Truly bad agents do their best to get you to list the house at a too-low price. Their commission is smaller, but they collect it in a short time and for very little work. They can then quickly move on to doing the same for (to?) another seller.
I have a friend who 12 years ago wanted to move from a pleasant urban house to one in the country. He was looking to sell within a couple of months. His agent recommended a price of $240k. Knowing that his house was nice and a little about the area, I told him this sounded awfully low - I guessed that $350k would be about right. Over the agent’s strong objection, he insisted on asking $280k. House sold in 1 day for that price. Agent happily collected her 6% commission with no comment on the fact that she’d probably cost him at least $50k.
To summarize what others have said, used houses are more difficult to buy because of 3 things:
They’re much more expensive (maybe 100x as much).
They can’t be moved.
They last a lot longer.
Consider a house-like object where none of those 3 apply. Buy a shed, or a trailer. Both are relatively cheap structures you could theoretically live in, but they aren’t any more expensive than a used car, they can be moved to any place you want, and may not last longer than a car. They’re no harder to buy than a car, actually they should be easier to buy because you don’t need a title or insurance, or a driver’s license to use them.
Yes. I never got the sense that agents had much incentive to overprice homes. What’s their motivation to do so? The pecuniary one is rather small. An overpriced house sitting on the market not selling doesn’t help the agent make momney at all. Both agents primary motivation is pretty much to sell the house. Now Xema’s example seems on the very extreme side, but it makes more sense to me than purposely and significantly overpricing a house that’s just not gonna move on the market. I assume when I see overpriced properties on the market, it’s because the owners have an over-inflated value of their own house (which I find most people do.)
ETA: This is not to say I dont’ think there are real estate agents who do their best to get their clients a fair and reasonable price for their home. I just don’t think there is very much motivation for a real estate agent to overvalue your home for the reasons stated above, and I would be surprised if it happened with any regularity, at least here in the US.
The most important difference, only hinted at upthread, is that a house represents real property. Historically, real meant royal, that is owned by the crown. Not any more, but the laws are encrusted with remnants of that.
Under common law, a man may not sell a property without his wife’s agreement. This one provision alone can cause infinite complication. A woman leaves her husband in NY and moves to Ohio. When the husband wants to sell the property, he can’t find his wife, so he lies and says she died or they were divorced. Meantime, the remarried (bigamy of course) and had children who grew up and got curious about that property. They discovered the facts and then sued, claiming that half the property is theirs. Under the law, they might be right. So you have title searches and title insurance. There is nothing like that for cars. Here in Canada, cars don’t come with titles and it is not obvious to me why they do in the US.
That said, there is nothing to stop you from selling your house without an agent. I did. But the buyer must pay to do a title search and get title insurance.
Remember that you are not buying a house. You are buying land with attachments. The municipality has an interest in those who own land in its jurisdiction. They provide many services to those living on the land, and collect taxes to support those services. That creates a much higher standard for any transactions.
Land is special. They ain’t making no more of it, as the saying goes.
I disagree with most of what has been posted before me. If you own your property outright and a buyer comes along with cash money to buy it, the transaction can be pretty easy. The scenario is probably quite rare, so my assertion of simplicity is hard to validate.
I live in California. Real estate regulations come into play here and I would probably still be required to file a disclosure statement. Fine. Once disclosed, the buyer and I go to a notary. I sign a quitclaim deed, take the cash and the transaction is complete.
I’ve done this. Back in 1997. Disclosure, notary, quitclaim, cash (in this case a validated cashiers check), done. The buyer did not want to involve an escrow agency. I didn’t mind not paying the extra thousand dollars so we punted that off. Before the final meeting I assume the buyers at least made sure I was the sole owner, but the issue never came up. It might have been a little risky but I had the signature, they had the cash, and the notary was right there. It worked out.
I’ll concede my experience might be really unusual. But it can be that easy.
Regarding commissions, 5% is pretty standard in LA for TOTAL buyer and seller commission. Some will try to charge more and you can try to pay less, but 10% sounds high.
You can certainly do all the legwork yourself, though in CA I think it’s rather complicated.
What you get when you hire a buyer’s agent is an adviser, someone who can tell you whether the neighborhood is good and how it’s changed/changing, whether the house is really worth the money, remind you of things like “if you want to put $20K in to build another bathroom, spend 20k more and buy a house with two bathrooms.” And they’re an intermediary who can ask tough questions and negotiate hard.
With a seller’s agent what you get is a salesman. We are about to close escrow (knock wood) for not only more than I think the house is worth, it’s more than our shoot-the-moon price. The agent we went with not only brought comps, *he brought them in a perfect-bound book. * Right away I knew this was a guy who could present things in a great light. He more or less insisted we move out and have the house painted and staged, and he hired a videographer (with drone camera!) to make an amazing video of the house. The high bidder had only seen the outside of the house and the video when they made their offer.
I could have saved myself the seller’s agent fee and some other money by selling my own home (though not necessarily the buyer’s agent fee-they expect to get paid). But I never would have done the things he did, and I wouldn’t have got the money he did, even taking into account what I have to spend on fees, rent, staging, etc.
