Realtor Commission and Transfer Tax

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Submitted by itismyopinion on Tue, 05/15/2007 - 8:41am.

I watched with interest the 60 Minutes story Sunday night about the six percent commission that is standard in the real estate industry and is being defended by Realtors and their organizations. (if you missed it, read about it at: www.cbsnews.com/stories/2007/05/11/60minutes/main2790865.shtml

Part of my interest came from my inability to understand why a 1% transfer tax, proposed to help counties pay the cost of growth, will be so devastating to the economy while a 6% commission on real estate transactions is not devastating.

There are proposals in the NC General Assembly to allow counties to impose a 1% transfer tax on the sale of real estate, if voters approve the tax. The NC Realtors object, and are fighting the proposals. Their claim is that the tax is unfair and would impair the ability of people to buy homes. Perhaps their real objection is that additional costs could produce more pressure on their standard 6% commission.

The bills in the General Assembly include a bills by Senator Janet Cowell and Representatives Jennifer Weiss and Deborah Ross (all from Wake County) There are other bills also being considered. The N. C. Association of County Commissioners are supporting the bills and the Realtors are fighting them.

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A Moore County Realtor weighed in on this in a lte

Submitted by momoaizo on Tue, 05/15/2007 - 11:08am.

to the Pilot, titled "Realtor's Fees Cannot Be Regarded as Taxes". Here's the money quote:

Please do not confuse this issue by attempting to compare a tax with a fee for a service. It's the old apples and oranges thing.

I am friends with quite a few really good Realtors, (one that posts here btw), and feel that their services are invaluable in many instances. Heck, I use to work for a realtor in Pinehurst who always put their customer first, as it should be. However, I still don't understand how a 1% transfer tax, money that is very much needed by the counties, will hurt their business.

Although e-realty will make a dent in their sales, a good realtor very often is priceless when buying a home or property.

No matter that patriotism is too often the refuge of scoundrels. Dissent, rebellion, and all-around hell-raising remain the true duty of patriots.

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The interesting thing about

Submitted by SPLib on Tue, 05/15/2007 - 11:56am.

The interesting thing about her letter is how she avoids the main point to the letter she is responding to. The Association of Realtors and other related groups are lobbying against a potential transfer tax. Part of their "argument" against it is that it will raise home costs and hurt the poor.

A transfer tax, if even approved by the voters would add 1% to the COST of a home. Realtors add 6% to the COST of a home. Fees, taxes, commissions, etc. add to the COST of the home. She shouldn't try to make the argument about the definitions of the different items since they all add to the cost of home ownership.

From their website

Entry-level and all other homes become less affordable. A transfer tax has a negative impact on housing costs and reduces housing opportunities across the income spectrum. Affordability is already an acute problem in North Carolina and a new Home Tax would only make that problem worse.

The Home Tax is regressive. People with lower incomes spend a larger percentage of their income on housing than people who have higher incomes. Therefore transfer taxes impose a higher tax burden on lower income households.

Commission is a fee for service--so is a tax

Submitted by itismyopinion on Tue, 05/15/2007 - 12:50pm.

Yes, it is true that a real estate commission is a fee for service. I recently bought my home in Cary with the help of a Realtor. She received a commission (I assume half to her, half to the listing Realtor, and I assume that part of her commission also went to the others in the office who provided services).

I will say that I was pleased with the service I received. The Realtor did earn her commission.

However, the transfer tax also is a fee for services. The building of new schools and new roads, made necessary by the growth of the area, are services that are just as important as the services provided by the real estate industry.

According to the letter writer (Dierdre McCormick) "It is the position of the North Carolina Association of Realtors that we already pay enough in taxes."

Is it also their position that we already have enough schools and roads? Perhaps it is their opinion that we already have enough houses.

Excellent.

Submitted by James Protzman on Tue, 05/15/2007 - 1:59pm.

Is it also their position that we already have enough schools and roads? Perhaps it is their opinion that we already have enough houses.

Perfectly put.

Two-sided argument

Submitted by teepack on Sat, 08/04/2007 - 12:25pm.

First the realtors claim the transfer tax robs the seller of his home equity, then they claim it drives up the cost of housing. If it drives up the cost of housing, then it adds to the seller's equity. You can't have it both ways.

The transfer tax does not drive up home values. However, the infrastructure built by the proceeds from the transfer tax WILL improve a home's value. People want to live in communities with good schools and good roads, which is what the counties and cities will use the money for. Builders can't build in communities that don't have adequate water and sewer supply; local governments will deny their building permits. Expanding water and sewer capacity is also what the local governments will use the money for.

These actions will make a community a desirable place to live, which will attract business and economic development, which further increases the quality of life. It is amazing to me that realtors oppose these taxes. They should support them because they, more than any other interest group, will benefit from the improvements.