HN Gopher Feed (2017-07-07) - page 1 of 10 ___________________________________________________________________
Real estate site Redfin files for IPO
162 points by realdlee
https://techcrunch.com/2017/06/30/real-estate-site-redfin-files-...___________________________________________________________________
jhulla - 4 hours ago
Good for Redfin. Disruption in any business that charges 6%
transaction fees is great.Having said that, real estate
transactions are complex beasts with many moving parts. A lot of
this process can be scripted and templated. But there are many
situations where it cannot. Buyers and sellers are under immense
stress as they face very large financial and legal decisions. They
don't understand the process, the terminology, the legal and
financial consequences, etc. There are local regulations and
conventions that differ from region to region. E.g: Check out the
differences in who pays fees across counties:
http://chicagotitletransfertax.com/Good agents absolutely earn
their fees when uncertainty and complexity arise. I suspect
Redfin is seeking to carve out the part of the market that
comprises straight-forward, template driven transactions.
hammock - 4 hours ago
>E.g: Check out the differences in who pays fees across counties:
http://chicagotitletransfertax.com/The complexities can be and
already are structured in a table format? Seems like a job
perfectly suited for a computer, not a human.
jhulla - 4 hours ago
Sometimes transactions stick at the strangest places. For
example, a buyer balks at paying a final $500 fee allotted to
him because he has hit his financial stress limit - potentially
killing the entire transaction.Good agents are not just
facilitating the transaction, but also acting as
friends/confidants/therapists for buyers&sellers - helping them
make responsible decisions. Good agents also come up with
creative solutions to complete transactions - this pops up
often in resolving inspection contingencies. Say there is
some leakage discovered underneath a bathroom sink with some
cabinetry damage. The buyer is getting cold feet. What do
you do?
[deleted]
mediaman - 2 hours ago
I think people should generally have professional help in buying
or selling a house. But the rates that brokers charge is out-of-
step with the help they provide.For example, in a $600,000 house
in an urban area, the two brokers earn $36,000. But I just bought
a house without a broker, and hired a real estate lawyer. Not
only was the lawyer much more versed in legal details of the
transaction, but he wound up charging me $500. Yes, he didn't
drive out and hold my hand, but he was extremely knowledgeable
and knew exactly what to look out for in all steps of the
transaction.In my experience, whenever the question of broker
commissions comes up, people come out to defend the expert advice
of the real estate agent and argue that people shouldn't "go it
alone" because the transaction is complex. And, generally, it's
true that people probably should not go it alone on an expensive
transaction such as buying or selling a home. But the agent's
advice is often mediocre, and they still lack the detailed
understanding of real estate transaction rules and law that a
real estate lawyer provides. So why pay the agent thirty times as
much as someone with more experience and formalized, specialized
education in the area? The only remaining reason is "marketing",
which is the service that is greatly devalued in the age of
online brokers.
notyourwork - 2 hours ago
I guess my question is why is it so complex? What complexities
arise that realtor's can help with.
strict9 - 5 hours ago
Bought my house via redfin and very satisfied with the process.
It's also a bonus for buyers, they send you a refund check for a
portion of the commission that normally all goes to agents.Their
agents may have less experience or knowledge, but as long as you
get highly rated/reviewed service providers (lawyer/inspector/etc),
that's all that matters. When I sell my current house it will
definitely be via redfin. So much is now done online, why pay high
commission to traditional realty companies?This is indeed an
industry ripe for change, and redfin is definitely doing just that.
1024core - 42 minutes ago
I like Redfin, but I have a couple of qualms with it:1. They will
tag a house as "hot" arbitrarily. The cynic in me thinks this tag
is for sale.2. They tend to hide information. I've seen houses come
on the market, not sell for weeks, go out and then come back in the
market for a lower price. But their "history" section does not list
"price reduced"; they just pretend like the previous listing never
existed. For example, the house at 110 Steiner Street (
https://www.google.com/search?q=110+Steiner+Street&ie=utf-8&... ).
It came on the market, and now is nowhere to be found. But when it
does come back on the market, they will completely erase the
history of this house not having been sold.3. They allow you to
filter with other criteria, but Walkscore is not one of them. I
have given them feedback several times, but no response.
debacle - 5 hours ago
Having worked in the real estate industry for a time, it's ripe for
disruption. Redfin is going to have a problem when it paves the way
for a flat rate competitor, but right now it's doing a massive
service to buyers and sellers.
maguirre - 5 hours ago
seriously curious as I am about to pay 10k+ for selling my house.
what are they doing that is so special?
bdamm - 5 hours ago
I think buyers could brave buying a home without a realtor.
It's a little crazy but doable.Selling is another matter
entirely. If you would like the peace of mind to know that your
home is actually in your past once the money is in your bank
account, use a broker. Having your past home haunt your future
can be a miserable prospect.
mac01021 - 4 hours ago
Why can't my attorney provide me with that assurance while
he's taking me through the closing process? What extra
thing is the broker doing?
harrumph - 4 hours ago
>What extra thing is the broker doing?The broker is causing
the closing to happen by finding and satisfying the buyer
along with the buyer's many, many issues with most
properties.
[deleted]
dpark - 5 hours ago
Cutting the fees in half.
vadym909 - 5 hours ago
cutting the fees by 25% actually. Redfin acts as the buyer or
seller's broker and only gives you back half of their 3%
commission. The other side's broker still gets their 3%. So
you pay 4.5% instead of 6%.
Danihan - 5 hours ago
How does a web site get licensed as a real estate broker,
anyway?
vadym909 - 5 hours ago
They are registered brokers with a website- just like
Windermere. They took this path vs being just a website
like Zillow.
bacontacos - 4 hours ago
zillow is much more than a website if you're an agent
hkmurakami - 5 hours ago
They have physical brokers in each region (I think the
unit is more granular than each state, iirc?)
apendleton - 4 hours ago
Yeah I think it's by metro area. I live in DC and the
same office handles DC and the Maryland and Virginia DC
suburbs, and I think many of the agents are cross-
licensed.
[deleted]
dpark - 4 hours ago
That only accounts for the selling side, though. You also
get a refund as a buyer and if you are buying and selling
with Redfin (not uncommon), the savings are
substantial.They actually only charge 1% commission as the
selling agent now, too, so vs a typical 6% combined
commission, they save 33% for the seller. (Assuming just a
sale)Redfin doesn't seem to disclose how they calculate the
refund anymore, though, so I'm not sure how much that works
out to be. Seems to be around half a percent, so lower
than it used to be.All combined, it's close to half of the
traditional fees that they either refund or don't collect.
skynetv2 - 2 hours ago
i purchased my house thru RedFin and it was an amazing experience.
Yes, a bit more hands on than conventional realtor but you never
know how much a conventional relator was working on your behalf
anwyay
haberman - 39 minutes ago
I'm closing literally today on a house I bought through Redfin.
It's my third Redfin buying experience. Redfin for buying is
great. Their website makes it easy to look for properties and get
alerts when properties you might like go on the market. No need to
pay a realtor to do that part.I'm still not using Redfin for
selling. When you sell, you're paying for a salesman, and a
salesman can make a big difference on how much you sell for, IMO.
Redfin will save you 2%, so the question you have to ask yourself
is: will a traditional agent make me 2% or more, compared with
Redfin? I think the answer is yes, they likely can.
BadCookie - 15 minutes ago
Indeed. When I needed to sell a house in the East Bay, the Redfin
agent wanted to list the property for almost 20% less than it
sold for. When I told her that I thought she was pricing it too
low, she looked at me like I was crazy. The local agent that we
ended up using instead (who had recently sold 3-5 houses in our
same neighborhood) had a much better idea of what the house was
actually worth, and also paid to stage the house--which Redfin
would not have done.We used Redfin to purchase that house, and
our purchase experience was very positive, but selling the house
with Redfin could have cost us a bundle. It would probably have
been fine if property prices had not been rising so quickly at
the time, but regardless, I am a believer in the value of staging
which is a service not covered by Redfin's fees.
notadoc - 5 hours ago
I'm still waiting for someone to completely eliminate the realtor
and charge a reasonable flat fee ($1000?) to buy/sell a house and
handle all the related details.Why do we need realtors at this
point? Everyone finds houses themselves online nowadays. Why does
anyone need to pay a whopper commission to some middle-man?
spelunker - 5 hours ago
I was recently a first time homebuyer and my real estate agent
was really helpful in basically holding my hand through the
process.He walked me through a contract to buy and sell, since
I'd never seen one before. He helped me figure out a competitive
offer for the house I wanted. He was able to spend time on things
like searching for houses or setting up tours while I was
working, it was great.Just looking at houses online only
scratches the surface of the homebuying process, IMO, and frankly
with my full-time job it would have taken me much longer to find
a house... assuming I would have even known how to get to
closing, which I didn't.
bduerst - 4 hours ago
Back in the early 2000's, there was a realtor group that
advertised a $900 flat fee for selling homes. Not sure what
happened to them though - could have been a dot com bust.
kazinator - 4 hours ago
If I were to guess: they probably went their separate ways to
join the RE/Maxes, Coldwell Bankers and Century 21s of the
world, where they could more than double their take for the
same work.
goshx - 5 hours ago
I agree. I've been waiting for this disruption for a while. In
the past 5 years all the realtors I had to interact with had to
do was to open the property I found and later prepare the
documents and tell me where to sign and who to pay, and obviously
collect a good chunk of money every year for rentals and the %
for sales. Every time I needed their help for something I
wouldn't get.I can't see how that could not been replaced by a
system of some sort.
rb808 - 4 hours ago
RE agents in most of the rest of the world charge 1-2%. 6% is
insane, and the buyers agent I really dont think adds value.
paulddraper - 3 hours ago
I recently bought from someone selling through Homie.
https://www.homie.comAbout $1000. Initial couple hundred to take
pictures, put up a nice sign, and list your house. The balance is
paid when you close. Scheduling viewings and offer submission is
done through their site. They also offer legal advice.The only
really nice feature they lack is HelloSign/similar integration
for the paperwork.
PenguinCoder - 2 hours ago
I was looking for a company like this to sell my house, instead
of through traditional realtor. I see their about page says "On
average, we save Utahns over $8,000 per transaction." Is the
service only available in Utah?
paulddraper - 1 hours ago
Probably...I thought that might be case but didn't see it on
their website when I looked.I live in Utah.I'm sure Homie or
similar will be very common within 5 years in most places.
jasode - 5 hours ago
>I'm still waiting for someone to completely eliminate the
realtor [...] Why do we need realtors at this point? Everyone
finds houses themselves online nowadays.The need for realtors
comes mostly from the sellers not the buyers. (Yes, some buyers
also contract a "buyer's agent" but the point remains that
realtors are still desirable to help market and show a
home.)Unlike the "dis-intermediation" that happened to travel
agents (online flight/hotel booking), and librarians (google
searches), or video rental clerks (Netflix), the elimination of
realtors to represent the most expensive component in an owner's
net worth is not going to happen because of a slick point & click
housing website.Consider that the vast majority of people don't
even post their garage items on ebay for sale. Compared to that,
selling a house is a much more complicated transaction. There's
a categorization in sales called "low touch" and "high touch"
transactions. A "low touch" transaction would be buying a loaf
of bread from the grocery store. For the forseeable future (at
least decades), selling homes will be a "high touch" transaction
and sellers will want the reassurance and "warm & fuzzies" from
another human middleman to help them fetch the best price.
