No. of Recommendations: 15
This is going to be a long process, as the appeals take place and terms are re-written to try to circumvent the specific rules.
But I think the writing is on the wall that the high commissions in the US are going to come down.
The problem is that the world contains other countries, which demonstrates how different systems create or destroy competition. The ones without the MLS monopoly rule have way lower commissions.
e.g., the average seller in the UK pays the an agent's fee of 1.18% plus 20% sales tax (range from 0.75% to 3%), which goes to the agent selling.
The buyer can either pay zero by going directly to the seller's agent, or start their search by hiring a buyer's agent at roughly comparable cost. Typical buying agent fees may range 0.5% to 3%, but probably average somewhere under 1.5%.
So, round numbers, the total costs are either around 1/4 or around 1/2 the figure in the US.
The story is pretty analogous in a lot of other rich countries: almost nowhere without MLS pays nearly as much in fees as the US.
Bottom line, I think the value of our holdings in BH Real Estate is falling. We're going to take a big loss. It was a nice little oligopoly while it lasted, but I think the future stream of earnings will at some point fall to half what it would otherwise have been. It might take a while. The industry is going to fight rationality tooth and nail, as they have done for 80 years.
Jim
No. of Recommendations: 6
Agreed. It's very competitive here in the UK. For mass market sales (up to £1m there's no such thing as a buyers agent) they're just listed on the portals through selling agents. 1% seems to be the norm for agents and you can neg them down to 0.75% if you push(staff rate used to be 0.7%) you can do this now as there are online only fixed fee agents selling for c£1500, so even 0.75% is still twice the commission on a typical 400k Southeast property sale. (National average house price is £286k)
Sales agents work on volume here and prop their income up with lettings management fees (c10% of rent). However, lettings are also coming under pressure as the UK Gov are intent on taxing small landlords to oblivion and encouraging corporate lets through companies and the build to rent sector backed by UK pension funds and private equity policy has been going this was for the last few years. This is also why we have a massive housing crisis and worsening homelessness crisis here, housing delivery is also constrained by an archaic planning system and nimbyism which limits housing supply and keeps prices high. Government although talking about housing policy and housing numbers do not act decisively on delivery and encourage high prices through Government led purchase incentive schemes.
Rant over 😂
