Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Zillow to Acquire Trulia for $3.5B

dealbook.nytimes.com

Post reply on HN
Print view View original

141–150 of 172 posts

Re: Zillow to Acquire Trulia for $3.5B

#141

Post by jessriedel »

mooreds wrote: post #92
ssharp wrote: post #75

Earlier quoted context omitted.

Yes, that was the argument in Freakonomics and they're completely right. The real estate market can be extremely receptive to low prices, so if you list your house very low, you're likely to sell it much faster. The bulk of the money the agents make will come from the part of the house that could sell very easily. If a house could sell for $200,000 today, but you have to have it listed six months before it could sell…

There are good agents and bad agents, just like good and bad folks in any profession. (Actually, because the barriers to entry are so low, there are probably more bad real estate agents.) See my comment below about LTV--if a consumer feels they aren't being treated well, the agent might make a bit more on this sale, but lose five figures of income later. Just like that agent that you interacted with. Now, if you feel…

Noisy reputation systems and customer education are better than nothing, but they pale in comparison to properly aligned incentives.

Re: Zillow to Acquire Trulia for $3.5B

#142

Post by roel_v »

w4 wrote: post #133
roel_v wrote: post #123

Earlier quoted context omitted.

We sold a house last year. I had read Freakonomics so I thought I was going to outsmart everybody (which I knew was a stupid to think from the start, of course). Turns out most real estate agents (the ones we talked to at least) weren't even financially literate enough to even understand the concept . At some point I tried to explain to one the Freakonomics theory. He always kept saying 'the more I sell, the more com…

> He always kept saying 'the more I sell, the more commission' - the concept of 'time value' was completely foreign to him. Maybe he was just playing dumb, I don't know. He probably wasn't. That having been said, the inability to understand abstract concepts like the time value of money and being a kickass salesman are not mutually exclusive. Some of the best agents I've met aren't what I'd call bright, but they're q…

Sure, he was building a relationship, which reinforces the point that he doesn't care about saving a few minutes on a sale, and that he'd rather go out of his way to talk to me/us more than necessary, instead of trying to move his 'dollars per minute' needle up.

Whether that's 'irrational' depends on your definition of 'irrational' - it surely is irrational from the point of view of pretty much every economic model out there.

Re: Zillow to Acquire Trulia for $3.5B

#143

Post by jessriedel »

mooreds wrote: post #47
rahimnathwani wrote: post #22

Earlier quoted context omitted.

they provide a hugely invaluable service What is that service? I'm not being snarky; I'm genuinely curious, as the structure of the industry (and fee level) is significantly different than where I'm from. I don't get why you need a real estate agent to help you buy.

Disclaimer: I work for a real estate brokerage (but I'm a software developer). Real estate agents can help in a number of ways (chaossphere2112 outlines a number of them), but one of the easiest ways to think about it is that this is a very large, complex transaction that happens rarely. That means that, while you could learn all the ins and outs of: - contracts (often regulated by the state) - negotiation (in whatev…

> As for the 'pumping up the price' to get paid more, or 'making me hurry up' to get paid faster, there may be some agents that do this, but good ones are more concerned about the lifetime value of a consumer,...

Most people don't do anything like this, especially not in the same geographic region.

In any case, this only gives the realtor an incentive to make you feel like you got a good deal. For products where my experience in the objective (e.g. going to a restaurant) or where I have adequate skills to judge, this would be find. But the realtor in selling his skills as judging deals, among other things. He tells me "this is a great deal for this neighborhood".

Re: Zillow to Acquire Trulia for $3.5B

#144

Post by mooreds »

jessriedel wrote: post #141
mooreds wrote: post #92

Earlier quoted context omitted.

There are good agents and bad agents, just like good and bad folks in any profession. (Actually, because the barriers to entry are so low, there are probably more bad real estate agents.) See my comment below about LTV--if a consumer feels they aren't being treated well, the agent might make a bit more on this sale, but lose five figures of income later. Just like that agent that you interacted with. Now, if you feel…

Noisy reputation systems and customer education are better than nothing, but they pale in comparison to properly aligned incentives.

Brokers (of all kinds) have been around for millenia and will be around for millenia more. There are always consumers who are willing to pay for expert advice and there are always sellers/producers who are willing to accept less than top dollar because they don't want the hassle of dealing with the consumer (which doesn't scale).

I think that technology can empower the consumer, but doubt it can empower the consumer enough to eliminate middlemen (of which brokers are one type). I've heard that story before, and all I saw was a different kind of middleman (heck, Amazon.com is a middle man for a lot of products).

So, that said, how can you align incentives? You have a limited number of ways to pay the middleman or broker: you can pay them a flat fee, you can pay them an hourly rate, or you can pay them based on the size of the deal. Which incentive structure do you think aligns interests the best?

Re: Zillow to Acquire Trulia for $3.5B

#145

Post by mooreds »

nawitus wrote: post #102
mooreds wrote: post #91

Earlier quoted context omitted.

There's a similar way to work without a real estate agent in the USA--you just hire a real estate lawyer who takes care of contracts and whatnot and you pay them a flat fee. I'm always curious how other markets work (and aware that the USA is one of the few RE markets with buyer's agents). Is there an inspection period? Are most homes bought outright, or are loans taken out to purchase them? Does the seller's agent d…

> Is there an inspection period? No. However, the seller is responsible for 'hidden problems' for five years after the sale. I would guess that most of these cases go to court, and are only for serious problems like mold. > Are most homes bought outright, or are loans taken out to purchase them? Loans are typically taken. >Does the seller's agent do any marketing (newspaper ads, open houses, etc)? Yes, the seller's a…

Thanks for answering my questions.

