Zillow CEO: startups trying to disrupt real estate commissions will fail (2012) • Hacker News Board

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

#211

Post by gnopgnip » Thu, Jan 17, 2019, 1:34 AM UTC

harryh wrote: post #27

calbear81 wrote: post #13

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…

since they are being paid from the Seller's Fees This is a myth perpetuated by buyer's agents. Just because you aren't writing a check doesn't mean it doesn't come out of your pocket. It's like sales tax. It's collected and paid to the government by stores, but it makes everything you buy more expensive.

The seller has a contract to pay 5-6% when the home is sold. If the buyer is unrepresented, the seller is still paying 5%. The agent has to do much more work to handle a sale with an unrepresented buyer, because they are representing them. If the seller could not pay this 2-3% because the buyer was unrepresented they would keep the money, not give a discount. Presumably they could find another unrepresented buyer too so there is no reason for the seller to give you a discount over other buyers.

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

#212

Post by yroc92 » Thu, Jan 17, 2019, 1:35 AM UTC

Homie is a VC backed startup replacing real estate agents in Utah and Arizona and they seem to be doing very well. Massive adoption over the last year. I feel pretty confident that agents will eventually be a thing of the past.

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

#213

Post by asdf333 » Thu, Jan 17, 2019, 1:44 AM UTC

picodguyo wrote: post #97

I've bought and sold on separate occasions through Redfin and saw no difference between their service for 1% and my previous transactions with a traditional realtor for 5%. They both took me around to see properties, provided neighborhood and property insights, acted as my negotiating proxy, and guided the closing process. I don't understand how Redfin can charge so little, but as it stands today I wouldn't dream of…

redfin worked great for us as well. we were very happy with them

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

#214

Post by cwyers » Thu, Jan 17, 2019, 1:49 AM UTC

burfog wrote: post #192

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 a…

You're not wrong about the incentives, but I think you miss a few things in practice:

1) If everyone else in the market is priced to move, and you aren't doing it, there is always going to be new housing stock that undercuts you. 2) A seller has to maintain insurance and the property, and typically maintains utilities (a house without water/electricity doesn't show as well). They sometimes have to pay a mortgage. And often people who are selling a house are also buying a house, and intend to use the proceeds from the sale to finance the down payment on their next house. Most people cannot treat the extra money from waiting on a better offer as 100% profit. 3) The primary purpose of an appraisal is to ensure that the underlying asset is sufficient collateral for the loan. If you manage to sell a house for significantly over the appraise value... guess what, the loan falls through.

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

#215

Post by smsm42 » Thu, Jan 17, 2019, 2:09 AM UTC

FireBeyond wrote: post #134

bspn wrote: post #43

Earlier quoted context omitted.

> Don’t you pay TurboTax? Yes, but the cost is significantly less. When I first moved to the US I used a tax accountant because I didn't know any better and it cost me ~$500 a year (this was in New York). I now file using either TurboTax or TaxAct and my costs are typically in the $60-70 range depending on which tier of service I select. Is it more work? Arguably yes, but I enjoy the freedom of being able to do it al…

Or you can get the worst of both worlds (looking at you H+R Block), where you pay accountant prices for someone to walk through what is essentially a customized version of something like Turbo Tax. When I moved to the US I used them, once. I had just arrived, was working from home, had bought a hybrid vehicle, my spouse was a student. I/we literally sat there with someone entirely clueless as she read questions off a…

Yeah, the shops like H&R looks like people there literally are just typing in numbers into forms on screen with zero added value. I got the same impression when I talked to them, fortunately I discovered it before paying them. OTOH, there are real professionals which gave me excellent advice over the years and saved me a bunch of money. They are usually independent CPAs and not part of any large franchise like H&R. Otherwise I just use TurboTax - no reason to pay anybody for typing I could do myself.

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

#216

Post by cwyers » Thu, Jan 17, 2019, 2:12 AM UTC

cletus wrote: post #42

People love to complain about realtors. Companies like Redfin have been trying to disrupt this market for years. People on HN and other places like to complain that realtors are pointless and that the only reason they exist is they are entrenched. I posit a different theory, which may well be controversial here, and that is that realtors continue to exist--and charge large commissions doing so--because they provide a…

I was home-shopping recently, and every time I looked at a FSBO home and tried to figure out what the price should be, I got the overwhelming impression I had spent more time looking up comps for the home in question than the owner had. I ran into realtor-sold homes that struck me as priced high for the market, but nothing like the FSBOs.

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

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Post by freedomben » Thu, Jan 17, 2019, 2:16 AM UTC

ryaniscool wrote: post #182

jessaustin wrote: post #118

Earlier quoted context omitted.

Those who are persistent can always eventually find someone willing to sell their property for 3%. That isn't some online discount scam, that's a local realtor with local billboard ads, regular newspaper inserts, and a respectable web presence who is will to take half to do this job. Maybe you're in a hurry, maybe you like gold-plating, maybe you have to use your sister-in-law as a realtor, but if none of those circu…

Maybe. One problem with listing a house for a 3% commission is the listing agent must put this in MLS. The buyer's agent's commission will be 1.5%. This could possibly put you at a disadvantage among buyers since you are competing with listings that offer a higher commission to a buyer's agent.

This is absolutely a problem. The buyers agent is a gatekeeper. They will not show your property if the commission is that low.

Source: I used to be a real estate agent. I left the industry because of BS economic incentives like that and others that incentivize you to not put your client's best interests ahead. That and the ripoff racket that is most brokerage licensing requirements and the arrangements enforced by law (that is heavily influenced by the NAR).

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

#218

Post by iakh » Thu, Jan 17, 2019, 2:16 AM UTC

ams6110 wrote: post #90

clairity wrote: post #77

Earlier quoted context omitted.

> "That being said, the National Association of Realtors (NAR) and their local branches are the definition of a cartel." NAR was actually investigated by the federal government (FTC i think? ), who concluded much the same, but lobbying buried the report and nothing came of it. MLS's maintain power by strictly controlling access to information. they have the most up-to-date and the most detailed information about prop…

Property transfers, including buyer, seller, and sales price, are public record. It's all published in the newspaper. How can MLS control access to that information? Is it just that nobody else bothers to compile it from the county records?

Purchase price is not public in all states

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

#219

Post by brightball » Thu, Jan 17, 2019, 2:16 AM UTC

daveFNbuck wrote: post #56

brightball wrote: post #12

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…

> sellers aren’t interested in experimenting...they just want their house to sell Presumably sellers also want to maximize the money they get when selling. Why wouldn't they be willing to experiment on increasing that number?

The rate is negotiable.

But usually it’s because people need their house to sell while they are still making payments. If there isn’t any urgency to sell, experimentation is fine.

In extremely high demand markets, you’re clearly better off experimenting too.

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

#220

Post by freedomben » Thu, Jan 17, 2019, 2:21 AM UTC

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.

Yes but such a crap shoot. And you'll easily spend $500 paying for one. Best advice I ever got was to just hire a general contractor to do it for roughly the same price. They find way more stuff and generally know the codes better. I've had inspectors miss huge structural problems that destroyed me later.