(E.g., the owner would presumably hire the appropriate realtor
with the reputation and track record to quickly sell homes
similar to his/her property.)However, that doesn't mean more
efficiencies can't be wrung from the system. Many think the
typical realtor's commission of ~6% is way too high so it seems
inevitable that entrepreneurs will revolutionize the market.
Regardless of the new landscape (e.g. maybe no more MLS), the
human intermediaries will still be there.
anindha - 4 hours ago
When I was young before the Internet, it was impossible to book
overseas travel without a travel agent. As more and more
information became available and presented in a user friendly
manner booking travel online became the norm.It will take much
longer for the information required to buy or sell to become
easily accessible over the Internet but I have no doubt this day
will come.
jpmattia - 2 hours ago
> Why does anyone need to pay a whopper commission to some
middle-man?Not just a whopper commission, but a commission that
causes the buyer's broker to be absolutely incentivized against
your interest as a buyer.What a throwback to earlier economic
times.
javajammer - 3 hours ago
http://walawrealty.com/Flat fee, and for "all the related
details" - they represent you as lawyers. I had an exceedingly
positive experience buying with them in 2012. I wish their model
would become dominant.
fananta - 5 hours ago
I agree with your point, but realtors are protected but layers of
legislation. In many areas the realtor groups almost operate like
the taxi cartels.
[deleted]
rhodysurf - 5 hours ago
I used to think the same way, but then I bought my first house
and my realtor was insanely helpful. The entire process is filled
with random quagmires that I would have never known how to manage
otherwise.Someone with more experience may be more able to go it
alone obviously, but my realtor was invaluable.
goshx - 5 hours ago
Have you used TurboTax or an alternative to file your taxes?
Would something like that, with step by step and explaining
why's and how's not be enough for this purpose?
dlp211 - 4 hours ago
I think for stable markets; ie: markets where neither the
buyer or seller has a distinct advantage; probably. But I
just bought in a market where the sellers have a clear
advantage and buyers are competing aggressively against one
another. Houses in my market have an average listing time of
8 days, almost all with multiple offers, many with dozens of
offers.I thought my RE agent wasn't really worth what I knew
I would be paying him until we actually went to make an
offer. Their knowledge of our circumstance and the local
market let us put together an offer that despite not being
the highest offer, nor the most favorable closing (I used a
VA loan which takes on average 50% longer to close), we still
were able to come out on top. My agent helped us get an
inspection on the property the day we saw it so that we could
wave inspection contingency, knew that we needed to put up
more than the standard earnest money to account for our weak
closing position, and they were able to accurately predict
what the house would appraise for so that we could ensure
that we didn't overbid and waive the under appraisal
contingency.
dublinben - 5 hours ago
That doesn't explain why they should earn a percentage of the
purchase price, and not a flat fee.
jrs235 - 5 hours ago
They don't get paid unless there is a successful sale.
Listing contracts are for a fixed period. There are marketing
expenses and time invested to list and market a property. If
they don't successfully sell your home they don't get paid
and they are out any of their time invested and marketing
expenses.High risk, high reward.
notadoc - 4 hours ago
> There are marketing expenses and time invested to list
and market a propertyPutting a house on Zillow takes, what,
15 minutes?Perhaps the exception is very high end real
estate, but from what I've seen most of the high end
realtors are just really good at networking and schmoozing.
jrs235 - 4 hours ago
Add up all the time an agent spends previewing the
property before listing, taking calls (especially from
crazies) and arranging for showings, showings (including
driving to and from), negotiating (writing up offers and
counter offers), after acceptance arrangements such as
coordinating inspections, final readings, closing
arrangements. They only get paid if the deal closes.The
amount of effort is variable and unknown upfront (high
risk, high reward).Would you be willing to pay an hourly
rate or per service rendered UPFRONT fee? I'm sure there
are some brokers that offer such things. Most people
don't want to part ways with their money before they know
they actually sold their home (another nice thing about
not having to pay until closing... the seller only pays
if and at closing!)How much do knowledgeable and
experienced consultants make per hour?
bhandziuk - 1 hours ago
Knowledgeable and experienced consultants typically don't
make more than maybe 250 per hour (as a cost the client)
that I've seen. That's pretty high at that.
notadoc - 5 hours ago
> The entire process is filled with random quagmiresOK, but why
is that? And how many of those "random quagmires" are coming
from realtors?The real estate industry reminds me of the tax
preparation industry or car sales in the USA. My opinion is
they are all (by design) intentionally annoying, cumbersome,
overly complex, overly expensive, and excessively time
consuming, seemingly for no reason other than to protect vested
interests. These areas are ripe for dramatic disruption.
Balgair - 3 hours ago
They usually come from City Councils, county boards, school
levies, HOAs, insurance requirements on page 192.PGP.168,
etc. that are changing all the time. Depending on where you
are in the US, it really can be that bad very quickly. Ever
buy a house? The contract you sign is literally thousands of
pages of legalese that may or may not contradict everything
else in it. The Real Estate Agents (REAs) give you 'cover'
and smooth out all bumps. Joan knows Frank on XYZ council,
therefore you'll never ever catch any flack. Freddy is a REA
you used and therefore everything is 'above board' as far as
a judge cares, next case please. Ahmed knows good and bad
home inspectors, it'll take you 3 months of 8 hour days to
begin to figure them out. Etc. Yes, corruption/nepotism
sucks, PM me when it has passed from the face of the Earth.
If you are buying a home in anywhere near a 'desirable'
market, use a REA. 5k for 'peace of mind' is more than worth
it.
notyourday - 2 hours ago
> The contract you sign is literally thousands of pages of
legalese that may or may not contradict everything else in
it. The Real Estate Agents (REAs) give you 'cover' and
smooth out all bumps. Joan knows Frank on XYZ council,
therefore you'll never ever catch any flack.That's why you
pay for real estate lawyer to go with you to closing.
That's the only person qualified to help you. It is the
only person who represents you if you pay them.
abawany - 3 hours ago
In the 10 or so real estate deals that I have done over the
past few years, I have to say that the realtor (even the
exceptionally good ones) never pointed out any of the
nuances of the perils related to the entities you mentioned
above. In all cases, it was me, due to bad past experiences
with HOAs for example, who was proactively demanding that I
be given the HOA restrictions before making the contract;
there were plenty of deals I walked away from when I
thought the HOA was power hungry and ridiculous. EDIT: I am
not dismissing the role of realtors - they had good tips
that I use to this day. Here is one: start the homeowner's
insurance purchase/quotes during the option period to
ensure that any related surprises here will enable you to
walk away during the option period than trying to deal with
killing the deal with the much-higher earnest money amount
at stake.I have to say that the most insightful article I
have ever read about realtors came from the controversial
Freakonomics. It clearly outlined the separation of
concerns and interests and made it clear to me that if a
real estate deal is to work well, the only person
responsible is me and me alone.
just4themoney - 37 minutes ago
> start the homeowner's insurance purchase/quotes during
the option period to ensure that any related surprises
here will enable you to walk away during the option
period than trying to deal with killing the deal with the
much-higher earnest money amount at stake.Wow, this is
great advice and something I would never think of doing.
mox1 - 5 hours ago
Agreed, for most people this is by far the single largest
monetary transaction they will make (aside from another home
purchase) in their entire life. Some form of "assistance"
during the process is necessary.I'm a big DIYer and will go to
great length to research and do things on my own. My Realtor
(Redfin agent) payed for himself and then some during the home
buying process. Your paying for their experience and
knowledge.My agent making statements like "I had our lawyer
review our signed purchase agreement and because of X,Y,Z we
are still ok" helped me understand why I'm paying a big company
a lot of money to help me out.
japhyr - 5 hours ago
I agree. I live in a small isolated town, and I thought
realtors were artificially increasing the home prices (not
values, but prices) in the small pool of housing available
here. But their local knowledge was invaluable in both buying
and selling a home.That said, if a buyer and seller agree on a
sale independently of any realtor here, we can go to a local
realtor and they'll happily facilitate the sale for a flat fee
of around $1000. I've done that once, and had a number of
friends who also did so. Most of the realtors recognize that
the bulk of their commission comes from the listing and
marketing process, and the paperwork is just something they
know how to do correctly. $1000 is a fair price for knowing
that's all being done correctly and fairly.
ericb - 5 hours ago
You don't need a realtor, fyi, just a good real estate
lawyer, which you generally need anyway when buying/selling a
house.A lot of the apparent value of realtors disappears when
you do the process yourself. source: have FSBO bought, and
FSBO sold, and redfin bought, and worked for Coldwell
Banker.Getting on the MLS is cheap/easy now with discount MLS
listings--I wouldn't do fsbo without it, even though you
usually pay buyer's agents.
opo - 4 hours ago
>You don't need a realtor, fyi, just a good real estate
lawyer,Lawyer prices will obviously be different in
different parts of the country, (so maybe a lot cheaper
where you are) but I knew someone who arranged a
transaction without a realtor and paid a lawyer a lot more
than $1,000 to put together all the necessary documents.
One thousand seems like a good deal.>...which you generally
need anyway when buying/selling a house.You've found it
necessary to always consult a lawyer when buying/selling
even though realtors were involved? Why? What value did
they add?
runako - 3 hours ago
Just to keep pricing in context, the media home value in
the US is right around $200k. So the transfer cost ends
up being ~$12k. If the RE attorneys (on each side) each
spent a full day @ $200/hour on the closing, you're
looking at $3,200. That creates an extra $9k to split
between the parties. And there's no way a closing takes a
full day for an attorney (and most will be less than
$200/hr).The best part is that that same $3,200 will
transfer a house that costs a lot more. The more
expensive the house, the more you should want to use a
lawyer over a realtor.
opo - 2 hours ago
>... That creates an extra $9k to split between the
parties. And there's no way a closing takes a full day
for an attorney (and most will be less than $200/hr).Yes,
most brokers use standard forms, there isn't much actual
expense there for them - which is a good thing because a
real estate attorney I know bills at more than $400 per
hour.A good realtor does a LOT more than just fill out
the contracts for you to sign. The realtor will spend
lots of time scheduling inspections, helping find
contractors, being at the property to watch contractors,
scheduling the photographer, putting the ad on MLS,
running open houses, answering questions from buyers,
negotiating with buyers, working with the title company,
arranging to hand the keys off to the buyer, etc, etc.
You are paying for their experience to know what needs to
be done and for the time it takes to do all those tasks
that I mentioned (and others). The standard commission
costs are high, but there are brokers like Redfin who are
less expensive.
just4themoney - 13 minutes ago
You (the buyer) schedules the inspection, you can ask the
real estate agent to do it for you but it's a simple
phone call.I don't understand the contractors statement,
a contractor is not a usual part of a real estate
transaction, at least in my experience?Once again,
scheduling photographs is a simple phone call to a
photographer.Putting an ad on the MLS can be done
yourself for a small fee - https://fsbo.com/flat-fee-
mlsBuyer's questions can be better answered yourself,
most sellers agents are unable to answer any questions
and they'll have to relay most questions to you anyways,
once again, my experience.Open houses are more about
generating leads for the agent then they are about
showing your house.Negotiating with buyers can be done
yourself easily.Working with the title company isn't
something real estate agents do, not around here anyways.
