We always find it interesting to compare and contrast real estate markets in different parts of the world. While the Australian property market generally functions well, there are still things which we can learn from others – both in terms of our strengths and weaknesses. In this blog, we take a little ‘tour’ of real estate in USA, Europe and Asia.
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USA
- The majority of real estate transactions in the USA involves BOTH a seller and buyer’s agent.
- Vendors in the USA can often pay as much as 6% in fees to the real estate agents. This is typically split 50/50 between the seller and buyer’s agent.
- Unlike Australia, in the USA, real estate agents can represent BOTH the seller and buyer. Conflict of interest needs to be carefully managed in this case!
- The USA uses a “Multiple Listing Service” (MLS). The primary purpose of the MLS is to provide a facility to publish the commission rate that is offered by the listing agent to other cooperating/buyer’s agents. This offer of compensation is considered a contractual obligation, however it can be negotiated privately between the listing agent and the agent representing the buyer.
- Most MLS systems restrict membership and access to real estate agents. A person selling his/her own property – acting as a For Sale By Owner (or FSBO) – cannot generally put a listing for the home directly into the MLS.
- Unlike in NSW where Open Inspections are generally held for just 30-45 minutes on a Wednesday or Saturday, in the USA, Open Inspections are often up to 4 hours long each time!
- In addition to the scheduled Open Inspections, it is also common for the both the listing and buyer’s agent to show properties to prospective buyers at any time with short notice. This is because most agents in the USA use a lock box. Basically, it is a big padlock which is left on the premises which contains the key to the property. This clever device allows agents to se
curely access the key either by swiping a card, entering a pin code or pointing an infra-red device. It is a secure lock box that also keeps a record of who accessed the key, at what time and for how long. When an agent is finished showing the property, they simply leave the key back in the lock box! This is a terrific tool for convenience – however, it does mean that vendors have to keep their property in ‘showable’ condition at all times and cannot just tidy up once a week.
EUROPE
- In France, Open Inspections is not a common concept. Most inspections have to be scheduled and by appointment only.
- In France, the “frais de notaire” (notary fee) is roughly 7% of the purchase price. Add to this the 6% commission for the real estate agent and it makes buying properties a costly exercise.
- In Sweden, properties are usually only on the market for a couple of weeks. It is Open for Inspection usually only twice (Sunday AM and Monday PM for example) before offers are accepted. Usually the bidding happens via SMS and to make it transparent, the bidding is shown live on a website so each bidder can follow the progress and see what other competitors have bid.
- In Sweden, it is not uncommon to have as many as 20 photos on the web for each property listing. They take pictures of everything from the hallway to the toilet!
ASIA
- Did you know that there is no capital gains tax in Singapore?
- In Singapore, all real estate agents can act either for the seller or buyer.
- The commission to real estate agents is approximtely 1-1.5%.
- In Singapore, only Citizens and Permanent Residents are eligible to buy apartments/flats from the Housing Development Board of the Government. Foreigners can only buy privately built apartments/flats.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.
