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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)

#161

Post by notahacker »

iwantedjusttom wrote: post #108
megaman8 wrote: post #18

Earlier quoted context omitted.

Not having a realtor as a buyer really helps, because you can add that 3% to the purchase price of the house saving you 3% which can be a huge amount in expensive markets like the bay area.

in most cases the seller has already agreed to pay 6% to the agent for the sale of their home - then that selling agent agrees to split it with the agent that brings a buyer. If you come in off the sign you're basically handing the seller's agent another 3% commission - even if you "negotiate" 3% off the top of the house the seller is still paying that 3% to the listing agent. In the eyes of the buyer it might not ma…

The selling agent getting double the commission if the vendor accepts your offer over anyone else's sounds like it could be a lot more help in negotiating a quick and satisfactory deal than any negotiation prowess having your own agent might offer, especially if your own agent would be financially incentivised not to reduce the price...

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

#162

Post by ergothus »

AtlasBarfed wrote: post #38
muhneesh wrote: post #22

I see at least three counterpoints: 1. Real estate agents aren't often "experts" at real estate valuation, inspection or execution; They have dependencies on appraisers, inspectors, and lawyers. The work an average agent does is more or less cookie-cutter from my anecdotal experience, though I think there is a proportion of rockstar agents that do much more. 2. Not every buyer wants homebuying to be a client-services…

"Good" real estate agents are interested in moving as many houses as quickly as they can, to gain as much vig revenue as possible. "Good" real estate agents from the buyers perspective would be slowing down sales, reducing the overall price they make a percentage on anyway (which is why fixed rate for a "class" of real estate would work better) as a disincentive. Why would a real estate agent dissuade someone from bu…

> Why would a real estate agent dissuade someone from buying something?

Story time!

When I was looking at buying my (now current) house, I had a realtor on my side, and my wife actually found the listing (no knock on the realtor there - my wife was just that on top of things) and the house was actually for sale from a realtor at the same company as my realtor.

As we were doing the inspection, I had questions about the pipes (lots of trees, and I knew of some horror stories). I was told the required inspection only covered the house itself, and the pipes would be someone else. My realtor was careful (IMHO) to not dissuade me in any way, but neither did she encourage me. I could tell she wasn't excited about me getting the pipes inspected - in part, I would later find out, because anything bad I discovered would then legally have to be disclosed to future prospects, whereas ignorance was a shield. So she was not a very useful source of guidance for getting this thing done.

But I did get it done, and when the result was a clean bill of health (the inspector showed me the video and was remarking that the pipes were basically pristine, which was amazing for 30+ year old concrete pipes) she was suddenly much more enthusiastic about the inspection. All smiles and congrats and saying what a good decision it had been.

It was a revelation into the incentives involved. To think what might happen to someone else with an agent who would cross the ethical line instead of just being unenthused.

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

#163

Post by StillBored »

davio wrote: post #69
muhneesh wrote: post #22

I see at least three counterpoints: 1. Real estate agents aren't often "experts" at real estate valuation, inspection or execution; They have dependencies on appraisers, inspectors, and lawyers. The work an average agent does is more or less cookie-cutter from my anecdotal experience, though I think there is a proportion of rockstar agents that do much more. 2. Not every buyer wants homebuying to be a client-services…

The listing agent should have expertise in the valuation for the ask price. I don't think appraisers are generally involved. Appraisers are primarily working for the mortgage company. My last 4 appraisals have been within a couple thousand of the purchase price.

"My last 4 appraisals have been within a couple thousand of the purchase price."

Is that a reasonable metric, or is time on market?

I ask because there are a number of studies, that indicate that real-estate agent's houses themselves frequently sit for sale for much longer than the ones they are selling. The idea being that the agents are pushing the market and willing to absorb the longer time-frame in exchange for a much higher selling price.

OTOH, it seems sometimes the strategy is the reverse if the market is really hot. Under-pricing and getting a half dozen people into a bidding war which ends up being double digit percentages above ask seems a frequent strategy to get maximal returns and fast sales.

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

#164

Post by scarface74 »

njarboe wrote: post #160
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…

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…

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.

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

#165

Post by Stryder »

StillBored wrote: post #158
clairity wrote: post #139

Earlier quoted context omitted.

> "Part of the problem is that most realtors want it that way." absolutely. the cartel doesn't help the top 2% of agents, because they're good enough to earn the 6% (or higher) anyway, but the monopoly works because the overwhelming majority of interested stakeholders benefit. (that's not to imply that most agents are lazy though. a stat i dimly recall is that only about 10% of agents make enough to be full time.)

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…

Sounds like software engineering today.

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

#166

Post by clairity »

guest2143 wrote: post #150
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…

Nothing came of it? The whole Virtual Office Website (VOW) thing got created.. before meetings NAR and RESO intone legalese about encouraging competition. There's a lot of fear that the FTC will step back in and do something. With the level of MLS balkanization, innovation has a bunch of high hurdles.

i mean, relative to what they could have done (sued for damages and broken up the monopoly), structurally nothing changed.

but if you promote free and fair markets, you'd discourage/dismantle this kind of protectionism.

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

#167

Post by garagemc2 »

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…

Wow, in the UK it is about 1 - 2%.

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

#168

Post by scarface74 »

goseeastarwar wrote: post #147
imbusy111 wrote: post #142

Earlier quoted context omitted.

Even if we ignore the expenses, that's only $100k/yr in an area where $117k/yr is below poverty line for 4 person family.

Where is your 4 homes per year stat coming from? It's extremely low.

Quick search on Zillow shows 12:

https://www.zillow.com/agent-resources/blog/commission-refer...

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

#169

Post by lxe »

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…

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.

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

#170

Post by Eridrus »

mediaman wrote: post #102
picodguyo wrote: post #97

I've bought and sold on separate occasions through Redfin and saw no difference between their service for 1% and my previous transactions with a traditional realtor for 5%. They both took me around to see properties, provided neighborhood and property insights, acted as my negotiating proxy, and guided the closing process. I don't understand how Redfin can charge so little, but as it stands today I wouldn't dream of…

Redfin charges 1% for selling the house. They still pay 3% to the buyer's broker. The total fee is therefore 4%, versus the normal 6%, where both sides get 3%.

If you use a broker that returns 2% when purchasing the property, this basically drives it down to 2%. Which is far more reasonable than 6%.
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