I like the idea of the seller being responsible after the sale--that would make most sellers more honest.

That tax is interesting--what does it support (national government? city government? schools?)?

Re: Zillow to Acquire Trulia for $3.5B

#146

Post by wpietri »

rahimnathwani wrote: post #139
caw wrote: post #68

Earlier quoted context omitted.

I'm also in the process of buying a home for the first time, and did some search on Trulia/Zillow. It was OK, but the data gets really stale. One home was sold already before it was taken down. I did find out that Houston has a really nice site, har.com that lets you do basically everything Trulia & Zillow does. Realtors have other interface(s) into the same data, which lets them do different things like N sided poly…

Agents are getting roughly 3% of the sales price. In the US, agents get roughly 6% of the sales price. The sellers's agent gets 3%, and the buyer's agent gets 3%. In the UK, agents get roughly 1.6% of the sales price. The seller's agent gets 1%-2.5%, and there is no buyer's agent. There are other costs (survey and lawyer fees) but these are not large either, and aren't related to the price of the property.

Regarding the US, I think the typical deal is that the seller's agent and broker each get 1.5%, and the same for the buyer's agent. Some agents are their own brokers, but I believe that's rare.

Re: Zillow to Acquire Trulia for $3.5B

#147

Post by wpietri »

elsewhen wrote: post #88
jquery wrote: post #79

Earlier quoted context omitted.

You would expect this from the two most innovative companies in the industry. Both companies are leveraging their revenue to grow rapidly. A concern for profits at this point is premature. Trulia was profitable years ago at a vastly smaller revenue number.

profit isnt the only concern; the revenue numbers dont seem in-line with companies that have such high valuations.

Hmmm... Combined market cap is about $10bn, which is about 25x revenues. The similar ratio for Google is 12x. Dropbox's revenue is reported at $200m with a $10bn valuation, which is 50x. So the ratio doesn't seem crazy to me given the assumption of growth potential and the ability of the new company to better control pricing. When you say the numbers don't seem in line, what examples were you thinking of?

Re: Zillow to Acquire Trulia for $3.5B

#148

Post by bradleyjg »

roel_v wrote: post #123
cookiecaper wrote: post #117

Earlier quoted context omitted.

Economists have a tendency to overlook data that is difficult to quantify. In the short term, a real estate agent may make more money by rushing a sale, but on a macro level, he does himself a disservice. Real estate agents need to become your friend and engender loyalty so that you'll recommend them and so that you'll use them again when you sell your new house. Every hour spent with a client and every dollar knocke…

We sold a house last year. I had read Freakonomics so I thought I was going to outsmart everybody (which I knew was a stupid to think from the start, of course). Turns out most real estate agents (the ones we talked to at least) weren't even financially literate enough to even understand the concept . At some point I tried to explain to one the Freakonomics theory. He always kept saying 'the more I sell, the more com…

If I remember correctly the meat of the argument in the book wasn't a just so story about consciously maximized incentives but an empirical look at time on the market for houses that agents sold on behalf of clients versus houses sold on their own behalf.

Re: Zillow to Acquire Trulia for $3.5B

#149

Post by wdr1 »

chatmasta wrote: post #23

I interned for Redfin last summer. This is a really interesting space, and most people don't realize that Zillow/Trulia are operating drastically different businesses from Redfin. Some background: The US real estate industry is broken up into regions (e.g. SF bay area, Orange County, Lake Tahoe, etc.). In order for a brokerage [1] to operate in a region, it needs to employ agents specifically licensed in that region,…

> So now it looks like the market will come down to Redfin vs. Trulia/Zillow.

I think that's a terrible mindsent. As a recent homebuyer, I can assure both Redfin & Trulia have a shared adversary: the existing full service broker syndicate in a given city, often deeply entrenched.

I started my home search using Redfin, used them for 6-9 months & put in offers+counter+etc on 3-4 different houses. We saw a lot of places via open house & were surprised how hostile the seller's broker would be towards us on hearing we were using Redfin.

In fact, one agent actually flat out said if we made an offer, she wouldn't bother taking it to their client because we used Redfin. That's actually illegal in my state, so I asked her to clarify. I think she knew I knew at that point & back tracked. Still, my wife was so insulted, she stormed out, refused to see the house, and refused to see any other listing listed by that agent.

Re: Zillow to Acquire Trulia for $3.5B

#150

Post by rhizome »

charmainefrank wrote: post #130
guelo wrote: post #71

Earlier quoted context omitted.

I just bought a house in the bay area, I tried multiple times to contact Redfin but never got any response. I ended up using a traditional agent but I was left wondering what is going on over there. Maybe they have more business than they can handle?

Good afternoon, I am the Bay Area Manager here at Redfin and wanted to extend my apologies for the lack of service you received. Would you be willing to contact me so that I can further assess the situation you encountered to ensure it does not happen again? I sincerely appreciate your time and apologize that we let you down. Kindly, Charmaine Frank Redfin Bay Area Manager charmaine.frank@redfin.com

The time to ask for free help is before they don't need you anymore, you should offer to compensate them like any focus group participant would be. Market research and management consulting both provide highly valuable information.
Post reply on HN