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Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

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Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#191

Post by sgc »

StillBored wrote: post #158
clairity wrote: post #139

Earlier quoted context omitted.

> "Part of the problem is that most realtors want it that way." absolutely. the cartel doesn't help the top 2% of agents, because they're good enough to earn the 6% (or higher) anyway, but the monopoly works because the overwhelming majority of interested stakeholders benefit. (that's not to imply that most agents are lazy though. a stat i dimly recall is that only about 10% of agents make enough to be full time.)

Well its a pyramid scheme like many of the state licensed businesses. The low level agents have to work for a broker who soaks up the majority of the commission. Only after being an indentured slave for a few years do they get the "privilege" of themselves becoming a broker. The problem is that once that happens no one will hire you, so your on your own for finding clients/advertising/etc. That takes capital most low…

Agents make at least 60% from day one. It is easy to find a brokerage who will offer 70-80% day one. So in that respect I don't think it is a pyramid scheme at all. Also, there are plenty of brokers who work in a larger organization without being the broker of record. But as you noted, advertising is not free. It is extremely expensive to market as a real estate agent, and that marketing cost is why most agents fail. It is just too expensive to start. In my area, I would allot at least 30,000 a year to get going as an agent for the first year, and more each year after that.

Source: On the fence about dropping my license right now.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#192

Post by burfog »

iwantedjusttom wrote: post #121

As a realtor for the past 6 years I can say a couple of quick things as to why I don't see the real estate industry going anywhere, even though I think that real estate brokers are extremely overpaid. - selling your house, at the end of the day, is quite the undertaking. A lot goes into it, it can get emotional, messy, and sometimes quite complicated. Having someone that does it on a daily basis can be nice and reall…

The trouble is, your incentives are all wrong.

If the house would not sell at $900000, would sell in 15 months at $800000, or would sell in 3 months at $700000, or would sell in 2 weeks at $600000, what do you do?

You try to sell it for $600000. You tell the owner that that is what the home is worth, even if the owner is not in a hurry. Getting your share of the 6% (likely 1.5%) of $600000 in 2 weeks is better than any of the other alternatives FOR YOU.

A better way to align the incentives would be to give the seller's agent a percentage of the amount by which the sale price exceeds the price determined by an independent appraiser. The buyer's agent gets the opposite, getting paid only if the price is lower than the appraisal, and you don't get to be both agents at the same time.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#193

Post by gnopgnip »

njarboe wrote: post #160
iwantedjusttom wrote: post #121

As a realtor for the past 6 years I can say a couple of quick things as to why I don't see the real estate industry going anywhere, even though I think that real estate brokers are extremely overpaid. - selling your house, at the end of the day, is quite the undertaking. A lot goes into it, it can get emotional, messy, and sometimes quite complicated. Having someone that does it on a daily basis can be nice and reall…

Seems to me that having the commission as a % of the sale price is not the right way to go. You lock in with an agent for 3 months and agree to pay them a set fee when they/you sell it. You should pay as a buyer for an agent to represent you. Currently, if I'm not mistaken, all most all agents get paid by the seller and, if you are a buyer, the agent has no legal responsibility to watch out for your interests. The cu…

There are ethical and practical reasons to avoid a system where buyers have a financial incentive to go without representation. In practice buyers without representation are unlikely to close, and sellers are unlikely to accept unrepresented sellers because the sellers agent would charge more money because. Neither the seller or the buy would save a substantial amount of money compared to the old system.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#194

Post by [deleted] »

trevor-e wrote: post #129
Spooky23 wrote: post #50

Earlier quoted context omitted.

Most of the appraisers, inspectors and attorneys are filling a compliance role. The reality is the real estate person usually drives the process. Good ones know which appraisers to call and which inspectors to avoid. There's no real professional ethics involved, so most of them have arrangements with preferred folks whom they get referral fees from. (It's one of the reasons why home inspectors are almost completely u…

>(It's one of the reasons why home inspectors are almost completely useless.) I think this is more accurately "home inspectors recommended by the realtor". Home inspections are extremely useful, so long as they are working in your best interest.