My lawyer handled all the title stuff. Plus what sort of
"work" does an agent need to do with the title
company?Handing off the keys? Seriously? That is done at
closing and shouldn't cost $5,000+.
ericb - 3 hours ago
A house sale is really a large contract agreement with a
number of finer points. The legal fees were maybe $750 -
1200 but memory is sketchy on that. There are filings
necessary with the state and other items that make it
legal, and at least in Massachusetts USA, it is a lot
different than say selling a mountain bike. Banks need
certain info for loans, there's the deed, etc,
inspections, etc.When you are signing your 20th piece of
paper, you realize you needed the lawyer. One dirty
secret of realtors is that all this work is handled by
lawyers, and the impossible-looking parts of a real
estate transaction are handled by lawyers who understand
it and have it down to a fixed-price cookie-cutter
process for their locality. They did "consult" with me a
bit and gave some "free" advice, but I just paid the fix
price for doc generation mainly.
opo - 2 hours ago
I agree it would be a bit risky to buy/sell real estate
without any outside help. My point was just that if you
are already using a realtor, it shouldn't generally be
necessary to also hire a lawyer.
just4themoney - 30 minutes ago
How do you get a mortgage without a lawyer? Our bank
required the lawyer to do the title search, title
settlement, and title recording - according to my closing
disclosure, which I just consulted.
ericb - 2 hours ago
The realtor and bank rely on the lawyer for your
transaction and documentation.When I say "you need a
lawyer anyway", even if you used a realtor, a lawyer drew
up the docs for closing, and you hired the lawyer who put
together the closing docs, although you may not realize
it. You are paying the lawyer directly as a line item in
your closing costs, so they are technically "your
lawyer." Most people think the realtor had something net-
positive to do with the magic house-transfering
documents, but, not really.This may vary by state/locale.
abawany - 4 hours ago
In my case, there was always a lawyer involved in the
contract with a fixed for dealing with documentation, as
part of the closing costs. I never explicitly involved a
lawyer but have always been intrigued by the idea of
doing a FSBO deal with a lawyer generating all of the
real estate contracts for a fixed fee.
bubbleRefuge - 3 hours ago
Or just a title company. I have twice gone without realtors
in transactions. Sales contracts in my state, Florida,
have a uniform structure. The title company, if its large
enough, probably has a staff attorney. In one case, I was
able to escalate issues to the attorney when the seller was
tussling with me about changes to the contract. No
additional costs other than normal closing fee's associated
with title insurance and such.
ferentchak - 5 hours ago
Do they make you sign a contract or can you put 3% discount
for person to person sale? That way they are paying their
agent if they decide to use one.
lighthazard - 5 hours ago
It seems the takeaway from all these comments here is that
there needs to be more education in the home buying
experience.
just4themoney - 11 minutes ago
Agents and brokers tend to make the home buying process as
complicated and as murky as possible on purpose, job
security.
ovulator - 4 hours ago
As someone who bought my first house without a realtor involved
at all. I don't know what value they could have added. Thanks
to Zillow, Redfin and the like it was a piece of cake to locate
a house. I found one that was for sale by owner that I liked,
we negotiated on a price and came to an agreement. There was a
lot of paperwork, but I'm literate and can read. Most of the
complex stuff was with the loan and the title company, both of
which were more than happy to walk me through the steps of
each.I really have no idea what tens of thousands of dollars
extra would have bought me. I don't need someone to hold my
hand and look at cars with me either.
meesles - 1 hours ago
Having just left a job in this exact field, maybe I can give you
an insight I haven't seen on here yet:There's a huge monopoly
present in real estate data right now. At a very high level: The
NAR (National Association of Realtors) licenses real estate
agents, they pretty much allow you to do business and you cannot
sell houses in the US without their approval. MLSes (Multiple
Listing Service) are organizations created for a
region/state/city, depending on the size/market. These are
exclusively permitted by the NAR. All realtors MUST put their
house data on an MLS. These realtors are also forced to pay large
amounts to access these feeds. All traditional real estate data
only lives in these organizations, with high barriers to
extracting and manipulating the data since they want to keep
their monopoly.Basically, the real estate world is very
entrenched in these monopolistic practices, and we're only now
seeing significant efforts to accumulate and dissipate the data
in a way that makes it more accessible. Personally, I wouldn't
expect any major overhaul as the NAR is a HUGE lobbying group and
have gotten a good amount of legislation around real estate on
their side.Hope that helps!
ssewell - 5 hours ago
Isn't the main value of a realtor the ability to provide access
to the home for sale, monitor the visitor, and provide insight in
regards to the construction & quality of the home?I don't think
most people expect the realtor to recommend random homes based on
the buyers preferences, as most people use services, such as
RedFin, to narrow down the homes that match their best fit.
berberous - 5 hours ago
And that's worth 3%? The issue with realtors is the exorbitant
fees they still charge.
bradly - 5 hours ago
In my experience a good realtor will either save you 3% when
buying or get you an extra 3% when selling by knowing the
area, knowing the right improvements to make, home staging,
and negotiating.
gpawl - 2 hours ago
It's only exorbitant since the price of housing has
skyrocketed in the past 20 years
dmreedy - 5 hours ago
Have you ever worked with a realtor? The fee may seem
exorbitant because you pay it in a lump sum. But if you were
to try and calculate their hourly fee, you'll see even the
mediocre ones who are only moderately attentive to their
clients are often making only a few dollars an hour.
ryandrake - 4 hours ago
Exactly. I worked with a buyer's agent for 2+ years, and
during that time saw over 100 houses and submitted about 30
written offers. None of the offers were accepted, so he
made $0 from me. I felt kind of bad, but the money he makes
from his successful transactions probably makes it worth
it. Not my problem.I don't know if they deserve a % of the
purchase price, but they definitely ought to at least
charge by the hour.
pmiller2 - 5 hours ago
Maybe so, but why is that worth a 3% commission on the sale
price, on both sides of the transaction?
ssewell - 5 hours ago
I never understood the 3% myself. Why does someone get
$60,000 for performing the relative same amount of work when
a home sells for $2M?
wyc - 5 hours ago
Buying a house is among the largest purchases of many peoples'
lives. It could be worth the $5,000-$50,000 (~6% of value in
U.S.) for the piece of mind. People are used to using realtors. I
don't think enough economists and business people give culture
enough credit for its impact on businesses and finances. It's
common enough that if the buyer tries to make direct contact with
the seller, all parties are startled and the deal falls through
entirely.Next, there are established network effects in the real
estate industry. Companies that have tried to offer a flat-fee
house brokerage service at scale have been met by massive
resistance from existing realtors, who then dissuade their many
buyers and sellers from even considering those services. I think
this has been a brick wall for a long time.
soVeryTired - 5 hours ago
I'm pretty sure purplebricks in the UK are flat-fee.
Simon_says - 4 hours ago
That fee could easily be 3-6 months salary. That's a hefty
price to pay for culture and piece of mind.
acdha - 1 hours ago
Spread over a 30 year mortgage? I'm not saying it's nothing
but many people really value peace of mind.
jbob2000 - 5 hours ago
Have you ever sold a home? Potential buyers will drive you nuts
with all the stupid questions they'll ask. A good realtor has the
communication skills to move you along to a sale much faster.
svachalek - 1 hours ago
And it only costs about $50,000 for that...
toomuchtodo - 5 hours ago
"I'm still waiting for someone to completely eliminate the need
for a software engineer and charge a reasonable flat fee to bolt
together some libraries and handle all the related details.Why do
we even need software engineers at this point? Everyone can find
the libraries and open source tools they need online nowadays.
Why does anyone need to pay a whopper paycheck to some middle-
man?"You're paying for someone's expertise, like in most
industries.
nihonde - 5 hours ago
I'm sure there are exceptions, but I've never met a realtor in
the US that wasn't an outright impediment to an easy sale. For
one thing, their incentives are usually adverse to one or both
parties. Also, they're usually in the habit of pushing volume,
and are lazy/terrible at marketing even the most compelling
properties. They fail to grasp the fundamentals of customer
service and fall back on scammy guilt trips and pressure sales
tactics. Meanwhile, they're cutting every corner they can
find.In Japan, I had the opposite experience. Here, realtors
worked really hard for me, and most of them are on a meager
salary without commissions.
gist - 4 hours ago
Agree. But you are wasting your time on HN arguing those
points. On HN (many) people are curious, think they rise to a
challenge, and think they have the time and bandwidth to defeat
any obstacle or achieve any goal they want. And are
additionally willing to DIY it just for sport. The shocking
thing is how little they understand how 'normal' folks operate.
Wanting simple, easy and not necessarily having either the
time, intelligence or desire to cut out a useful middleman.Also
I love when people decide that the way someone else earns a
living makes them overpaid and not worth what the market is
paying them.In the end as I said in another comment most people
selling real estate aren't making tremendous money doing it
with all the time wasted on people who don't end up buying.
hueving - 3 hours ago
The problem isn't that real estate agents are offering the
service, it's that you're pretty much forced into using it.
gist - 1 hours ago
You are not 'forced' into using it.You can compile your own
information of houses that may be for sale that aren't for
sale and approach the owner directly and try to buy it. You
can also approach people who had their houses listed that
took them off the market and approach them after the
listing expired.Think I am making this up? That is exactly
what I did with one property that I bought. It was listed
one year and never sold. I wrote a letter to the owner
saying I wanted to buy it, struck a deal, and bought it.
Simple common sense.Let's say you are interested in a condo
(as only one example could be houses in a development) in a
particular building. Send a postal letter to everyone in
the building. Say you are a serious buyer and ask them if
they want to sell. In a large enough building you will get
people that are thinking about selling and you can strike a
deal.Management offices (at condos) often know who might be
selling as well. Contact them.I have gotten deals for
buying real estate from property management companies as
well. They send me leads and I don't have to use a realtor
at all. They know I am a buyer because I have communicated
that to them. Also helps to buy small gifts for the person
that holds that info or at least be super nice.
paulgb - 5 hours ago
Isn't that basically what SaaS is? Companies that would have
had to hire engineers to do bespoke work can contract out to a
SaaS vendor and get what they need for a fixed fee.SaaS doesn't
make sense every case, just like Redfin doesn't, but it's still
valid.
toomuchtodo - 5 hours ago
Those SaaS vendors are still paying developers; if a cookie
cutter self-service model works for your needs as a customer,
more power to you.Rarely has that appeared to be the case in
the dozens of real estate transactions I've been through, and
it might explain why Redfin can't grow faster; people want to
have their hand held through the largest transaction of their
life, and those who can charge more for those services will.
abakker - 2 hours ago
Meh, at some point, it always becomes a matter of
perspective. If the same work is getting done, then you
just shift around who does it or how it's paid for.Rarer,
but more valuable, is discovering new work to do, or old
work that doesn't need to be done, and then either
inserting it or taking it out of an existing
market/process/role/job/company, while still managing to
get paid for your own contributions.
