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Why is the commission rate so much higher when selling a house (the commission on a...

Why is the commission rate so much higher when selling a house (the commission on a $300,000 house is approx. $18,000 while the commission on a sale of 3,000 shares of a $100 also a $300,000 investment is approx. $100?

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Answer #1

As we know that a house is an asset which takes a lot of investment and a number of considerations are given before making the decision of buying the house. The liquidity of house is quite low that is if a person wants to sell the house, it will take a relatively longer time to sell. On the other hand, the liquidity of shares is quite high. A person can simply sell these shares any time in the stock exchange.

Thus in order to sale the house, a lot of efforts and time will be required while for selling the shares, one has to simply contact the broking site or person and it can be done almost instantly. Thus due to the level of efforts, time required to sale the house and the involvement of huge number of factors for taking buying decision of a house, the commission of the agent is quite high in case of a house against the commission for selling the share.

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