[deleted]

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#195

Post by general8bitso »

iwantedjusttom wrote: post #103
general8bitso wrote: post #17

Earlier quoted context omitted.

Well, until they coordinate to change laws at the state and federal laws, facilitating real estate transactions as a non-realtor will expose such individuals to legal action. Kinda like Tesla trying to sell in states that require a franchise dealership. Also, the term commission is ambiguous in the context of the headline. Do we mean a percentage of sales or an officiating body that controls an MLS or something at th…

this is not completely true because a seller can negotiate on behalf of themselves for their own home and a buyer can negotiate for themselves as well. Which I suppose is obvious. You can also have an attorney negotiate for you, at least in my state, and attorneys only charge a flat fee for handling a transaction in my area. A small percentage of what it costs to use an actual realtor.

That is still a two-party transaction. It is when a third party is involved, that gets you in trouble.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#196

Post by dpcan »

hcurtiss wrote: post #112

Real estate agents have three things they offer that until recently you could not get on your own. The first is listing on the MLS. The second is the MLS lockbox so other realtors can easily show the listed house. The third is access to the negotiated forms. All of these you can now get from a startup called Savvy Lane for a flat fee. We listed our house in Portland, paid Savvy Lane $495, and it sold 11 days later. I…

When we sold our house, we found an agent who was also his own broker. We paid him $500 and he did exactly this. Gave us the forms, put the house in the MLS showing a buyer-side 3% commission, and then made a note that we were representing ourselves and we listed our phone number to call if you wanted to show it. I think we signed something saying he wasn't representing us too.

We had our house listed with a REALTOR for about 2 years prior to that (keep in mind this is during the market crash). But within about 2 months on our own, the house sold.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#197

Post by sgc »

lxe wrote: post #169
iwantedjusttom wrote: post #121

As a realtor for the past 6 years I can say a couple of quick things as to why I don't see the real estate industry going anywhere, even though I think that real estate brokers are extremely overpaid. - selling your house, at the end of the day, is quite the undertaking. A lot goes into it, it can get emotional, messy, and sometimes quite complicated. Having someone that does it on a daily basis can be nice and reall…

Expecting 3%/$30,000 k for being "someone that smoothes things out" on a sale of, let's say a $1M home in CA, is theft.

Given the amount of weird and unrealistic expectations of both buyers and sellers nonstop in a transaction " the one smoothing things out" can be translated to "the essential element to actually closing the deal". There is a reason why most FSBOs wind up with an agent. They fuck it up.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#198

Post by HumanDrivenDev »

lowercased wrote: post #187
garagemc2 wrote: post #167

Earlier quoted context omitted.

Wow, in the UK it is about 1 - 2%.

Came here to say the same thing. My wife is from UK, and she's ... well, pissed at the expenses here (besides healthcare). We are in the process of selling some land, and the default for land is 8% . WTF. You don't "show" it. You don't stage it, or model it, or deal with keys or codes or anything else. But there were no realtors we spoke to who wavered from 8%. I suppose we could possibly have done DIY, maybe... ? Bu…

If you think 8% is insane, then sell it yourself.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#199

Post by sgc »

hcurtiss wrote: post #112

Real estate agents have three things they offer that until recently you could not get on your own. The first is listing on the MLS. The second is the MLS lockbox so other realtors can easily show the listed house. The third is access to the negotiated forms. All of these you can now get from a startup called Savvy Lane for a flat fee. We listed our house in Portland, paid Savvy Lane $495, and it sold 11 days later. I…

The catch is you don't know whether you under priced your house for that or well more than that unless you paid an appraiser or broker to help you set the price. Most FSBOs sell for under market.

Re: Zillow CEO: startups trying to disrupt real estate commissions will fail (2012)

#200

Post by sidlls »

anonymous5133 wrote: post #173
ryaniscool wrote: post #33

Over the last two years I've bought a couple of properties and I see the value of realtors as professional negotiators and experts on real estate laws and contracts. 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…

What about services like redfin? They advertise their fee at only 2%.

How does that work in states where commissions are technically required to be negotiated per contract?
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