GFischer - 1 hours ago
""I'm still waiting for someone to completely eliminate the
need for a software engineer and charge a reasonable flat fee
to bolt together some libraries and handle all the related
details."That can be done (and is done) for cookie-cutter
projects such as websites.A company I consulted for offers 600
dollar CMS websites, no extra fees.I've also paid amazingly low
prices for other kind of "bolt-library-together" projects.A lot
of companies do overpay, but there's also a lot of variance
between projects.
jjppott - 2 hours ago
I generally have a different opinion. I am somewhat in the
industry (construction side) and I feel that generally most
realtors dont really have much knowledge of what they are
selling. Furthermore, it is relatively easy to get a real
estate license (at least where I live) and the handful of
acquaintances that have gotten their license really dont know
more than the average person.I actually find the lack of
knowledge of most realtors very surprising (not that there
arent some really good ones out there). When we were working
with one to find a home, we would walk into a place and our
realtor would look through the listing sheet and be like "oooh
they supposedly have a good quality insulation in their walls",
I would then need to explain to him what an R value means and
that no they truly didnt have good insulation and what they
were using as a marketing point was in fact the minimum
required by code. I would then point out a few other items
(jump ducts, hollow core doors, etc) that would make me feel
like I was walking into a Habitat for Humanity type of home,
not a $600,000+ residence.Buying a home is the largest single
investment people are likely to make in their lifetime and they
have almost 0 knowledge about what they are buying and do
almost no research into it other than the location. They then
rely on input from someone regarding what they are buying that
has very little additional information other than comparable
sales and "knowledge" of the market. I wrote a business plan a
little while around this, but never took past just putting some
ideas on paper.
alexchantavy - 1 hours ago
Any rules of thumb/advice you can offer on evaluating home
quality from your experience?
jjppott - 1 hours ago
That is a tough one. I have been in the industry for 10+
years and a lot of it in the higher end custom home side.
To me a couple of things that standout as super cheap are
jump ducts (basically they didnt bother to put a return air
duct in a room and just put a whole in a wall with grills
on either side to allow air transfer), hollow core interior
doors (you can hear/feel the difference if you knock on a
hollow core door versus a solid door), all stucco exterior
(cheapest clading material where I live), sometimes upper
floor water pressure is almost non-existent and they dont
put in a booster pump, and on and on... I feel like it
really varies from project to project. I have seen some
where they actually spent a decent amount on the cabinet
drawer/door fronts, but then didnt bother to spend a couple
of hundred more on good undermount drawer guides. Others
where they didnt bother to think about layout/flow in a
kitchen (aka the island looks great, but if I open my
fridge I cant squeeze by the island and the door to
actually get anything out of it). I think generally a lot
of what people are trying to build today qualifies as
"modern" but to me it just looks/feels cheap. To truly do
modern well is very expensive. I dont particularly like
the look, but thats just my opinion.Older construction is
another area entirely. When flipping houses became popular
a lot of people got into the industry who didnt know what
they were doing, or they went about trying to do it as
quick and cheaply as possible. I have heard that the less
you know about a place you are trying to flip the better.
AKA if I dont open up any walls to see if the electrical
doesnt actually meet code, then I dont have to spend a
bunch of money replacing it! Or I didnt get a structural
engineer to look at the foundation so I dont know if there
are any issues with it and therefore I dont need to
disclose anything to a potential buyer.
just4themoney - 1 hours ago
Yes, yes, yes, this is so true.When I was buying my house
every time I asked a seller's agent a question about a house
their answer was "I don't know." Every single damn time! If
it wasn't written on the MLS they don't have a clue. That's
even assuming the seller's agent was even physically there
for the showing, only a few were.My loan agent also told us
that the taxes listed on the MLS were almost always flat out
wrong so he always has to ignore the MLS and call the town
when drafting up mortgages. I can't help but wonder if that's
not so accidental. The taxes listed on the MLS for the house
I ended up buying were wrong, for what its worth. Two
municipals tax my house and the MLS only listed the tax for
one of them.
pfranz - 1 hours ago
I guess I'm looking for different expertise. I wouldn't
trust them to have any building knowledge. I want them to
know the local market. I bought a house in Los Angeles a few
years ago. Because everything is so expensive we were fairly
open to different areas in a radius around our jobs. It was
easy to overlook neighborhoods that were a good fit just by
looking at a map of house sales. I reached out to a few
realtors in different parts of town. They could help answer
questions about schools (and charter schools), what was low
and high for the neighborhood, and other things I could find
out myself, but would take too much time if I did it for a
dozen neighborhoods.They also were really helpful in
scheduling walkthroughs before the house would go on the
market, and scheduling all of the inspections--they also
offered to be on site if I couldn't make it.I also think they
keep the sale rational when either side can get too
sentimental. After inspectors found a few, minor things, the
seller only offered to address them after adding another 5k
onto the price (at no point was 'as-is' mentioned). This was
after a few other petty things from the seller and I
considered walking away. The house had been in escrow with
no backup bids before we showed up. So I wouldn't be
surprised if that happened last time, too.
bhandziuk - 1 hours ago
This is so true. Not only do they typically not know anything
more about nay given home that you, the buyer, do. If they
are on the selling side they will also outright lie about
home features. I experienced this so many times on houses I
visited and even on the house I ultimately purchased.You just
have you shrug your shoulders and fix whatever they
misrepresented.
dgfgfdagasdfgfa - 4 hours ago
Expertise at what, exactly? It's often incredibly difficult to
assign any value to realtors except 'knowledge of market',
which should be the easiest part to automate.
msielski - 4 hours ago
Knowledge of process, not just market. Which, don't get me
wrong should also be easy to automate.
toomuchtodo - 3 hours ago
The hubris of this forum is astounding sometimes.Zillow and
Redfin have attempted to automate just the valuation of
properties (with enourmous resources behind them), and
still aren't as accurate as traditional appraisers. It's
easy?Edit: Even Zillow agrees. There's a million dollar
prize if you can do better.http://www.marketwatch.com/amp/s
tory/guid/D24B68EC-4090-11E7...
just4themoney - 1 hours ago
So? Real estate agents aren't appraisers and shouldn't do
"official" appraisals because of misaligned incentives
(among other reasons).Appraisals are kind of weird
anyways, they are only an somewhat educated guess until
someone actually buys the property and they are pretty
individually subjective. My friend had 3 different
appraisers come to her house and do three different
appraisals and they all varied by quite a bit and one
was absurdly high, much higher than the others, and
extremely unrealistic (IMO). Appraisers also have
information that algorithms don't because they actually
go to the house and view the property with their own
eyes. They can take into account better the condition of
the property and "soft," more subjective inputs that you
can only tell by actually viewing the property. It's not
really directly comparable to an algorithm since there's
just a subjective bend to the whole process and there's
much more information available to appraisers.Not only
that but when the bank does an appraisal for a mortgage
the appraiser's job is only to justify the selling price.
They start with the agreed upon selling price and they
use data to justify it, they don't go into it blind, they
consider and analyze the agreement of sale as part of the
valuation. Zillow obviously can't take that info account
as Zillow doesn't have that information. So you're
comparing apples (a market analysis based on public
information) to oranges (a justification of a privately
agreed upon sale price).An appraisal is also cheap,
especially compared to a real estate agent. Ours was a
flat $425.https://theappraisercoach.com/why-most-
purchase-appraisals-s...
MichaelGG - 3 hours ago
Don't professional appraisers actually go to the property
and look around?As for the rest, why should the process
of selling a house require "expertise"? Apart from
inspections, which require domain knowledge of
infrastructure.
jasode - 2 hours ago
>why should the process of selling a house require
"expertise"?At a fundamental level, one could say sellers
don't require outside expertise to sell a home. Real
estate agents are optional. There is a concept called
"for sale by owner" which is a strategy some homeowners
use. They can list the house on their own (not on MLS
though), vet potential buyers, coordinate the showing of
the home (appointments and/or open houses), etc. They
can also get a real-estate lawyer to draw up contract
papers, handle earnest money, etc.However, most sellers
do not want to mess with all the above. They literally
do not have the "expertise" to do it all themselves.
(Yes, the homeowners can sell a car on Craigslist but
selling a home is a step change in complexity.) Hence,
you end up with middlemen like real estate agents.Some
people think real-estate agents only exist because they
have a monopoly on the MLS computer listings. That's not
true. Even if somebody disrupted MLS database with
Zillow listings, real estate agents would still exist.
Selling a house is a complicated enough affair that
intermediaries who specialize in it would always be a
natural emergent phenomenon. The real economic question
is whether they can keep charging 6% commissions as the
internet evolves.
just4themoney - 1 hours ago
Most of the time you can list a FSBO house on the MLS for
a small fee. Our MLS has plenty of the FSBO houses
listed.https://fsbo.com/flat-fee-mlsThe thing is, a lot
of time FSBO houses tend to be overpriced, which is very
unfortunate.
GFischer - 1 hours ago
The real economic question is whether they can keep
charging 6% commissions as the internet evolvesThat's the
point. In pre-internet ages, there was a huge information
imbalance that kind of validated that 6% (also, there
wasn't such a ridiculous housing bubble).Someone
mentioned a real estate agent making 1250 dollars/hour. I
would be willing to jump whatever hoops were needed to
make that kind of money if I were in the U.S.
jasode - 41 minutes ago
>That's the point.Well, the percentage is only part of
the point. Some commenters in this thread are truly
perplexed why the agents even _exist_.They exist because
sellers want them to exist. I'm saying it's naive to
think that a new revolutionary website with a slick UI/UX
would make agents obsolete. Agents may make less money
(e.g. free market pushes their median income from $45k to
$20k) but the agents won't go away. If you have a
population of people that don't want to do something
(hassle work of selling) and a segment of population
willing to specialize in selling, then boom, you end up
with agents. A new website or smartphone app doesn't
remove the desires for that business
relationship.>Someone mentioned a real estate agent
making 1250 dollars/hour. Most agents don't make much
money[1]. (Median is ~$45k.) There are a handful of
superstar agents selling multi-million dollar mansions
but most agents are selling more modest properties.[1] ht
tps://www.google.com/search?q=average+real+estate+agent+i
n...
