This morning Ed Cone posted about a site hosted by the North Carolina Association of Realtors that is dedicated to defeating a proposed tax on home sellers' equity. Ed got a comment on that post he considered golden enough to justify it's own post. Hopefully Ed won't mind if I share it here:
"It's appalling to think that somebody can require payment of a fixed
percentage of the price just because you are able to sell your home.
Fixed, non-negotiable percentage skim-offs are no doubt a huge drag on
the marketability of real estate. ®ealtors are so right to lead the
struggle against fixed, non-negotiable and onerous percentage charges
to home sellers!"
As I've written about before, I'm not a big fan of the realtor business as it's currently structured (note I didn't say realtors themselves). Want some interesting reading? Check out this recommendation on the DOJ site dated Nov. 2005. Here's the introductory paragraphs:
1.1 million real estate agents in America(1)
average only six home sales
per year.(2)
Each works about forty hours per sale,(3)
which amounts
to 12% of the work year,(4)
or five hours per week. Most of the
balance of hours is devoted to getting new business.(5)
Brokers
receive a median $52,800 income yearly.(6)
The average couple selling the average home will need to work five
weeks each — ten weeks total — to pay the commission of the agent
who will work only one week on that transaction.(7)
Oh, and for the record I'm against the proposed tax. I already pay property tax every year, and I don't see why I should pay a tax if I happen to realize a gain on the sale. Also, if I have a house I buy for $200,000 and during the time I own it I put in $40,000 to improve it and then turn around and sell it for $230,000 because that's all the market will bear and then pay a 1% tax on my "gain" I don't think that's quite fair. I'll have to check on this but I don't think I get a tax break on improvements I make to my property over the years, which means I'd really be getting hosed on the deal.
* *Update** Got an email from my mom who points out that when you sell your house you can deduct the improvements you've made from any gain you have in the house. That's a good point. Also, upon further reading (see this article) it looks like the proposed tax would be up to 1% on the value (i.e. sales price) of the house, regardless of gain or loss. That's a royal hose job if you ask me, because you've been paying property taxes all along so to pay an "exit fee" when you sell your house seems like a nice case of double taxation.
So I agree with the realtors but I have to say that their position is somewhat ironic.