Exactly. When we bought a big RV which my wife and kids lived in while driving around the country for a book it was just like buying a car, and nothing like buying a house. Went to the lot, wrote the check, and done.
It varies by jurisdiction, but in my state a mechanic’s lien or any civil judgment can attach to both real and personal property (like a car). Any buyer takes subject to that lien if it is properly recorded.
The difference is in the practicality of enforcing the lien. A creditor who has first priority on a house can easily find the house and will be sure of getting their money from a forced sale. Houses tend to appreciate in value over time.
With the car, they must first find that it has been sold, locate the new owner, locate the car, and then after paying all of this money, probably find out that it is an old beater and it wasn’t worth the effort. Cars depreciate in value over time.
So, if I pay $2k for a 1992 Ford Escort, it might not be worth my time to search the records for any liens against the owner, nor would any rational debt collector pay an attorney join me in an in rem action to force a sale of the car. The legal costs would far exceed the recovery, as I am not personally responsible for the debt, only the car may be used to satisfy it.
However, if I pay $300k cash for a house, these creditors have priority over me. If one of those creditors has a $40k judgment, the sale of the house, even at auction at fire sale prices, will easily cover their costs, fees, and they will get full recovery. Therefore, they WILL bring suit.
In (most? all?) U.S. jurisdictions, we do it differently. If the previous owner didn’t pay the property taxes, that is a charge against the property itself. The current owner may have a claim against the previous owner, but the county can compel the current owner to ante up (or force the sale of the property to collect).
Similarly, municipal charges (such as unpaid sewer bills) can in most places be enforced against whoever currently owns the property, even if they are not the ones who ran up the bills. Depending on state laws, the current owner may also be responsible for any unpaid tradesmen’s bills (roofing, plumbing, etc.) , even if the contractor had not filed a mechanic’s lien as of the sale date.
You can also run into various government requirements that automobiles just do not have. After our parents died, my siblings and I sold their house. Using a real estate agent we discovered that five years after my parents had the house built (it had a porch with a bunch of 2 by 4 supporting it), the town required that all houses sold in the future had to have these 2 by 4’s fifteen feet in the ground, not just a few inches like my parents had (with no problems for 40 years). So we were required to get 3 different estimates and deduct the price from our offering, with the new buyers “fixing” the porch. We have no idea if they did but they did make a number of gauche changes inside and outside the house, judging by the pictures they had on zillow 7 years later when they sold it.
A house can be sold as easily as a car if it’s a cash transaction and the house is in very good shape with no legal or deed issues or other gotchas, and is priced to market, and the seller is completely honest about the house and overall property condition, and the buyer is representing their financial capability honestly and both know how to read contracts and the respective duties they have.
If all those things are happening then assistance is not needed. If not then well… good luck working it out.
In US terms, a lien is a security interest in property to secure a debt. So it attaches to the property and can survive sale to another party, meaning that the lienee can attack the property for the debt of the previous owner.
You have the shittiest conveyancing traditions on the planet. When I hear my UK lawyer friends describing the process I end up just shaking my head in disbelief. There isn’t too much difference between Australian and UK legal background, but your tradition is seriously effed up. The process takes about three times longer than Australia, and is racked with uncertainty and expense.
I think the other thing is that at a practical level possession is 9/10ths of the story when it comes to personal property but only perhaps 4/10ths of the story when it comes to real property.
If a seller physically possesses personal property and is physically capable of giving it to the buyer, the chances are very good that the buyer will get what they paid for. Of course the seller of personal property with possession might not be able to legitimately pass; the property may be stolen for example. But that is relatively rare.
Contrastingly, a seller of real property might commonly own it despite not having possession, and could easily have possession but not own it. There can be invisible interests and faults which inspection won’t reveal, like easements, incorrect boundaries, municipal regulations affecting development rights, government plans to resume the land, and on and on and on.
I used a flat fee broker to list some real estate on the MLS and gave a 1% discount for people who didn’t have a buyers broker and ended up paying a 2.5% buyers side broker fee (the broker handled all the paperwork and my lawyer/title company reviewed it). Saved enough money that would do it again.
This sort of touches on a large part of the reason: for various historical reasons, land has always been treated differently under the law than other personal property (at least in the Anglo-American legal tradition).
In England land was not bought until fairly recently; it was granted by the Crown (technically, that is still true, though it is essentially a meaningless distinction today). That ties into the second reason, which is that land is finite. And the third, which is that ownership of land comes (or came) with various rights that do not accrue to owners of movable property (such as the right to vote, the right to access public highways across neighboring land, water rights, the right of survivorship, which is a complicated way of saying a widow(er) automatically inherits his/her deceased spouse’s interest in land under certain circumstances, and so on).
In the US, we have further complicated matters by adopting various laws coming under the heading of “homestead legislation,” which makes it more difficult to encumber real property with liens or mortgages, or to transfer title.