GFischer - 1 hours ago
I'd say that Zillow and Redfin are better on average than
traditional appraisers.Traditional appraisers might be
better in certain markets or conditions though (probably
Zillow and Redfin are more generic).I've worked on
homeowners insurance and I've seen wildly differing
appraisals.
dgfgfdagasdfgfa - 23 minutes ago
Getting the appraisal from the place that's selling to
you seems like an inherent and obvious conflict of
interest. Ideally the appraisal should be a flat flee
from a third party.In the context of your comment, what
value do you see realtors providing w/r/t appraisals?
hueving - 3 hours ago
If you don't know the difference between an appraiser and
a real estate agent, you should stop commenting in such a
condescending tone.
toomuchtodo - 3 hours ago
Fair point! A realtor can still walk a property to
perform a market analysis, which is still more accurate
than an automated valuation.I'm exhausted by the never
ending comments here "it's easy! Anyone can do this!"
when it's clearly not. I'm simply countering the
disingenuity, whether the source is ignorance or
arrogance.
stickfigure - 1 hours ago
Anyone can do this. In fact, I do it every time I walk
into a home and decide what I might be willing to pay for
it.
dragonwriter - 1 hours ago
Anyone can do an estimate; whether they can do it better
than Zillow, etc., algorithms is a different question.
cgh - 1 hours ago
As buyers, we simply hired an appraisal firm. I think it
cost around $300. Then we hired a notary public to handle
the paperwork, about $2500.Honestly, if you think real
estate agents are the only ones capable of managing this
process, then I can only assume you've never bought a
house.
just4themoney - 1 hours ago
>A realtor can still walk a property to perform a market
analysis, which is still more accurate than an automated
valuationWow, how on earth do you know that!? That's a
pretty bold statement and I don't really see anything to
justify it at all. You start with "algorithm aren't as
accurate as traditional appraisers" and then conclude
from that "real estate agents (who aren't appraisers!)
can give a more accurate market analysis than
algorithms." There's a big leap there.Even if this was
true that real estate agents do a better job than
automatic algorithms it's still kind of irrelevant
because an appraiser cost somewhere in the neighborhood
of $300-$600 where as an agent costs $5,000-$10,000+. If
you need an appraisal you hire an appraiser, not an
agent.
bacontacos - 1 hours ago
In markets where anything can happen and buyers overbid
on the order of 100-300k over asking price simply because
they want it and will do anything to get it, it is very
difficult to accurately estimate the value and/or selling
price of a home.also, ever wonder why the home appraisal
comes in right at the offer price during the loan
process? its not a coincidence. the appraised price
typically has more to do with conducting a business
transaction in the interest of all parties involved and
less to do with an actual valuation of the home.
city41 - 4 hours ago
The developer's expertise is often not needed, such as Wix,
Google Sheets/Excel, Wordpress, etc. Developers will be
middlemen less and less as technology progresses, same as
realtors.
ferentchak - 5 hours ago
I can see some of the expertise coming into play on the selling
side.Can you give me a few examples of what kinds of value one
gets while buying?From what I can tell the main service that my
realtor offered when I buying my place was access to the MLS.
We found the houses we wanted to look at and he gave us access.
Dollars per hour he was doing very well working with me,
although I might be an exception.
toomuchtodo - 5 hours ago
In my most recent homebuying experience, my realtor was able
to point out several facts about the house based on the
surrounding market that saved me about $40k. It also helps
that I don't pay for the realtor on the buy side.What's your
argument against a good realtor who saves you any amount when
it's coming out of the seller's fee?Edit: By the time you've
come to visit a home you're buying, the seller has already
agreed to the commission percentage with their agent. The
money is already spent.
hkmurakami - 5 hours ago
You're surely paying for the realtor in a pass through
fashion on the sale price of the home.
ferentchak - 5 hours ago
The money from the seller isn't free. For example there is
a chance that I could get them to sell the house to me for
less than what I am buying it for. If for example the
seller met me half way on those fees that's a decent amount
off of cash.When I was buying my home the loan person I
worked with is family so she helped me more than my
realtor. Looked into neighborhoods for me etc. It could be
that they were looking out for me more than normal.I am in
a market where houses sell instantly, more or less you look
at a house and make an offer within out 24 hours or else
it's gone. Which is crazy but the realtor didn't even get
much of a chance to look into things here for us.
wavefunction - 4 hours ago
Yes, your loan person was definitely going far beyond
what service any normal customer would receive from their
loan person.
ferentchak - 2 hours ago
I'll make sure and call her and tell her I love her!
jasode - 4 hours ago
>Can you give me a few examples of what kinds of value one
gets while buying?If a buyer is unfamiliar with the area
(e.g. job relocation), a competent agent can point out the
desirable & the unpublicized undesirable aspects of
particular neighborhoods. The agent knows the area
intimately and that knowledge can be worth paying for to
avoid buying the wrong house.If I'm living in the same house
for 20 years and I see a house right down the street from me
go up sale that would be perfect for my elderly parents so I
could keep an eye on them, I wouldn't need a buyer's agent
since I would already know more about that house/neighborhood
than any agent would.
dgfgfdagasdfgfa - 4 hours ago
Seems like an awful large price to pay for some low-
quality, fear-mongering, dog whistling. Seems like a great
way to encourage people to spend more than they want to!
notyourday - 2 hours ago
> If a buyer is unfamiliar with the area (e.g. job
relocation), a competent agent can point out the desirable
& the unpublicized undesirable aspects of particular
neighborhoods.This is just utter rubbish. Buyer's agent has
absolutely no incentives to publicize undesirable aspects
as the agent is still paid half of the commission on the
sale price which means that the agent has all the
incentives to inflate the price.But lets pretend that this
is the exclusively buyers agent? Well, the thing is - if
this buyer's agent is not working for buyers only brokerage
he or she is still going to be not on a right side because
the brokerage needs cooperation of the sellers agents. In
fact, the customer of a buyers agent is seller's agent, NOT
the buyer. Even worse, where a buyer can do 2-3 transaction
via agent ( unlikely really but possible ) the agents that
represent the other side are likely to do dozens of
transactions with him or her.It is even worse for the buyer
only brokerages ( they do exist but they are super rare
).This entire agent industry needs to be destroyed.
dvcc - 5 hours ago
Isn't this basically Redfin? It might not be a flat fee, but it
is a reduced fee. Also intermediaries are still needed for
guidance and walkthroughs, its not like viewing homes online is
all there is to it.
zjaffee - 4 hours ago
I can't really speak on the aspect of buying a home, but when we
sold my grandmothers home having a solid real estate agent
certainly was mutually beneficial. They knew what needed to be
done in regards to quick fix repairs that were far cheaper than
the value added to the home when sold, and in turn earned a
higher commission fee for themselves.I'm not sure how good redfin
is to work with on the sell side of things, but I have a hard
time imagining that a flat fee gets you the personal attention
needed to be able to sell a home for 10% above what you were
hoping to get.
ransom1538 - 5 hours ago
Mainly they are protected by the MLS listing service. You can
buy a house with a flat fee now with a decent RE lawyer.
jrs235 - 5 hours ago
In many states, real estate brokers are responsible for ensuring
that laws are followed and held accountable by a state government
office. This means brokers take on risk and liability. Many
states require a brokers license in order to sell real property
for another for a fee. Yes, brokers are trying to protect their
generous income structure.Brokers (and salespeople) are only paid
on successfully selling the property. The truth is not many
people want to pay someone per hour or per showing to see houses.
You can certainly sell or buy a home without a broker. You are
bearing the risks in that case. If you buy and sell a home on
your own and the deal falls apart, if the contract was not valid
or not enforceable you could owe or lose thousands of dollars.
Yes, you can have a lawyer draft the contract but a lawyer can't
(in many states) show the property (ADD: and a lawyer is going to
charge for each and every offer you written up. You pay
regardless of if the sell happens or not).With time I see brokers
fees approaching a flat fee for facilitation services only (so
long as they don't represent the seller or buyer in the
transaction).Why do we still have sports agents? Can't players
and teams negotiate on their own?
[deleted]
bdamm - 5 hours ago
Having gone through four home-buying episodes, where my wife (an
ex-realtor) spent massive amounts of time trolling Trulia,
RedFin, calling police departments, gathering reports from the
local City Hall, I can tell you there is still a service to be
provided by agents. And anyone who has bought a house knows that
the collection of contracts that represents "buying a house" is
not a small collection, and errors can be logistical disasters
down the road.A good agent is worth 10x their commission. A bad
agent, of which there are many, is a waste of money. And the big
rub is that people who could be buying homes probably aren't
simply because they don't know the dozens of tricks that can be
employed to make an unaffordable situation affordable, or able to
identify a good deal.If you're comfortable buying a home without
any background check, then I guess you don't need a realtor, but
I wouldn't do it.Oh, and the laws that protect realtors, toss
'em. What we really need is Yelp for realtors.
blocacres - 4 hours ago
I'm currently working on solving this problem, hoping to
launch in the next year. The truth is the average real estate
agent doesn't have a college degree and has been in the
business for less than 3 years. And in a hot market, when
houses sell in a week, the agent is worth even less. What
marketing plan is going to sell a house in a week? None at
market value.Furthermore, buyers are walking into transactions
thinking they aren't paying for a realtor when they are paying
for both sides in the price of the house.
harrumph - 3 hours ago
> What marketing plan is going to sell a house in a week?
None at market value.Do not agree. Markets are only
collections of people, and brokers know people, some of whom
are buyers and a few of whom are the perfect buyers. Reaching
those people is the marketing plan. Also, this is not buying
airplane tickets, this is the single most costly and
complicated process buyers and sellers will likely go through
in their whole lives, so time frames of a week are fantasy.
eric_the_read - 2 hours ago
Depends entirely on your market. A former co-worker sold
his father's house for tens (possibly hundreds, I don't
want to oversell this, but I can't recall for sure) of
thousands of dollars over list in Denver in less than 3
days. If you count closing, it's definitely more than a
week, but a contract was signed very quickly.
harrumph - 2 hours ago
I hear you -- I'd only say the marketing, showing, offer
and acceptance took three days but selling of the house,
by any meaningful/legal definition, took much longer.
fraserharris - 5 hours ago
What is the purpose of calling police departments?
hkmurakami - 5 hours ago
Crime in the area, for one.
jrs235 - 5 hours ago
To determine if any possible meth activity is associated with
the home.
notadoc - 5 hours ago
> A good agent is worth 10x their commission.You actually think
a 'good' realtor deserves a 60% commission? I can tell you're
married to a realtor.
bdamm - 2 hours ago
My bad, we're actually pretty good at shrinking the realtor
commission, we never pay 6%.
iopuy - 55 minutes ago
> My bad, we're actually pretty good at shrinking the
realtor commission, we never pay 6%.Maybe a better
wording:A good agent is worth 10x their (extremely?)
reduced commission.
rgbrgb - 5 hours ago
With Open Listings we started flat fee on the buy side but had a
couple problems.First, it was very hard to communicate the value
prop to customers. We went to market with something like "we
refund the buyer's commission minus our flat fee". This brought
up all kinds of questions and often buyers thought we were more
expensive than realtors. Saying that we're 50% the price of a
traditional realtor ended up being a more compelling message even
though there's less savings in many cases.Second, when we're
acquiring customers we compete with all of the people charging a
much fatter commission. If a realtor is making a 50k commission,
they can afford to spend 10k on acquiring a single customer.
