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

YouGotListings (YC W11) looks to provide the best tools for real estate

techcrunch.com

Post reply on HN
Print view View original

31–40 of 49 posts

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#31

Post by shawnee_ »

pg wrote: post #27
shawnee_ wrote: post #22

Earlier quoted context omitted.

There are so many sites and nothing centralized has really taken off. Even when you boil it down to one city. Wrong. There IS something centralized: it's called the Multiple Listing Service, and ONLY Brokers and Realtors have "access" to it. They are salespeople, and salespeople compete only with each other. That 6 percent commission is the unwavering aspect of their model -- they built it to ensure that it always ge…

How exactly does this conspiracy manage to overcome market forces to keep rents artificially high?

Market forces can't really work effectively on the problem when there is information asymmetry, can they? Market forces presume rational behavior, and perfect information.

I will assume that the expected result of this startup (why YC invested in it) is that the market will somehow become more "efficient" because communication between brokers and landlords will be facilitated.

I will predict that the actual result of this startup will cause the market to become less efficient, due to the increased cost of information asymmetry. By hooking up brokers with landlords, the information asymmetry between the "producer" (both landlords and brokers would be considered "producers" of listings) and the "consumer" (the renter or home-buyer) becomes even greater.

A pretty interesting paper that explores the idea that the costs of derivatives are increased as a result information asymmetry: www.cs.princeton.edu/~rongge/derivative.pdf

So, the "cost" is being doubly passed on to the consumer from both the broker and the landlord. The market is not more efficient, it's less efficient.

In general, financial experts suspect that the sheer volume of derivative transactions probably allows many kinds of manipulations to go undetected. We are highlighting one particular kind of manipulation where this undetectability as well as its financial cost can be made precise. from http://www.cs.princeton.edu/~rongge/derivativeFAQ.html

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#32

Post by patio11 »

shawnee_ wrote: post #22
cletus wrote: post #7

I come from Australia, have lived in the UK, Germany and Switzerland and now live in the US. What I find really interesting is just how badly real estate works online in the US. To quote Bart Simpson, it achieves what was previously thought physically impossible: it sucks and blows at the same time. In Australia there are basically two online sites for both rentals and sales: realestate.com.au and domain.com. They ha…

There are so many sites and nothing centralized has really taken off. Even when you boil it down to one city. Wrong. There IS something centralized: it's called the Multiple Listing Service, and ONLY Brokers and Realtors have "access" to it. They are salespeople, and salespeople compete only with each other. That 6 percent commission is the unwavering aspect of their model -- they built it to ensure that it always ge…

This comment would be better if you dialed down the invective a few notches. As it is I think your passion gets in the way of seeing reality as it actually is:

home ownership remains an unattainable pipe dream for most people

This is objectively untrue for any sensible definition of "most": 67.4% of inhabited housing units in the US are inhabited by the owner.

Is home ownership going down? No, by any sensible measurement, it is increasing, across all races and most income groups. For folks who are often the have-nots in the US economy, home ownership increased rapidly (did people think "sub prime mortgages" existed solely to inflate bank revenue numbers? The flip side of that coin is giving loans to people who would historically have been classified as too risky for a mortgage gives houses to people who historically would have been too risky to qualify for a mortgage.)

http://en.wikipedia.org/wiki/Homeownership_in_the_United_Sta...

An addition underappreciated side-effect of financial engineering in the last twenty years is that, even post-bubble, down payments have gone from "your life savings" (which, at 20%, they really were) to "optional for many people and often and achievable in 3~5 years of dedicated work" (norms are in flux now, but there are a lot of banks which will take 5% as sufficient skin in the game for a prospective owner with decent credit).

I have no significant disagreement with you regarding the value add by Realtors and the 6% commission structure, although that is not inviolate, particularly in the current climate. (5% of something beats 6% of nothing every day of the week.)

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#33

Post by patio11 »

shawnee_ wrote: post #31
pg wrote: post #27

Earlier quoted context omitted.

How exactly does this conspiracy manage to overcome market forces to keep rents artificially high?

