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)

#301

Post by novaleaf » Thu, Jan 17, 2019, 4:54 PM UTC

i used Redfin to buy my latest house. They saved me 1.5%. That said, I had to do all the leg work myself: visiting every potential house meeting my data criteria, compiling all the potentials and eventually narrowing it down to bid candidates.

Assuming that physical inspection leg work+analysis is part of a full 3% commission realtor's responsibilities, I can see that full 3% being valuable to certain time constrained buyers.

However given how rare a house purchase is, I would bet that a large number of full commission buyers arn't aware nor getting the full attention of their realtor.

On the sell side, I really don't see the benefit of a full commission realtor. I did a FSBO before, which is on the opposite extreme. Again I think a discount listing agent like Redfin makes a lot of sense.

I actually wonder why Redfin isn't as popular. I assume due to the aggressive social marketing realators do, and the hand-holding they do during the the high stakes process.

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

#302

Post by njarboe » Thu, Jan 17, 2019, 5:18 PM UTC

skh wrote: post #174

njarboe wrote: post #160

Earlier quoted context omitted.

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…

The buyer always pays the cost of both the seller's and buyer's agent in the same way that people who rent apartments do pay property tax. That cost happens to be hidden in the sense that there is no specific charge that the buyer sees but the buyer is the one who ultimately pays it.

Well, in that case I would say "Not really then". Landlords generally don't run on a cost plus basis. They don't add up their costs add 10% and make that the rent come hell or high water. They charge as much as the can to achieve the desired rate of turn-over. If they are a person instead of a company, they may give tenets who have proven not to be a hassle and they have a personal relationship with a bit of a break on the rent.

In some markets, like the Bay area, rents are much less than the cost of owning the property, and in others, like Kent, Ohio, they are higher.

Plus: If there is a willing buyer for something you own at price X and then someone takes 6% of that when the seller pays, true the sell pays it all, but the buyer also pays it in getting less money.

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

#303

Post by richardknop » Thu, Jan 17, 2019, 5:19 PM UTC

C1sc0cat wrote: post #268

laurencerowe wrote: post #239

Earlier quoted context omitted.

Because interest rates were much higher back then (12% vs 0.5% now) so house prices were a lower multiple of wages. (Mortgage payments tend to be similar to rent, so higher rates mean lower prices.)

What does that have to do with how much an estate agent/relator charges

Real estate prices being lower wage multiple means the agent has to charge bigger percentage commission to make same amount of money.

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

#304

Post by notahacker » Thu, Jan 17, 2019, 5:21 PM UTC

sharemywin wrote: post #291

notahacker wrote: post #144

Earlier quoted context omitted.

If I'm understanding correctly, the basic principle doesn't work for an online service - any sensible buyer registers to look at houses in someone else's name, then takes the 2% discount on the "first" house they look at in their own name. Even if you stopped this on your own platform, other means of looking at houses exist. Plus I hate to think what would be wrong with a house or its starting price for vendors to of…

buy reps get usually get 3% so the money is coming out of the reps commission not what the seller is paying. With a showing, you physically show up to a house to look at a house. I'm not talking about virtual or anything.

OK, that's clearer and I can see what the buy reps get out of it (less commission for less work). But frankly as a consumer wanting to shave percentage points off I'd rather look at a lot of properties without a buy agent than one property with a buy agent

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

#305

Post by njarboe » Thu, Jan 17, 2019, 5:23 PM UTC

gnopgnip wrote: post #193

njarboe wrote: post #160

Earlier quoted context omitted.

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.

Yes. One needs to get rid of the idea in everyones head that one needs a buyer and sellers agent. This is a pure network effect that is keeping this over-priced service intact. Similar to the AMA's restriction on medical school licensing.

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

#306

Post by lxe » Thu, Jan 17, 2019, 5:26 PM UTC

conanbatt wrote: post #298

lxe wrote: post #169

Earlier quoted context omitted.

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.

You dont need to use a realtor, its a voluntary transaction. If you find the price too high dont use them.

That's the answer that's supposed to end this argument, but real estate business is a cabal: if I'm agent-less or use one of the "disruptor" services, like redfin or openlistings, agents of the other party will simply steer clear of the transactions. Some would even say that to my face.

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

#307

Post by JamesBarney » Thu, Jan 17, 2019, 5:34 PM UTC

conanbatt wrote: post #296

JamesBarney wrote: post #262

Earlier quoted context omitted.

> a truly competitive market would probably put the commission in the 1-2% range. This depends a lot on the price of the house. Selling a million dollar home isn't 10 times more work than selling a $100,000 condo.

Yes it is. Becuase the hard part is not selling it, its getting the listing. And you bet your ass that a the 10 million dollar home goes to the well dressed, swanky offices top ads agent, not your "aunt's best friend".

You took my word "selling" replaced with "customer acquisition" then argued I was wrong.

You're right, that the majority of the work of a 10 million dollar house is customer acquisition. And this isn't true of a 100k condo.

But this was my point, 3% of a 100k home is close to the competitive market price. But 3% of a 10 million dollar home is pretty far away from the competitive market price.

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

#308

Post by JamesBarney » Thu, Jan 17, 2019, 5:35 PM UTC

a_imho wrote: post #263

JamesBarney wrote: post #262

Earlier quoted context omitted.

> a truly competitive market would probably put the commission in the 1-2% range. This depends a lot on the price of the house. Selling a million dollar home isn't 10 times more work than selling a $100,000 condo.

And handling a money transaction is mostly orthogonal to the amount yet many (most?) are charged as base fee + percentages.

But that's not really a competitive market either.

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

#309

Post by toldyouso » Thu, Jan 17, 2019, 5:47 PM UTC

The SF bay area is ripe for disruption and is being disrupted. Buyer's agents here don't have to really put any work together - I know from experience having worked with a couple realtors. Most homes sell here completely free of contingencies (loan, inspection, appraisal), thus once you as the buyer commit, you commit.

Sellers here don't tend to be sentimental. Just because you attach a nicely written letter with a photo of your family and your dog doesn't mean the seller will turn down an extra $20k.

Thus, a buyers agent really won't be able to negotiate a better deal for you than you can get for yourself. It's highest bid wins, and buyers' agents will always tell you to bid more so you have a better chance to win the house (something obviously self-evident).

Also in the bay area, especially the south bay, housing prices are at the $1.5 - 2.5m range. Tell me how whatever service for the buyer can possibly worth $45k - $75k for putting together an offer for maximum amount with no contingencies. Realtors are entrenched but there's a reason why these real estate startups are proliferating.

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

#310

Post by paulie_a » Thu, Jan 17, 2019, 6:01 PM UTC

jessaustin wrote: post #118

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…

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…

20 percent of home sales are due to a sign in the front yard. Open houses are statistically a waste of time. Simply not worth the effort for the agent or seller. It usually is the nosey neighbors that come through.