Assuming an efficient market (which the acquisition side kind of
is), a flat fee kind of caps your addressable market because you
can only compete with ads at a certain price point (buyers at
<400k price points in CA for instance). In some ways this is
counteracted by the fact that you can save $1M buyers way more
money with the flat fee, but only if you can communicate that
message effectively.That said, it looks like redfin found that
there's more price elasticity on the sell side. The seller has
likely been through the process before, seen how little work
agents do, and feels the full agent fee more viscerally at the
time of listing. For the buyer, the agent fee is this murky thing
that your agent will tell you is paid for by the seller... first
time buyers usually don't find out how much it is until they sign
the final closing docs. The other difficulty is that the typical
2.5% being offered to the buyer's agent is essentially an
advertising cost... in the existing market agents will often
steer clients away from low commission listings (not ethical but
it happens).
rokhayakebe - 40 minutes ago
Assuming an efficient market, a flat fee kind of caps your
addressable market because you can only compete with ads at a
certain price pointUnless you plan to be in business for the
next 7-10 years and instead invest heavily in building a brand
around your value proposition. So short term you make less,
however long term when you have made the other guys irrelevant
you own most of entire market.
boulos - 1 hours ago
Aha! I knew I wasn't crazy... I had told multiple people that
Open Listings was the true incarnation of "this should be a
fixed fee, not percent of transaction" only to be proven wrong
by your current pricing page.Maybe like Vanguard you could do a
sliding scale as the home price goes up? That is, instead of
doing 50% off at all points (and I know you're focused on CA,
but bear with me) you could increase the discount at higher
price points. That way a $2.5M home on OpenListings is suddenly
really attractive to the high end, while you'd still be the
best option at the lower end (your pricing comparison to Redfin
is genius, since I believed they did a 50/50 split).Did
different portions of California respond differently to your
pricing? I'm seriously sad that people buying a home wouldn't
do the math to see that your flat fee was drastically lower
than any percentage.
rgbrgb - 44 minutes ago
That's a cool idea. Our long term vision is definitely to get
transaction costs approaching 0 so that home ownership
becomes more accessible.> Did different portions of
California respond differently to your pricing?As a young
startup the sample size was pretty small, but I didn't see a
regional difference. I'd say the mentality split was more
experienced vs first time homebuyers. Experienced deal
seekers understood commissions and were already looking for
hacks around using a full-price agent (e.g. getting their own
license, going direct to the seller), but the FTHBs often
thought it was an additional fee. However, our product
naturally attracted more of the latter group and as a team
it's just easier to get excited about helping young families
become homeowners than helping millionaires save 100k. That
said, we didn't really see a dip in the deal seeker audience
when we switched the pricing (it's still very competitive).
cabinguy - 4 hours ago
"seen how little work agents do..."This is going to sound
condescending, but you honestly do not know much about the
business you're in.
rgbrgb - 3 hours ago
I'm not an agent myself, but I did help start a brokerage and
spend most of my time automating busywork for our agents. Our
top agents do 5-15 transactions per month in very competitive
markets, have competitive acceptance and close rates, and
great NPS scores. Agents are absolutely necessary to
negotiate with sellers and talk stressed out buyers through
the process, but most spend the majority of their time doing
lead generation. I talked to an agent from a respectable
brokerage in LA the other day who said she spends 95% of her
time prospecting for new clients.I'm not by any means saying
agents are lazy, I maybe phrased that poorly. Just that if
you're looking at the hourly rate the agent is making for the
~10 hours they're spending from offer to close, it's kind of
wacky compared to most other types of high skill work (e.g.
10 hours on a 500k home with the typical 2.5% commission is
$1,250/hour).
strongai - 2 hours ago
Thank you. A very illuminating description of how things work.
clairity - 5 hours ago
do you really think the value prop of a realtor is that simple?
that people willingly pay tens of thousands of dollars for a few
"related details"? if it were that easy, why not just throw that
business together over the weekend yourself? maybe put the
thinking cap on for a few seconds before making a flippant
comment about a $100B+ industry?(just one tiny hint: you have to
dismantle the MLS network in the process.)yes, it's inefficient,
but it's not a valueless middleman. yes, there is additional
value that could be unlocked through greater efficiency. but
there is a huge contingent of professionals vested in the
continuation of the current regime. there are systemic and
regulatory hurdles. which politician wants to dismantle an
industry that still provides determined but not necessarily
highly educated individuals the chance to break into the upper
middle class?
kevincennis - 38 minutes ago
I had a positive experience with Redfin, but honestly feel like
even with the refund check, I still overpayed for their
contribution.I shopped online, went to open houses on my own, and
Redfin basically just contacted the seller on my behalf to present
an offer. I'd be shocked if my agent did more than a few hours
total work over the entire duration of the sale ? though I liked
him a lot, and he was super responsive the few times I needed him.
ransom1538 - 5 hours ago
Redfin with its smaller cut of RE transactions on the seller side
combined with the ability to circumvent MLS with it's own listing
system could be the begining of the end for agents.
saimiam - 5 hours ago
While I don't disagree with you, Redfin has been in business
since 2004. 13 years is a long time to take to kill off
realtors.I'm in the process of selling my place and I'm using a
realtor (who nearly matched Redfin's seller commission rate). The
Redfin agent I first spoke to proposed a generic, templatized
method to sell my property - list on N realtor sites, email my
contacts, take nice pics - while the realtor I went with lives
two doors down from me, knew the quirks of the HOA, had working
knowledge of what potential buyers were looking for in my
community based on recent deals he had been part of.
vadym909 - 5 hours ago
I agree. Realtors won't get killed- they'll just have their
commissions reduced. I've bought a house through Redfin which
was easy enough, but used an agent who agreed to Redfin level
fees, but was much more knowledgeable and better at selling my
house. From dressing up the house, doing open houses to
following up with buyers, to negotiating. Redfin couldn't match
him with their inexperienced agents/helpers, high volume and
cookie cutter methods that are more suited to hot real estate
markets where there's not much for realtors to do.
GFischer - 58 minutes ago
So the mere existence of Redfin has lowered their fees. Good
for you :) and an example of the market at work.
jdross - 4 hours ago
Having completed thousands of home sales at Opendoor, I believe a
system will works better for most home sales, but local expertise
works better for high-end homes.An agent always make you feel like
their differentiation matters. Redfin advertises their refined
process across thousands of homes to sell faster for more money.
Your neighbor advertises their local expertise and awareness to get
you an edge.We joke that real estate is like politics ? Everyone
hates real estate agents, but loves their real estate agent.
probe - 3 hours ago
Does Opendoor primarily work with high-end homes or your
"average" home (relative to the area of course)?Also thoughts on
Ben Thompson's analysis on your company
(https://stratechery.com/2016/opendoor-a-startup-worth-
emulat...)?
bkjelden - 5 hours ago
I hope this company sees nothing but success.I bought my house
through Redfin last year, and not only did I save ~$5k in
commissions compared to a conventional realtor, I also felt the
process was much smoother and more pleasant than other times I've
interacted with a conventional realtor.It's simply absurd that in
an era where any buyer can view photos of a house for sale online
real estate agents still expect to receive 6% commission on the
sale of a house.
Danihan - 5 hours ago
Well, technically the brokers get most of that.
deelowe - 4 hours ago
Actually, they typically get 1/2.
jdross - 4 hours ago
Many brokerages get nothing except a flat fee per transaction
and a "desk fee".Some take nothing at all if you're a top
producer and refer your clients to their title and mortgage
operations.HomeSmart is the largest, I believe
dgfgfdagasdfgfa - 4 hours ago
Is this true in high-demand, low-supply markets? I've found
the brokerages get much more greedy in these situations. See:
Seattle, San Francisco, NYC.
hijinks - 1 hours ago
I wanted redfin to work when we solf our house in the SF Bay area
a few months ago.Redfin's issue is the selling agent was located
45 minutes away and just ran random comps and said our house was
120k lower then market. She said it would never sell for what I
thought it was worth. So we ended up going with a local agent who
put it on market for more then we thought and it sold for 1% over
asking.
vostok - 1 hours ago
This happens with full price agents too. In my experience,
their "expertise" is really just confidence and bluster.
Commissions are high not because real estate salespeople are
good, but because they are inefficient and because they operate
under a de facto cartel.
hijinks - 31 minutes ago
I agree, we just ended up going with someone who specialized
in the area instead of dealing with Redfin agent who said it
would never sell.I love their site for searching.
fizixer - 2 hours ago
Let me guess, that ~$5k is less than 1% of what you would pay in
total.No offense (and sorry for being off-topic) but I never get
how people obsess over the under 1 or 2% cost savings while
completely ignoring the overvalued principal. Two other
examples,- People go over to buy a $50-$70k car and later boast
how "they made" the salesman give them a $500 or $1k discount.
(well what about a fully-functioning $20k car, or the same car
but 2-3 years old but costing $8-12k?)- People buying stupid
stuff off amazon etc, and worse, travelling to random places,
just because they have credit-card cashback and travel rewards,
and looking at you funny when you tell them you only have one
credit-card and you make sure you don't overspend but never paid
attention to how many points you accumulate.
valas - 2 hours ago
Bigger picture is that agents conventionally get 6%, which is
obnoxious in the Internet age. Sure 1% maybe is not much, but
anything that helps to squeeze that industry is great. No?
dforrestwilson - 2 hours ago
Yes. Is there even another real estate market in the world
where intermediaries capture so much of the gain on sale?
fizixer - 2 hours ago
Maybe. Though I haven't gotten over the obnoxious housing
prices in the first place, so I guess I'm not seeing what
you're seeing.
[deleted]
scottLobster - 2 hours ago
Just speaking for myself, 5k is a lot of money. So is 1k, so
is $500. I can do a lot with that money. Percentages are
arbitrary.I agree however that people buying luxury items and
then boasting is kinda dumb. If you're willing pay premiums
for luxuries, getting a slight discount on said premiums is
hardly a victory. It's like people who buy stuff they don't
need and won't use because it's "on sale" and then brag about
how they "saved money".
foolfoolz - 1 hours ago
after I bought a house with an excellent agent I can't imagine
how you can't use an agent. at least for your first house it's
awesome. pictures online are no substitute for going in person.
the agents main value is being correct in paperwork and knowing
the neighborhood.I think they are a great tool but not a
replacement. great agents are very useful
dmoy - 1 hours ago
Redfin has agents who walk you through houses, help you with
paperwork, and live in the neighborhood... (And you still save
thousands over a traditional agent)
soperj - 1 hours ago
Do agents even write up most of the paperwork? I was under the
impression that they just contract that out to a lawyer.
foolfoolz - 37 minutes ago
my agent walked me through the entire 150+ page offer and I
asked a lot of questions, they knew. they found errors with
me during escrow signing. they were with Alain pinel so I'm
betting there's corporate help available but she really knew
her stuff
existencebox - 4 hours ago
Let me offer a different viewpoint.Redfin absolutely serves a
purpose, but in some markets, notably for my case very hot
markets, it's a significant impediment. I really wanted redfin
to work, shopping in seattle 2 years ago. I tried for almost a
year, but they would consistently be not as contactable or prompt
as we wanted, and gave us very erroneous advice when it came to
crafting offers on some houses we wanted. As a result we lost
out on houses when we could have been competitive.Eventually we
got a very solid realtor, who was aggressive in finding us houses
that would slip through our normal searches (the house we ended
up buying had been on the market for a long time at a higher
price than they eventually relisted it for, in an area we had
discounted.) When a bidding war started, he worked with us by
being connected with the selling agent, gave us very accurate
hints on how we'd need to push and what would work to our
advantage, and landed both the deal and some back and forth that
happened after.Downside, this was after 2 years of searching and
losing out on houses I frankly today still regret not getting.
An hour+ commute sucks, and I attribute some of my early failures
to not getting an experienced/knowledgeable/active realtor
earlier.YMMV but that's the caveat from my experience.
acdha - 1 hours ago
That sounds like the Seattle manager is slacking. I had the
opposite experience in DC, which makes me wonder how good a
handle they have on agent quality.
adrianpike - 3 hours ago
I had the same experience. I really wanted to use Redfin, and
heavily used it for all my research and self-searches, but when
the time came, I found my success with an agent.
