged the floor plan maker and photographer, etc etc. For 3% of the sales fee I certainly could've done all that myself, but I know people who would've never gotten all that organized while also moving. We barely did even with the help!
Now all that said, your median realtor in America just forwarding MLS listings and lockbox codes is probably not earning their share, but in competitive markets I think realtors can make a lot of sense.
In our latest sell/buy, the house were selling had a significant unaddressed issue and the house we were buying had easement issues and a hard to work with seller/agent. His experience was crucial in getting it all over the finish line, we would never have been able to do it successfully ourselves and I would say he earned his money.
- 3.57% RE commission
- 2.00% notary
- 6% for the land transfer tax
And the seller also pays 3.57% of the RE commission. So over 6% at the end of the day :)
Then approximately £1000 in legal fees when buying or selling.
Then the big one which is stamp duty (a government tax) which is between 0 and 12% of the purchase price. Typically the lower end of that scale though. (https://www.gov.uk/stamp-duty-land-tax/residential-property-...)
Legal fees are more like 2k+ these days (source: buying a house)
Also it's possible to cut out the estate agent if you really want to save money. There are a bunch of websites that for a minimal flat fee will let you DIY it, but be prepared to make your own for sale sign, photograph your own property, and show prospective buyers around.
Is that including all legal fees?
Even still that seems like a much bigger rip off than a buyer's agent in the US.
No idea why it is always everybody else who should work for free.
They could open this to competition and let lawers do the job as well, but that would go down badly with the notaries who make a fortune.
It's an expensive, but essential step in Germany.
Because there isn't a default real estate purchase contract, so you need to trust that you'll receive the property. It's like paying a lawyer to mediate an expensive purchase, and they carry some legal risks with it.
They also do the bureaucracy with the government to add your name to the Grundbuch (it's a book from the government about who owns what % of a property), and also clean up the previous debts that it had (they are written there).
The actual in-and-out costs are significantly higher than just the agents, though the agents are the most expensive and of questionable value.
In Germany, the net average tax rate on a worker is 37.4%, in America it is 24.8%. That's a dramatic difference in taxation!