Redfin Turns Profitable, Real Estate Industry Shudders • Hacker News Board

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#21

Post by mikeryan » Fri, Jul 10, 2009, 4:04 PM UTC

anamax wrote: post #19

mikeryan wrote: post #11

Earlier quoted context omitted.

I don't disagree that there's some value to having an agent. But as someone looking to buy in the Bay Area, the amount realtor's (particularly buyer's realtors) get paid relative to the work they put in, is all out of whack. Finding houses is easy, that's what MLS listings do. So that leaves the hidden "gotchas" in the actual sale process, For a buyers agent to get 3% of an $800,000 home is ridiculous. I'd rather pay…

> I'd rather pay a lawyer $500/hr to do the 10-20 hours of work closing a deal. Where does buying a house require 10 hours of paperwork? (It seems endless while you're doing it, but it's way less than 10 hours and almost all of the paperwork is canned.) Do you really think that a lawyer has 10 hours of expertise that's relevant to buying the typical house? (How many houses have you bought?)

I have bought none, if its less then 10 hours my point is even better made ;-)

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#22

Post by sgoraya » Fri, Jul 10, 2009, 4:29 PM UTC

I've been following redfin since their early days and was very excited by their business model. They were featured on 60 minutes about a 1-2 years ago too, which helped them gain some mainstream momentum.

The real estate industry, specifically residential real estate, is in the process of rebooting. A lot of the legwork that agents were doing in the past can now be accomplished by the buyer/seller and much of the information can be found on real estate aggregation sites. Not to say that residential agents will be extinct anytime soon (they still provide a service) but their commissions will definitely be affected.

Commercial/Industrial/Ag. real estate on the other hand, still requires professional agents, IMO. Specific knowledge (legal/zoning issues/environmental impact reports/etc. etc.) is needed in these areas to assist buyers/sellers.

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#23

Post by grignr » Fri, Jul 10, 2009, 4:31 PM UTC

shiranaihito wrote: post #18

jacquesm wrote: post #12

Earlier quoted context omitted.

In the Netherlands it's limited by law to 1.85% or so.

You Win :) That's just a really sensible solution to this "problem".

I agree, but maybe it should be a sliding scale based on what the house is worth. For a $100k house, even Redfin's flat fee of $5k-$7k is more than double the Netherlands' 1.85% cap.

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#24

Post by sharksandwich » Fri, Jul 10, 2009, 4:36 PM UTC

shiranaihito wrote: post #18

jacquesm wrote: post #12

Earlier quoted context omitted.

In the Netherlands it's limited by law to 1.85% or so.

You Win :) That's just a really sensible solution to this "problem".

Really? The gov setting the rate is the most sensible solution? It may have worked out well in this case, but that's an awfully slippery slope. I couldn't agree more that the commissions themselves are absurdly high, I just tend to think the gov's role should be to foster a competitive environment that would allow the market to arrive at a fair rate rather than picking it themselves

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#25

Post by Xichekolas » Fri, Jul 10, 2009, 4:50 PM UTC

anamax wrote: post #19

mikeryan wrote: post #11

Earlier quoted context omitted.

I don't disagree that there's some value to having an agent. But as someone looking to buy in the Bay Area, the amount realtor's (particularly buyer's realtors) get paid relative to the work they put in, is all out of whack. Finding houses is easy, that's what MLS listings do. So that leaves the hidden "gotchas" in the actual sale process, For a buyers agent to get 3% of an $800,000 home is ridiculous. I'd rather pay…

> I'd rather pay a lawyer $500/hr to do the 10-20 hours of work closing a deal. Where does buying a house require 10 hours of paperwork? (It seems endless while you're doing it, but it's way less than 10 hours and almost all of the paperwork is canned.) Do you really think that a lawyer has 10 hours of expertise that's relevant to buying the typical house? (How many houses have you bought?)

His point wasn't that it required a lawyer's expertise.

It was that a lawyer could do the work of a buyer's agent, and even at $500/hr, would be cheaper when buying an $800k house. (That hourly rate would buy you 48 hours of lawyer time before you got up to the 3% commission of $24k.)

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#26

Post by inaka » Fri, Jul 10, 2009, 4:59 PM UTC

I sold my house with redfin on Dec 31 2007. The transaction was absolutely wonderful. It was a money loser for Redfin - first offer fell through due to misrepresentation by the purchaser, second one was complicated due to an extremely picky purchaser, and it took a total of about 60 hours of work by the Redfin agent to get the deal closed. It was an unusual case but the point is i've done about 4 other transactions and this was the most professional and hardest working agent and it was the cheapest... So they don't drop you if your transaction turns out to be a statistical outlier... HIGHLY recommended.

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#27

Post by kapitti » Fri, Jul 10, 2009, 5:20 PM UTC

jacquesm wrote: post #6

sielskr wrote: post #5

Summary of the article: Redfin reimburses 50% of the fee they receive back to the buyer. And Redfin charges the seller a $5,000 - $7,000 flat fee. In contrast when the buyer and the seller of a million dollar house use traditional Realtors, together the Realtors take about $50,000 or $60,000 of the transaction. Finally, here is a comment from the Techcrunch article: I was an active Realtor for 8 years and I’m glad to…

Realtors in the US/Canada make far too much money on the transactions.

The realtor themselves don't make that much as it's a pyramid scheme. A realtor splits the commission 50/50 with the broker, and then pays fees (advertising, listing, business expenses, etc) out of their 50%. Take out taxes as well, and real estate, in most markets, ends up being a minimum wage job.

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#28

Post by kirpekar » Fri, Jul 10, 2009, 6:03 PM UTC

We bought through RedFin about a year ago. The $$$ refund makes it all worth it.

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#29

Post by greyboy » Fri, Jul 10, 2009, 6:29 PM UTC

The major downside to Redfin is their service area. I hope they can expand by the time I need them.

Re: Redfin Turns Profitable, Real Estate Industry Shudders

#30

Post by silencio » Fri, Jul 10, 2009, 8:29 PM UTC

sgoraya wrote: post #22

I've been following redfin since their early days and was very excited by their business model. They were featured on 60 minutes about a 1-2 years ago too, which helped them gain some mainstream momentum. The real estate industry, specifically residential real estate, is in the process of rebooting. A lot of the legwork that agents were doing in the past can now be accomplished by the buyer/seller and much of the inf…

I might just be dealing with a particularly bad commercial broker right now, but he is all about covering his behind and refusing to do anything beyond his bare minimum, that is to say, the only thing he's ever told me about phase 1 ESAs is a piece of paper detailing my responsibilities in general. Which, well, my lender and other people have already told me about. He also told me to go figure out all the other legal issues on my own with someone who specializes in commercial real estate law. I actually did do this with more than one lawyer prior to submitting an offer, and I ended up having a 4 hour long fight with the broker over changing some wording, only to get lectured at the end about how I need to learn to not change legal documents written by lawyers and how I should be leaving all the paperwork to the grownups because I was a 20 year old female sitting in front of him eating frozen yogurt...wait, we were having lunch and it is my corporation of which I have a controlling interest in that's buying this property and it is my bank accounts funding the majority of the purchase price, right?! I think I just stared at him and didn't sign anything until he conceded. He tried to lie his way into making me initial parts of the offer that were clearly voluntary as well. I'm extremely tempted to file some complaints...

So I honestly do see a market for a Redfin-esque service for commercial real estate and even buying/selling businesses. If only to get rid of that nonsense.