Market forces can't really work effectively on the problem when there is information asymmetry, can they? Market forces presume rational behavior, and perfect information. I will assume that the expected result of this startup (why YC invested in it) is that the market will somehow become more "efficient" because communication between brokers and landlords will be facilitated. I will predict that the actual result of…

Markets do not presume perfect information. They're a hack around the lack of it, because perfect information would make a price discovery / resource allocation mechanism unnecessary: you'd just use your godlike powers and pick the best investment at the optional price every single time. One of their handier properties is that they quickly aggregate valuable-but-imperfect information from an incredibly broad group of people to discover prices. They're certainly not perfect, but they often work.

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#34

Post by shawnee_ »

patio11 wrote: post #33
shawnee_ wrote: post #31

Earlier quoted context omitted.

Market forces can't really work effectively on the problem when there is information asymmetry, can they? Market forces presume rational behavior, and perfect information. I will assume that the expected result of this startup (why YC invested in it) is that the market will somehow become more "efficient" because communication between brokers and landlords will be facilitated. I will predict that the actual result of…

Markets do not presume perfect information. They're a hack around the lack of it, because perfect information would make a price discovery / resource allocation mechanism unnecessary: you'd just use your godlike powers and pick the best investment at the optional price every single time. One of their handier properties is that they quickly aggregate valuable-but-imperfect information from an incredibly broad group of…

You're right, my typo. I can't remember the exact verbatim text that my economics textbook cited, but one of the underlying assumptions of "market forces" economics is that information isn't unduly restricted; it's more or less accessible to any parties that want it. In this example, the MLS is blatant restriction of information, and it definitely creates information asymmetry.

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#35

Post by shawnee_ »

patio11 wrote: post #32
shawnee_ wrote: post #22

Earlier quoted context omitted.

There are so many sites and nothing centralized has really taken off. Even when you boil it down to one city. Wrong. There IS something centralized: it's called the Multiple Listing Service, and ONLY Brokers and Realtors have "access" to it. They are salespeople, and salespeople compete only with each other. That 6 percent commission is the unwavering aspect of their model -- they built it to ensure that it always ge…

This comment would be better if you dialed down the invective a few notches. As it is I think your passion gets in the way of seeing reality as it actually is: home ownership remains an unattainable pipe dream for most people This is objectively untrue for any sensible definition of "most": 67.4% of inhabited housing units in the US are inhabited by the owner. Is home ownership going down? No, by any sensible measure…

As it is I think your passion gets in the way of seeing reality as it actually is

This is my soapbox issue, yes. But there's no invective here, just a bit of "why!?" b/c I hoped to see a YC company in this industry on the side of the little guys/gals, not the 500 pound gorillas.

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#36

Post by tptacek »

shawnee_ wrote: post #34
patio11 wrote: post #33

Earlier quoted context omitted.

Markets do not presume perfect information. They're a hack around the lack of it, because perfect information would make a price discovery / resource allocation mechanism unnecessary: you'd just use your godlike powers and pick the best investment at the optional price every single time. One of their handier properties is that they quickly aggregate valuable-but-imperfect information from an incredibly broad group of…

You're right, my typo. I can't remember the exact verbatim text that my economics textbook cited, but one of the underlying assumptions of "market forces" economics is that information isn't unduly restricted; it's more or less accessible to any parties that want it. In this example, the MLS is blatant restriction of information, and it definitely creates information asymmetry.

Far be it from me to stand athwart your argument against realtors, but: how effective can they be at seizing control of the market via the MLS? Yes, you have to be a real estate agent to list there, but when I bought my house in '05, I had no trouble at all getting access to MLS listings.

The MLS --- which, I probably agree, is a shady system --- is not some secret parchment guarded by the Stonecutters. Pretty much anyone can get access to it.

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#37

Post by tptacek »

patio11 wrote: post #32
shawnee_ wrote: post #22

Earlier quoted context omitted.

There are so many sites and nothing centralized has really taken off. Even when you boil it down to one city. Wrong. There IS something centralized: it's called the Multiple Listing Service, and ONLY Brokers and Realtors have "access" to it. They are salespeople, and salespeople compete only with each other. That 6 percent commission is the unwavering aspect of their model -- they built it to ensure that it always ge…

This comment would be better if you dialed down the invective a few notches. As it is I think your passion gets in the way of seeing reality as it actually is: home ownership remains an unattainable pipe dream for most people This is objectively untrue for any sensible definition of "most": 67.4% of inhabited housing units in the US are inhabited by the owner. Is home ownership going down? No, by any sensible measure…

Did people think "sub prime mortgages" existed solely to inflate bank revenue numbers?

