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)

#221

Post by brightball » Thu, Jan 17, 2019, 2:22 AM UTC

sokoloff wrote: post #49

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…

> 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. Other than title insurance (which is separate from and in addition to the 5-7% commission), what's the insured risk that could possibly be worth that percentage?

Hidden damage to the house that wasn’t found in an inspection and not disclosed by the seller. Low level water or termite damage that can’t be seen because a layer of wall was built in front of it.

Just as an example.

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

#222

Post by raquo » Thu, Jan 17, 2019, 2:27 AM UTC

rossdavidh wrote: post #176

As a back-of-the-envelope approximation, if the commission is 6%, and there's at least a 6% chance that having a real estate agent keeps me from doing something stupid on the largest financial transaction I will do in my life, it's worth it. Probably, they do nothing for me I couldn't have done myself, but there is that chance that I would have (for example) bought a house in an area where it could flood, and then no…

It can be both "worth it" and "horribly overpriced" at the same time. That's just how cartels and monopolies work. They charge you vastly more than their cost, and use the profit to legalize measures that inflate the "market" price to their desired level.

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

#223

Post by vonmoltke » Thu, Jan 17, 2019, 2:27 AM UTC

iakh wrote: post #218

ams6110 wrote: post #90

Earlier quoted context omitted.

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

It isn't? What states don't put that information in the property tax records?

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

#224

Post by freedomben » Thu, Jan 17, 2019, 2:33 AM UTC

yroc92 wrote: post #212

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.

I hope you're right, but I bought my current house with Homie and it was a nightmare. Their website is a pile of crap that is so riddled with bugs. I was a buyer but got several emails regarding the "sale" of my house (I wasn't selling a house). Their website was so broken that I couldn't even fill the forms out, and ended up making phone calls.

Then they face a basic blackout from the entrenched real estate mafia. No selling agents want to work with buyers from Homie because the buyers agents are supposed to show the house. But when you have no agent, it falls on the seller, and they flat out told me no several times unless I agreed to buy it through them. I can sympathize with this, but it sucks as the consumer. This is a problem they will need to overcome.

I love the idea of Homie, but if you're going to push the software/automation angle, you better have software that works. You also gotta figure out how to twist the arm of that cartel. I believe in their mission enough that I actually looked into applying there so I could fix those bugs, but I get the impression that they don't hire in-house engineers and possibly use contractors. I'm a senior engineer who worked as a real estate agent for a couple years, so I think I would have been pretty valuable hire for them. I'm also super passionate about disrupting that industry because I feel they've taken advantage of me in the past much. But, alas, what can you do.

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

#225

Post by henryl » Thu, Jan 17, 2019, 2:38 AM UTC

I'm the founder of a real estate tech startup that caters to realtors.

This article was written before Opendoor and before a record breaking $10B was pumped into proptech in 2018.

The consensus now is that this industry is undergoing rapid change. At the bottom end of the market (maybe 10%), iBuyers like Opendoor will likely completely disrupt the traditional brokerage model. Next, you will see discount brokerages (Redfin, Purplebricks, et al) take more and more of the market. Full commission brokerages will still be the mainstream for the foreseeable future, but commissions will come down modestly, even for them.

As purchasing or selling a home is one of the most expensive, most emotional, and most intimidating transactions you will ever do, seeking the help of a real estate agent is generally a good idea. Increasing competition will create more options and more value for consumers than we've ever seen before and that's a good thing.

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

#226

Post by pointillistic » Thu, Jan 17, 2019, 2:38 AM UTC

clairity wrote: post #77

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…

> "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…

Zillow CEO argument falls on it's face. If this was such an important transaction, buyers would chose top dollar firms across the board, contractors, architects, masons, etc. Yet the fact all these survive the most competitive, bottom dollar market. Only realtors who carry no liability compared to the above, they still enjoy top dollar. This is a rigged market signal.

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

#227

Post by robnagler » Thu, Jan 17, 2019, 2:47 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…

This Freakonomics-style argument doesn't work. The only price that matters is the market clearing price. Appraisers don't know that more than anybody else. The only thing an independent appraiser would do is use (well-known) comps to anchor the price, which is not something a seller wants. Rather, a seller wants competition among buyers.

I used to think that real estate agents were a waste of time until I lived through several difficult transactions. Each real estate transaction involves negotiations for loans, inspection objections, and various legal details. For example, a good real estate agent will make sure the title commitment documents are in hand early enough that you have time to review them, because they often have a lot of mistakes. This can kill a closing and/or require post-transaction work to correct.

I bought a house in the middle of a flood (Boulder 2013). The inspection objection had already been negotiated before the flood occurred. Getting the deal done was a huge task, because the seller was lying about the house being affected by the flood. I still wanted the house, but I needed proper compensation for the remediation. My real estate agent did an amazing job of bringing the deal together by tossing in some money and getting the other broker and seller to contribute a bit.

I'm now living with the above real estate agent, and she's on the phone right now at 7:45p working on a deal. I have watched her pull together deals, and the important thing is that all her clients are happy. I have met many of them, and they are very grateful for her work. I know there are many other agents out there like her (maybe not quite as good :-).

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

#228

Post by bleu-ble-bleu22 » Thu, Jan 17, 2019, 2:52 AM UTC

Homie.com here in Utah seems to be doing well.

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

#229

Post by dd36 » Thu, Jan 17, 2019, 3:00 AM UTC

lotsofpulp wrote: post #183

StillBored wrote: post #113

Earlier quoted context omitted.

Part of the problem is that most realtors want it that way. I live in Austin, and the push for a few years now has been to have a "silent market" where a buyer picks a "full service" realtor (AKA full commission), and gets a week or so jump on properties being listed in the MLS. This gives them a better chance to get the property before the MLS hordes descend and start bidding it up. The part I've never understood is…

One of the key functions of a broker is to provide plausible deniability, such as screening potential buyers who you think might waste your time or to avoid accusations of discrimination.

Brokers have to present all offers.

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

#230

Post by ajr0 » Thu, Jan 17, 2019, 3:00 AM UTC

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…

I recently sold a home through redfin and was able to negotiate down to 3% total (2 for buyer 1 for seller)

if you have the time have you attempted hosting/selling yourself? I know it sounds ridiculous at mentioning but I purchased my current home without any real estate agents, we did work through lawyers and there were fees there... but likely minimal (I paid under $1500) and I actually enjoyed working directly with lawyers rather than having real estate agents inbetween, this would be my prefered method if I were to sell/purchase again.