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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)

#321

Post by clairity »

sgc wrote: post #191
StillBored wrote: post #158

Earlier quoted context omitted.

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.…

yah, it's not a pyramid scheme so much as it exhibits power law characteristics (80-20 rule and such).

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

#322

Post by gamechangr »

sgc wrote: post #197
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.

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.

Totally agree.

It's like saying if I trained hard enough I could be in the NFL. Well - "training hard enough" is actually hard to do.

I purchased a home recently and my buddy tried to sell his FSBO. I told him to use the same title company, because we had a painless closing. The title company told him that they do not do title work for FSBO's because "not enough of them actually disperse funds, so we don't get end up getting paid on the title searches and work we do before the closings. We prefer working with clients that have a much higher probability of closing".

That's a title companies perspective. They are getting paid either way and don't get paid more if it's with a real estate agent or FSBO. That's about as unbiased as you can get in that market, one would think.

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

#323

Post by scarface74 »

setr wrote: post #171
scarface74 wrote: post #164

Earlier quoted context omitted.

You are free to get a buyers agent that does represent you. In that case, the buyer’s agent and seller’s agent split the cost.

I still don't understand this mechanism... the buying agent takes his fee as a percentage of the total house price? Doesn't this mean that both the selling and buying agents are incentivized to drive up the price?

A better link.

https://www.nachi.org/forum/f11/exerpt-freakonomics-book-reg...

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

#324

Post by dd36 »

firebird84 wrote: post #278
dd36 wrote: post #229

Earlier quoted context omitted.

Brokers have to present all offers.

They may have to present all offers, but they don't have to present them in the same light. When I've been presented offers they DEFINITELY tell me about the strength of the buyer, what kind of financing, and what the deal terms are signalling. This stuff definitely matters to me because I've had to hassle with cash-poor buyers before and it just isn't worth the time, even in a buyers market.

The information about the strength of the buyer comes from their proof of funds or pre approval.

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

#325

Post by gamechangr »

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.

One of the ironic parts of "Homie" is that they're value proposition depends on existing real estate agents.

They claim to charge sellers $1,500 to list and no more. Sounds good so far. How do they get buyers?

They claim to give buyers $5,000 back at closing. Cool, but where does that money come from you might ask?

The FAQ's imply by only buying listings currently available with a traditional real estate agent.

Exact wording from their FAQ's: "If a non-Homie seller has listed their home on the MLS, they’ve agreed to pay a buyer agent commission (BAC), usually around 3% of the price of the home."

The more sellers choose them, the less successful they will be at attracting buyers.

That's why so many of these "Billion dollar disrupters" go under. They need the existing system to succeed.

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

#326

Post by spott »

pointillistic wrote: post #226
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…

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.

>Only realtors who carry no liability compared to the above, they still enjoy top dollar. This is a rigged market signal.

Realtors are among the most sued profession out there... I'm not sure why you don't think they carry any liability.

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

#327

Post by Latteland »

lgregg wrote: post #257
AYBABTME wrote: post #186

Earlier quoted context omitted.

Where most engineering interns are probably paid more than the median national household income? Where starting salaries are in the 6 digits?

Only in Tech Hubs like NYC or SV...

How much lower is the starting pay in Boise, or Kansas City or some non-tech hub? My startup company pays well over 100k for college hires with no experience. And other companies pay more. Yes, we are in one of the tech hubs (Seattle). If other companies don't pay nearly as much, why would people work there?). You might pay 20k a year for your cool apartment in walking distance to bars, shops etc, but you have a great lifestyle.

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

#328

Post by pointillistic »

spott wrote: post #326
pointillistic wrote: post #226

Earlier quoted context omitted.

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.

>Only realtors who carry no liability compared to the above, they still enjoy top dollar. This is a rigged market signal. Realtors are among the most sued profession out there... I'm not sure why you don't think they carry any liability.

An engineer or an architects is responsible for life safety, structure, etc. All carry a substantial liability insurance. What could be a pitfall for a realtor if there is above the board transaction?

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

#329

Post by amatai »

jessaustin wrote: post #126
amatai wrote: post #110

IMO, agents are not almost always not acting in buyer's interest. The percentage based commission is twisted in getting the buyer to bid for as much as they can pull. So, realtors at least for buyers, not such a great value, other than getting you access to lock box to view a property.

That may be true for simple home purchases, but I know some active real estate investors and they really value the services of buyer's agents. These guys don't buy something in the hopes that it will appreciate in future. They buy something only when they know they're stealing it. ("Victims" vary: could be an out-of-touch heir, an overextended builder, a bank that's held onto a repo for 11.5 months...) On the day of…

Agreed, but that's not the market Zillow/Redfin are serving.

In fact, I think, the right term for those kind of agents is whole-sellers, who scout around for kind of deals you mention.

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