Yes. Read _All The Devils Are Here_ for an excellent exposition about how the subprime market was first invented as a vehicle to get private banks out from under the thumb of Fannie Mae, then turned into a vehicle for boiler room speculation, and then fed back to Fannie Mae. The interests of homeowners were not a primary feature of the development of the subprime market; in fact, one open secret of the phenomenon was how few of those loans actually went to first mortgages on owner-occupied sole residences.

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#38

Post by pg »

shawnee_ wrote: post #31
pg wrote: post #27

Earlier quoted context omitted.

How exactly does this conspiracy manage to overcome market forces to keep rents artificially high?

Market forces can't really work effectively on the problem when there is information asymmetry, can they? Market forces presume rational behavior, and perfect information. I will assume that the expected result of this startup (why YC invested in it) is that the market will somehow become more "efficient" because communication between brokers and landlords will be facilitated. I will predict that the actual result of…

Let me try again. Suppose I decide to rent out my house. The price I can get for it depends on how much people like it compared to other houses that are available. How is the amount of rent that I can get being gamed upward, in a way that it isn't if, for example, I decide to sell my car? (Unless you believe that used car prices are also inflated across the board.)

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#39

Post by defen »

patio11 wrote: post #32
shawnee_ wrote: post #22

Earlier quoted context omitted.

There are so many sites and nothing centralized has really taken off. Even when you boil it down to one city. Wrong. There IS something centralized: it's called the Multiple Listing Service, and ONLY Brokers and Realtors have "access" to it. They are salespeople, and salespeople compete only with each other. That 6 percent commission is the unwavering aspect of their model -- they built it to ensure that it always ge…

This comment would be better if you dialed down the invective a few notches. As it is I think your passion gets in the way of seeing reality as it actually is: home ownership remains an unattainable pipe dream for most people This is objectively untrue for any sensible definition of "most": 67.4% of inhabited housing units in the US are inhabited by the owner. Is home ownership going down? No, by any sensible measure…

> This is objectively untrue for any sensible definition of "most": 67.4% of inhabited housing units in the US are inhabited by the owner.

Are you sure that 67.4% of inhabited housing units in the US are actually inhabited by the owner? If I take out a 30 year loan on a house and then move in, the bank still owns that property. I would expect the number to be significantly lower than 67.4% when you factor in rentals + people living in homes with refinancing or otherwise not-fully-paid-off mortgages. But I don't actually know what the number is or where to find it.

Re: YouGotListings (YC W11) looks to provide the best tools for real estate

#40

Post by jetaries »

pg wrote: post #38
shawnee_ wrote: post #31

Earlier quoted context omitted.

Market forces can't really work effectively on the problem when there is information asymmetry, can they? Market forces presume rational behavior, and perfect information. I will assume that the expected result of this startup (why YC invested in it) is that the market will somehow become more "efficient" because communication between brokers and landlords will be facilitated. I will predict that the actual result of…

Let me try again. Suppose I decide to rent out my house. The price I can get for it depends on how much people like it compared to other houses that are available. How is the amount of rent that I can get being gamed upward, in a way that it isn't if, for example, I decide to sell my car? (Unless you believe that used car prices are also inflated across the board.)

The power the brokers have over landlords' is very limited, even in hot rental markets like Boston and NYC. The landlords set the price, and the brokers try to rent them (first hand experience). Unlike sales, typically, there is no exclusivity in rentals, it's first come first serve. Whoever rents the apartments get the prize. Which creates tremendous competition among brokers.

It is in the brokers' best interest that the landlords lower their price and pay a finder's fee. This makes the apartment easy to rent. The idea that somehow brokers bound together to control the price is simply untrue (this notion is somewhat true in sales). Landlords control the price based on supply / demand.

Everyone tend to think that brokers themselves represent market inefficiency, which is also debatable. Everyone knows Craigslist, and if they wanted to be on it, they can. Now, why do landlords go through brokers at all, knowing there is Craigslist?

Last but not least. The reason that renting is such a unpleasant experience lies in the nature of the business, and also what I call the Craigslist's dilema. If you are interested, I'd be happy to write another article to further elaborate on this point.

Post reply on HN