[deleted]
totalrobe - 2 hours ago
I had a similar experience, although I caught on very quickly
that the Redfin process was not going to work for me.We were
first time home buyers relocating and were looking for a house
in a new area. Wife and I looked for months online and actually
found a house on Redfin. Contacted them to put in an offer and
I get back "well, why don't you schedule some time to come down
and look at some houses". On top of that, the guy I actually
spoke to was a remotely located coordinator that knew nothing
about the area, and said we would be handed off to someone else
local once we actually scheduled a viewing. Here I am wanting
to put in an offer now and there was zero sense of urgency. In
a hot market, I'm going to pay a little bit extra to be able to
actually get the house we want.I called a local traditional
agent and we got an offer in the same day.Another coworker that
relocated had the same experience; tried Redfin, agent didn't
even show, got a traditional local agent and closed quickly.
gedy - 21 minutes ago
Weird, totally different experience with me. Found a place
on Redfin, clicked the "buy"/etc button about 11pm. By 7am
agent replied back to start offer. Was fast and great
slantedview - 1 hours ago
> they would consistently be not as contactable or prompt as we
wanted, and gave us very erroneous advice when it came to
crafting offersYMMV indeed. I had the reverse experience buying
a house through Redfin. We had used a traditional Realtor
previously and it did not go well and ended up bailing on that
person in favor of Redfin. The Realtor there was very sharp,
knowledgable and responsive, and helped us through a tricky
purchase to a positive outcome.
pjschlic - 1 hours ago
I bought a house in Seattle 2 years ago through Redfin, and had
a GREAT experience. We had started with a more traditional
realtor first, but the Redfin one was way more responsive.
Maybe it's realtor-specific.
larrykubin - 1 hours ago
Same, bought a place in Seattle through Redfin towards the
end of 2014. Went from attending a free Redfin homebuying
class to getting the keys to our new place in 30 days. Loved
the website and the experience and didn't feel pressured.
aetherson - 4 hours ago
I bought a house in SF three years ago through Redfin. The
realtor that Redfin gave us was prompt, aggressive, and
thorough in the bidding/closing process.What he didn't do is
drive us around to open houses or suggest places to us. Which
we didn't want anyway.I suspect that the individual realtor you
get through Redfin has a big impact on your experience with the
site. It sounds like you got a bad one and were unhappy. We
got a good one and were happy.
existencebox - 4 hours ago
We got, unfortunately, MULTIPLE realtors through redfin; some
on our own request, some when they simply would disappear
from the company/stop answering our emails. There was
neither quality nor consistency, and we had marginal ability
to impact that choice on our own, whereas with a personal
realtor we went with someone highly recommended from work
peers.I absolutely agree the individual realtor impacts the
experience, that's pretty much the crux of my whole issue :)
My conclusion was that Redfin doesn't offer as much
control/guarantee to ensure this, and in a hot market, this
matters quite a bit.(To be fair, I'd say the same thing about
my experience with mortgage lenders, BoA did an abysmal job
and very nearly left me in the lurch, whereas a smaller local
lender picked up the slack and pulled our asses out of the
fire. Perhaps my overarching statement should be to wonder
if we (businesses) suck at scaling customer support? (I'm
pretty much saying "well duh" to myself as I write this
statement, frankly))
zaroth - 3 hours ago
I've never used a buyer's agent and always written into my
offers that the 3% buyers agent fee is to go back to the
seller (and of course adjust the top-line offer
accordingly).I've never tried to buy in SF, but this
strategy has always worked for me and saved a lot of money
over the years. Frankly I can't understand the purpose of a
buyers agent in this era, and taking 3% off the cost of a
house is very substantial.When the closing statement
(HUD-1) is finally prepared, usually I can see that the
seller's agent took some of the buyer's agent fee, e.g.
they will end up with 4% instead of 3% in the end and the
rest goes back to the seller. Since these offers usually
mean more money for the seller'a agent they go to the top
of the pile.It's also important to disclose that you've
purchased houses before, that you have funds, and that you
are ready to close immediately. You don't need a buyers
agent to tell you this.
te - 2 hours ago
So you reduce the top-line offer by 3%? Or, if your
written offer specifies 3% back to you, how does the
seller's agent manage to take 4% in contradiction to the
offer? Not sure what jurisdiction you're operating in,
but I wasn't aware that offers could dictate chagnes to
the terms of a pre-existing listing agreement between the
seller and their agent. Would love more details on how
to effect something like this.
zaroth - 1 hours ago
Yes, reduce the top-line offer by 3%, or slightly less
than 3% -- so everyone is actually coming out
ahead.You're absolutely right, I can't dictate the
agreement between the seller and their agent. But when I
put in writing, "hereby relinquish any and all claim to
the 3% buyer's agent fee ($XX,XXX)" it gets the point
across. Then it's between the seller and their agent,
usually the agent will get a small bump (from 3% to 4%)
and the seller keeps the rest.It's important to try to
convince the seller at the same time, that the sale will
be easier without the buyer's agent, not harder. Also
important to refuse to sign any kind of "dual agency"
agreement with the seller's agent.
jrs235 - 1 hours ago
>but I wasn't aware that offers could dictate changes to
the terms of a pre-existing listing agreement between the
seller and their agent.Exactly. Sounds like this borders
on interference. The seller can't sign such an offer
without breaking a previous contract. It may have worked
for him because the broker was amendable to changing
their agreement but by not having representation the
person above may still have overpaid by 2%. What if the
pricing strategy was to price 5% over what the seller
really wanted knowing people would negotiate
down.Additionally the previous the buyer doesn't know
what the co-broke fee, if any, is being offered to an
agent that procures a buyer.
vostok - 1 hours ago
> It may have worked for him because the broker was
amendable to changing their agreement but by not having
representation the person above may still have overpaid
by 2%.Or you might have representation and still overpay
by 2%. It's kind of how investing in a mutual fund with a
3% load doesn't guarantee that you'll beat the market.
[deleted]
IshKebab - 2 hours ago
This is really confusing. I just bought a house in the UK,
and the process is as follows:1. Look for house on Rightmove
or Zoopla. 2. Call the estate agent or private seller to
arrange a viewing. 3. Show up at the appropriate time. Look
at house. 4. Make an offer. Offer gets accepted/rejected/they
want more. Repeat until you get it or get outbid or give up.
5. Offer agreed (hopefully). Now do all the actual buying
through mortgage brokers and solicitors.The estate agents
charge the sellers a percentage, which is cheeky because they
do almost nothing - the only reason you should ever use one
is if you are incapable of taking photos or really can't
spare a few evenings to show people around the house.But
nobody ever drives you to see houses or finds them for you.
How does it work in America?
svachalek - 1 hours ago
In the US, the real estate industry controls the MLS
"multiple listing service" which essentially makes them the
Google of houses, with negligible competition coming from
classified ads, Craigslist, and the like. They charge a
standardized 6% commission to the seller, which they split
with the buyer's agent, and both agents end up giving some
to the brokers that handle the actual transaction.In recent
years, they've been losing ground on the commission so
often it's less than 6%, and the buyer may end up getting
some share of his/her agent's cut as well, but so far it's
pretty hard in most markets to work around the cartel.
AJRF - 1 hours ago
Rightmove is a property portal, Redfin is an online
residential estate agency.
existencebox - 2 hours ago
I can only speak of hot markets in America, which are VERY
different than many others, but at least within that:A
"reasonable" house goes on the market. ("reasonable"
defined by <1 mil, within an hour commute of a city center)
This house will usually be sold within a week or two.
Usually less. Definitely less, if it's actually priced
within middle-class-affordability (and I laughably define
that as ~400-500k). I've seen houses sell the day they
listed. The selling process involves showing up at the
house during an open house (viewings are possible but rarer
in hot markets as typically it's a race to get your offer
in and sellers know they don't need to be accommodating;
even viewing my house during the closing process was a "if
we can fit it in" sort of thing from the seller side) You
don't really get to "repeat". If you're very lucky they
MAY tell you a competing bid went over your escalation
threshold, but for 80% of the houses I put offers on, they
look at the escalation guidelines and offers and just make
a choice right there. Typically at least someone has
offered +50/100k in cash and is going without a loan, so
they'll often nab the house without a back and forth with
any of the other offers. If the seller agrees, the closing
begins. The buyer usually gets 1 shot to make an
impression for a given house, usually having to put the
offer together within 12 hours/a couple of days max, having
seen the house once, usually with a bunch of other people.A
real estate agent helped me in multiple steps of the
above.- Having an offer ready ahead of time with lots of
contingencies/tradeoffs well understood so we could tune it
quickly and get it out and under the wire.- Knowing how and
where to look for houses before listing, IMMEDIATELY after
listing, and that may have been listed ages ago/at bad
prices.- Able to get us contacts with the sellers if an
open house time won't work/if we need to ask questions.-
When our BOA agent left us high and dry, he hooked us up
with a trusted local lender with a good reputation and used
his prior working relationship with her to get our file
pushed through in a ridiculous timeline over a weekend so
that we could put in a competing bid. (as I said,
timelines are nutso)- Gave us advice on what parts of our
offer would have what impact, to what sellers. e.g. 5k vs
3k vs 10k escalation steps? What other caveats? Should
compromise on preinspection? etc.- If anything went wrong,
if we had followup questions, needed contacts, he would be
extremely accessible, would give us contiguous care (and
thus knew what our preferences were, what we were looking
for, what offers we were comfortable with/what our finances
were) which saved time in rehashing that every few weeks
with a new agent; and given that you WILL lose most of the
offers you make, this process can go on a very long time so
continuity is nice. (we were on the market 1-2 years)
balls187 - 2 hours ago
Did you look at areas that haven't been gentrified?Plenty
within 1 hour of Seattle that are affordable.
existencebox - 1 hours ago
That's more or less where I ended up buying, and managed
~400 for a respectable 3b2b. That being said, the
gentrification is spreading so aggressively and was
already well in place even when I bought; in the last
month 3 of my neighbors went on sale, all sold within a
week at far higher prices than comparable for when I
bought. (I only had... 2 other bidders, if I recall,
when I bought, so it's certainly less hot than redmond
where 10-15 competing was common)
lukevdp - 2 hours ago
USA has a different system than in the U.K. Or Australia.In
the US, buyers go and get a buyers agent to help them buy
the house. Buyers agents get 3% and sellers agents get 3%.
(Actual amounts varies wildly)In UK and Australia, 99% of
people do not use buyers agents. The agent showing buyers
through the house and answering all the questions works for
the seller. There is only one agent so only one
commission.Selling privately is popular in the U.K., but
much less popular in Australia however the segment is
growing). USA less so again.
branchless - 2 hours ago
In Canada realtors actually do something, they look for
houses for you after you tell them what you want, they
attend the viewing with you, get feedback, understand what
you are after.Is that worth 5% - no. Could they be removed
by tech: probably. But they are far better than the low-
life estate agents in the UK who are I think the least
trusted profession, perhaps now undercut by bankers.
mmanfrin - 1 hours ago
Was it Kenny? I, too, bought a house in the Bay Area a bit
less than 3 years ago, and your experience is exact to what
mine was. It was really pleasant, especially compared to the
times I had gone along with my parents when they were house
shopping with a traditional realtor.
