Not 100% free as you are taxed on the dollar amount paid by company for closing/realtor fees as income.
IP
My employers “grossed-up” my salary at year end to pay the taxes on my relocation costs. That’s pretty standard in Engineering if you’re working for a Fortune 500 employer (or at least is was way back in the day when I had a need for employment.) {{ LOL }}
Indeed, if you hired an Engineer, and he/she didn’t demand a “gross-up” on the relocation package, you’d probably start to question their analytical abilities.
I job-hopped between five Fortune 500 companies in the 1980’s.
intercst
Maybe. Or maybe not (more later)
The big issue I have is why is that something worth twice as much when the house is in a good location and well maintained and sells for twice the price?
Back to the showing…
The only house I sold was supposed to be ready for an open house lets say on weekend 2. But the realtor called and asked if we could be away on weekend 1 Saturday since there was so much interest already. We went away for the day and the house was shown to several people.
Previously, the realtor told us about 3 or 4 things we should do to sell quicker. One item was that a blue wall needed to be white-ish like other walls, but we planned to do this between weekend 1 and 2, which we did. Buy, paint, carefully paint, cleanup, apply second coat since blue showed through, do touch up , do cleanup on corners, etc.
House was shown next 2 weekends, offers came in, top offer buyers came to talk to us.
“What? what happened to that nice blue wall, we loved it! The house looks so plain now.”
Yes, realtors say they know all this stuff, and they are probably right that plain white is least offensive, blah, blah. But most things they suggest do not pay off – just make the house sell faster which is all they really care about.
Mike
3 Likes
That’s what they should care about how fast the house sells. You say that like it’s a bad thing.
You are proving sellers take it very personally.
I want the best price for my home. Wanting to “sell fast” to get the real estate agent his/her commission as soon as possible may not yield the best price.
Washington Post had a good article today on the “real estate agent pitfalls” to beware of.
free link:
https://wapo.st/4dJ25JZ
intercst
As I recall, my closing costs were covered by the company as part of the relo package. But the inspector was NOT covered. I paid the guy $275 to do the inspection, and he ran through the house checking stuff off on the stack of sheets in his clipboard. He even had this newfangled device that beamed something at a stream of water and measured the temperature (he was very proud of his new device and pointed out how high tech it was to me a few times). So he dutifully checked the hot water temperature in each of the 3 showers, and all the sinks. BUT he neglected to check the COLD WATER, and sure enough the shower that a previous owner added had no cold water, something was wrong with the mixer and the water was full blast hot. That made that shower (an extra shower in the powder room that was apparently unused for a few years) too hot to use. And I couldn’t fix it easily because the mechanism was well ensconced behind tile. The wall on the other side was drywall, so I would be willing to cut it open, but the hot water heater was right there mostly blocking the spot. So that shower didn’t get fixed until we remodeled that bathroom a few years later. As the years went by, I saw that he missed a few other things, or maybe because I am an engineer, I am generally more picky about such things.
And I never bothered to change the locks. The former residents weren’t likely to come in. Much later when we changed all the windows and doors we got new locks all around.
Mine was also grossed up. That’s standard procedure for relo packages.
1 Like
Maybe you want it to sell fast…maybe you want the best price, maybe you are willing to wait another week or two for a bit higher price. They mostly always want the fastest sale because they can spend their time selling another house. Do the math to see why. Their 5 or 6% on the little higher price doesn’t compare to 5 or 6% on another house.
Mike
3 Likes
Since a lot of people are selling a house in order to buy another one that they’ve already found, the motive to move fast can be strong.
DB2
1 Like
You don’t need an agent to sell fast. The point is the seller’s agent isn’t motivated to get you the best price, even if that’s what you want.
4 Likes
The agent is getting a percentage so that is not true.
It is true, and it was proved empirically by economist Steven Levitt. The incentives work like this: The seller’s agent typically gets 3%, which is shared with her firm, so let’s say 2% goes into the agent’s pocket.
If a home sells for $500,000, the agent personally receives $10,000. If the agent sets the price for $530,000, but it takes an extra two weeks to sell, that’s an extra $30,000 for the seller, but only an extra $600 for the agent.
So the agent is better off pricing it to sell quickly and moving onto the next commission. The seller’s and agent’s incentives are misaligned.
8 Likes
That would imply that the buyer’s and agent’s incentives are aligned.
DB2
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Stop believing in Ph.D studies. I mean just stop. If the house sells for $500k you can not reset the clock and say it would sell for $530 three weeks later.
Yes if the study is done in a HOT SELLER’S Market those who hold out will make more.
Let me remind you this is not a hot seller’s market right now. Most markets are not “Peaking” hot seller’s market.
Ph.Ds have to publish. They are commissioned very often to find the results a rich sponsor wants.
Regardless of what economist Steven Levitt found it is not true in most US markets most of the time.
Regardless of what Levitt said were the results you are not providing Levitt’s disclaimers.
So no generally it is false.
It logic yes but we are not talking about a specific context so it is only meaningless.
Not so meaningless if one is in the market to buy a home. If an agent can make more money in a year by transactions at lower prices then buyers benefit by using an agent.
DB2
It’s kind of perverse incentives. When times are good, lots of house selling, they want quick sales, and care less about price overall, because they can do more volume for the year and earn substantially more (just one or two extra closings a year could give them a substantial boost of income). But when times are bad, very few houses selling, they have lots of time on their hands, so they don’t need quick sales and would rather extract higher prices so at least they get 5-6% of a bigger number than of a smaller number, after all, they also have their living expenses to cover for the year. An extra $10k in price is an extra $500 for their groceries, etc.
This conversation is full of bull.
A home for most people is their largest ticket sale. Meaning the market can lack liquidity. People are between homes at times. They might hold two mortgages. People just need it to sell.
You need the specific context for the transaction. Generalizing is worthless.
1 Like