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Granted this service could be performed by a real estate website and they simply employ a cheaper access work force, but again you run into pro-guild red tape at the state and local levels.
6 years old thread. Low end commodity RE commissions will be chipped at, but higher end you want an expert. Buying a million dollar house without an expert is fool money gone.
That being said, the National Association of Realtors (NAR) and their local branches are the definition of a cartel. My parents owned a real estate agency when I was growing up in the 80s and 90s. Back then, the cost of selling and marketing real estate was much higher. Most real estate advertising was done in print which the broker paid for out of pocket. Cameras used film back then which meant multiple trips to the property to take nice pictures. Someone had to always be manning the telephone because there were no mobile phones. The listing broker would have to arrange a showing with interested buyers and their broker. MLS was a huge printed catalog you would flip through to look for houses your clients may be interested in.
Nowadays, the cost of listing a house is nominal for a brokerage. Advertising is free because all of the real estate sites that consumers visit (realtor.com, zillow) pull directly from MLS. All cameras are digital so you can take that perfect picture the first time. There are now phone apps that automate broker access to houses to show their clients.
There are all of these productivity improvements for real estate agents on both sides of the negotiating table but the commission structure is almost identical to what it was 30 years ago. I believe the standard commission structure has gone from 7% to 6% in thirty years.
There are many segments in real estate that are ripe for disruption, Zillow is not the end all be all of real estate. Take cap rate calculation for instance, this is something very important to real estate investors, but Zillow hardly has a product that addresses it and tries to predict it accurately. Their strategy seems to be let's go after mom-and-pop buyers who just learnt how the internet works. If Zillow could bring in a fraction of tech you see in a product like Facebook or Github for instance to the broken industry of real estate instead of just showing pictures of properties with a few other metrics next them then the industry could be disrupted.
I've used buyers agents (1 traditional, 1 Redfin) when I've bought homes since they are being paid from the Seller's Fees and in most states I believe they are legally bound to act in your best interest. I've had a new construction seller try to convince me to not get an agent and would give a discount instead but felt that the risk wasn't worth it especially since most buyers agents I've engaged with have been open…
They are not on the hook for anything but a check from the title agency.
With their data advantage, they could kill or hobble OpenDoor the way AMC killed MoviePass.
I don't feel excited about suggesting this, as I love the OpenDoor model and hope they win.
"Agents are entrenched, and they will put up a damn good fight to protect their margins" is how I read this. Also this is a PR move for Zillow to tell agents that they're on their side.
> Also this is a PR move for Zillow to tell agents that they're on their side. And more likely that they have something in the pipeline intended to do that exact type of disruption.
I see at least three counterpoints: 1. Real estate agents aren't often "experts" at real estate valuation, inspection or execution; They have dependencies on appraisers, inspectors, and lawyers. The work an average agent does is more or less cookie-cutter from my anecdotal experience, though I think there is a proportion of rockstar agents that do much more. 2. Not every buyer wants homebuying to be a client-services…
"Good" real estate agents from the buyers perspective would be slowing down sales, reducing the overall price they make a percentage on anyway (which is why fixed rate for a "class" of real estate would work better) as a disincentive.
Why would a real estate agent dissuade someone from buying something? They can compartmentalize/offload the moral responsibility to the inspector (which are pretty hit or miss too).
Earlier quoted context omitted.
It’s a essentially a giant network effect. Practically, the #1 reason to use a realtor is that if there is an issue with the home that should have been known ahead of time, there is a chain of insured entities that provides legal recourse. The shop and decide part is secondary to their value, but that is how they are so entrenched. The local MLS in any given area has the ability to cut off access to anyone. Some are…
Not having a realtor as a buyer really helps, because you can add that 3% to the purchase price of the house saving you 3% which can be a huge amount in expensive markets like the bay area.
Particularly in expensive markets in the Bay Area, the real estate agent is there to tell you when you're being stupid - unrealistic with your demands (under or _over_ paying) and keeping you from stomping away in a huff during the stressful negotiations.
This is buying and selling the most expensive asset most people will ever own. People hire in help to buy and sell their business, this is equivalent.
6 years old thread. Low end commodity RE commissions will be chipped at, but higher end you want an expert. Buying a million dollar house without an expert is fool money gone.
Weirdly I kinda think it should go the other way. Does it require twice as much work (or expertise) to sell a million dollar house than a 500k house? If not, why do agents get paid twice as much?