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just4themoney - 2 hours ago
If you really want to get your blood boiling about buyer's
agents, watch this - https://youtu.be/jxcCJxN8aJERed Fin doesn't
operate in my area but if it did I'd be all over it in a
heartbeat when I bought my house.
gist - 4 hours ago
> where any buyer can view photos of a house for sale online real
estate agents still expect to receive 6%It's not the same as
buying a car as you have to gain access to the property to look
at it which involves another agent and much work even after an
offer has been accepted or negotiated.The only thing that is
'absurd' is that the commission generally stays the same whether
the house is 1.5 million or 150,000. And as others have mentioned
that is split between various parties that are needed to sell a
house which is a big one time purchase that most people need help
with.The other important thing is this. Agents spend a great deal
of time with buyers who don't end up buying anything from them.
Driving them around, setting up appointments, dealing with the
listing agent and so on. Unless they make a sale they are not
paid. Most of the agents in this country are not selling million
dollar real estate either. And in the end they aren't really
earning that much money either in a typical market.Just yesterday
I requested information on a property from an agent on something
that I honestly don't think I have a serious interest in buying.
They took time on the phone and I could easily setup an
appointment with them to view the property and waste more of
their time. In the end unless I buy now or in the future or refer
someone to them they will end up eating that time and getting
nothing in terms of pay.
cgh - 1 hours ago
We bought our house with no agents at all, buyer or seller. We
used a notary public to do all the legal paperwork. Savings:
$20,000 (Canada).If you can possibly avoid using a real estate
agent, then do so. They may bring some value but it is not
nearly commensurate with their commissions.
clamprecht - 3 hours ago
Can I just pay a real estate agent per hour instead? That
solves the problem of me deciding to not buy a house from them
later.
runako - 3 hours ago
I tried this when purchasing my last house. I offered a
pretty hefty hourly fee, knowing full well there's no way the
hourly fees would approach 3% of the transaction. IIRC the
response was essentially that they are prohibited from doing
so by their Realtor organization (?). This was in Georgia.
bhandziuk - 1 hours ago
That commission is huge. I just bought a 280k house which means
the agent gets ~7,800 $. Sure they maybe keep some fraction of
that but that is such a crazy big dollar amount. That's several
month salary for me and they did it in a few hours of
work.Plus, because this is paid through what eventually becomes
my mortgage I'm paying that inflated price for decades.With
those kinds of numbers I see why it is such a guarded industry.
gist - 1 hours ago
You are comparing a case where it only took them 'a few
hours' for your particular transaction with all the time they
had to spend either showing that house and getting nothing or
showing other houses and getting nothing.Do you honesty
believe the majority of transactions they do are so quick and
easy?What do you think they are doing a transaction like that
per week? There is an overhead cost to dealing with people
and with sales. I would take a wild guess that in a year of
work the agent that you dealt with (or a typical agent that
sells $280k houses) is making less than $100k per year.
That's not a crazy amount of money, even in a lower cost
community.
bhandziuk - 1 hours ago
They were very rarely available to show us homes and
instead just gave us the lock box codes to we could walk
through on our own.It was also suspicious they felt the
need to justify their existence saying the hard part is
drawing up the contracts. But as far as we could tell the
loan company did all that work. The realtor just showed up
to the signing and let the loan officers answer any
questions we had.Sure, most transactions are not as fast
and easy for them but it seems with these numbers if they
are with one client for 2 weeks straight and sell a house
at the end they are still way ahead. Even if they sell 1
house a month at that rate it's still a killing.
gist - 1 hours ago
I take it this is your first transaction buying a house.
You are basing what you think on that and what people are
saying online. I can assure you as someone that buys real
estate (as investments) it typically isn't that easy, at
least in a typical market and for most transactions. And
I have been doing this since the 1980's fwiw.
bhandziuk - 1 hours ago
You're right it was my first house.I do believe it is
sometimes more complicated. But is the value of a
realtor's time to me, as a buyer or seller, really
several hundred dollars per hour? Is buying a 600k house
really twice as difficult a transaction than a 300k
house? Why are they not paid a flat fee?
dragonwriter - 1 hours ago
Seller's agents aren't paid a flat fee to align their
interest with that of the seller; they want the deal to
close at the highest price possible.Why buyer's agents
are paid on sale-price-commission is, OTOH, a real
question.
gist - 47 minutes ago
> Why buyer's agents are paid on sale-price-commission
isOnce again buyer's agents are a large part of the
equation. They have to drive around the actual buyers and
waste time showing properties with nothing to show for it
often.So the way it works is the people who actually buy
(or sell) make more money to compensate for people that
do not buy.
dragonwriter - 21 minutes ago
But a sales price commission, of all possible completion-
based pay structures, makes the interest of the agent
misaligned with (opposed to, in some respect) that of the
principal.
tabeth - 3 hours ago
I'm very interested in why many people believe a realtor should
receive a percentage of the home's sale price as compensation but
not the:- inspector (arguably a good one is more useful than
realtor by pointing out foundation problems and other issues that
can cost 10s of thousands)- attorney (again, arguably more useful.
they can point out clauses and things like flood zone, unpermitted
work, liens on the property, etc.)- appraiser (you might not even
be able to get a loan if the house appraises for less than the
purchase price, unless you can foot the difference and/or waive
appraisal contingency)- lender (unless you're paying all cash. some
lenders have vastly different interest rates they can offer you,
given a credit score. this can save you 10s of
thousands).Additionally, it doesn't really make sense. The
realtor's value is not proportional to the price of the home. Even
if you believe a realtor is extremely valuable, a house being twice
as much in price wouldn't make them twice as valuable.Redfin is
definitely an interesting step in the right direction towards fixed
fee realty.
kevincennis - 31 minutes ago
Am I misunderstanding your point about the lender?They obviously
get paid a percentage of the loan value rather than the home's
sale price, but presumably those are fairly well correlated.
gpawl - 2 hours ago
Same reason that app stores charge a 30% commission instead of a
flat fee. Prices are what the market will bear and prices are
controlled by a cartel that runs the marketplace (the MLS
members)
codebook - 22 minutes ago
I am actively looking the house right now. And getting disappointed
by Redfin these days. Previously it showed listed price for sold
properties but now it has gone. Only sold price is shown. Not only
this, but the property disappeared from MLS then re-listed with
higher price tag doesn't show previously listed price.Information
should be transparent between seller and buyer but Redfin is
leaning to seller side at this moment.So, I am using Zillow more
frequently than before.
africajam - 59 minutes ago
Realtors have for the longest time seen other realtors as
competitors. Its time they recognise that the true competition is
from large sites like Redfin that will use tech to gain an
advantage over them.I realised this after several conversations
with realtors about this open source project I've created to help
them build decent
websites:https://github.com/etewiah/property_web_builderMost of
them figured if it was open source then any of their competitors
could use it and be just as good as them. They would say this even
if they recognised that my product would give them a better website
than they currently had. Pretty strange way of thinking if you ask
me....
andrewhillman - 58 minutes ago
Coming from a background in real estate as an active broker who has
worked with Redfin agents, I'd like to point out a few things.
Redfin's biggest asset is their website. It's a good user
experience and grabs them a lot of leads. However, Redfin agents
tend to be subpar agents when representing sellers and or buyers.
Most wouldn't survive in a regular brokerage setting. If I am
hiring an agent, I want a hungry service oriented agents, not
someone who is fine with receiving a salary. Discounts are
enticing to consumers, but from what I have noticed these discounts
come at a cost to their clients. Rather than list a bunch of
examples, from what I have witnessed, Redfin agents are not all
that skilled in negotiating. They are actually horrible. Redfin
needs to train better but training is a multi-faceted issue. They
need experienced brokers who have been beaten up and have seen it
all. I was lucky to have a mentor who played a significant role in
redefining the industry back in 2001. Let's just say, nobody knew
what the concept of Exclusive Buyer Agency was during the late 90s.
Anyway, in order to have great agents, they need to learn from
smarter battle tested agents in the office. An agent needs good
instincts to represent clients well. This takes time - 10,000
hours easy and they need to see a lot of deal flow. You learn from
the ugly deals, not the smooth ones. Fortunately, for Redfin most
Redfin buyers/sellers won't realize how good their agent is until
they have something to compare it to. Redfin does not have top
agents nor can the attract high-quality agents. In order for them
to succeed in the public market, they will need to increase fees
because the cost of maintaining and attracting talent isn't cheap.
Discounting gives companies a good chance to obtain market share.
But market share will go down once they raise fees. Historically
speaking, discount real estate companies don't do well in public
markets. Let's look at one example of a company associated with
discounts, Zip Realty. I think they did an IPO in 2004 or so. Over
the years things didn't go well so they were forced to merge. Now,
you might say, REDFIN is different. This is somewhat true but I am
sure if you read the Redfin S1, you will see some of the concerns I
have addressed.This is coming from a non-traditional broker. I
have always gone against the grain. I believe Redfin will need to
evolve a lot to get the public market to embrace them. If I had to
guess they will become a little more "traditional" overtime.I hope
Redfin trains better and figures things out. Otherwise, they will
need to merge post-IPO.Sorry for the long comment. I could write
forever on this topic. I may do this on my site when I have a
couple of hours.
wyc - 5 hours ago
Here's a great piece by Ben Thompson discussing the economics and
markets of such services: Both limit growth: regular agents with
a stake in the current system steer home buyers away from
Redfin properties, and hiring and training agents who aren?t
interested in the upside from commission takes a lot of time
and money. https://stratechery.com/2016/opendoor-a-startup-worth-
emulat...Why the flat-fee brokerage Allre had to close shop: All
of these internet companies that profess to want to
disintermediate the real estate business ? just as they did
with the travel agency business (everyone even uses the same
analogy) ? forget one major fact: buying and/or selling a home
is often the largest, most complicated transaction a person may
undertake. https://therealdaily.com/editorials/allre-startup-
thinks-imm...
opo - 4 hours ago
>Here's a great piece by Ben Thompson discussing the economics
and markets of such services:Most of the article is about
OpenDoor. I don't think that quote about Redfin describes the
situation very well.I don't think there is evidence that agents
with buyers steer them away from Redfin and it wouldn't work very
well since almost all buyers will go to a site with MLS listings
and see what is on the market. Redfin takes a lowered commission
on their business, they don't lower the commission to the buying
agent.In terms of hiring, they allow agents to get away from the
continual cold calling/door knocking and self promotion they need
to do to attract the next customer and they offer a stable salary
and a support staff to take care of the mundane stuff like
arranging inspections, etc. I don't think they have a problem
getting job applicants. (Not associated with Redfin, but a happy
customer.)
biastoact - 4 hours ago
I bought through Redfin five years ago.Actually, we offered on two
houses, backed out after poor inspections, and then purchased the
third house in a competitive multi-bid environment all in a few
months. With Redfin I never felt the kind of sales/relationship
pressure to close a deal that I did when buying with traditional
realtors. The only reason we didn't sell our Condo through Redfin
is I wanted someone in the neighborhood who could help coordinate
painting, staging, etc in the lead up to the listing.All and all a
great experience.
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