Feb. 19, 2018
Real Estate Differences Between Denmark and the US, specifically Hawaii.
To be on the sideline in Hawaii sure is different from how it is in Denmark. I haven't actually been with a Realtor in Denmark, but during my 3 semesters on the academy, we have had a lot of lectures and speeches from Realtors, and other people in the business. Even the legislations are very different on major key points. This might be because it has been decided to be done this way, or if realtors in Denmark are just too used to the ways its been done since the beginning. Let me take you through some of the major differences.
Sellers Agent & Buyers Agent
In the US, the seller obviously has an agent, but so does the buyer. If both parties can agree in terms of price etc. the house is sold. After this, the seller's agent, and the buyer's agent shares the commission. Even the same Realtor can represent the buyer and the seller if they both agree to those terms, and the Realtor can keep the commission to himself, after the cut his firm may or may not take.
In Denmark, this is very different. In Denmark, the commission is only split within the same company the Realtor is from. So if I get a client who wants to sell their house, I am guaranteed to get some kind of commission, as long as we sell the house. The percentage of this can differ though.
Buyers agency is very rarely used, and if it is, the Realtor is not getting anything out of it, other than a potential client if they choose to sell in the future.
How Realtors Get Paid
Now, most Realtors, either its Denmark or USA, are mostly only on commission, instead of a standard monthly salary. That means if you sell nothing for a whole month, you simply do not get paid. If you sell a lot, you can potentially get paid a lot. I'm sure there are cases where people are getting the same rate every month, but then a lower commission rate if any at all. They'd still have to show results, in order to keep their jobs.
In Denmark, the standard template is 70% to the company and 30% to the Realtor. If it is not the same Realtor who listed the property, the commission is split between the listing agent and the selling agent. A few people want to have a fixed salary each month, and will then get a much lower commission.
In the US, there is no one or two answer for this, and I do not think there is a "standard" template to follow. It depends on the firm and the negotiated contract between the realtor and the firm he is employed by. This could vary from 50% and all the way to almost 100% to the realtor, and the remaining to the company.
This potentially gives the company very small buffer in case they have a case where a client needs to be compensated for "damage" done by the realtor, and they also have other expenses that need to be paid for. Ex rent for the office/offices.
Now, I don't know how the rates for giving false information or any damage in that sense, are in the US, but in Denmark, I have a few examples of the Realtor's liability.
If the Realtor with a disadvantage for the consumer has miscalculated the proceeds, he needs to compensate every single dollar, between the right and wrong calculation.
A miscalculation in the owner's monthly expenses to sit in the concerned property is a compensation between the wrong and the right calculation, times 10. So if there's a 2000 dollar difference, the realtor has to pay 20,000 dollars to the buyer in compensation. Of course, these examples are rarely seen, as Realtors should not make mistakes in the first place, and everything is looked through multiple times, but just shows that the company needs some kind of buffer, just in case there is an incident, as the money is not paid from the realtors own pocket, but by the firm.
The price range is wider in Hawaii. Of course, Hawaii being a tropical island, their conditions for expensive houses with an amazing view are much better than they are in Denmark, and being located not very far away from Asia and USA, it is even a second home for some owners. On the other hand though, it is much cheaper to live in Denmark, and I feel like you get more house for your money, just without everything that comes with it, when buying a house in Hawaii.
Comparing the two markets is hard. There are certain things that I like more about Denmark, but also certain things I'd like to have in Denmark. The Danish market seems to be more protected for the buyer and puts more of the risk on the Realtor. Not doing it more attractive for the market to be using a buyers agent, seems weird though, in a market that focuses so much on protecting the buyer. Having a lower income than the actual Realtor in some firms seems like there is little to no risk for the company in the US though. Are the process easier to complete in USA compared to Denmark, or is the Danish market just making it harder to be a Realtor in Denmark? I can probably give you that answer in a few years.
By Alexander Vinderslev