How many years until realtors are replaced by Redfin/Uber/Zillow/etc?

[Anonymous]

Anonymous wrote:Redfin agent here. The whole goal of Redfin is to put the consumer's best interest first. Yes we refund part of the broker's commission and agents are paid a salary but the bulk of our pay comes from bonuses that are directly influenced by customer's responses to a one question survey after closing, if a customer is unsatisfied or even just marginally satisfied it has a huge impact on our pay. We are also paid to tour with our clients which is meant to make our clients never feel like they can't reach out to us, that and it seem to curtail much of the pressure to sell sell sell. The average Redfin agent in California is closing on average about 36 deals a year, top agents are around 60, anywhere between 3-9 times many as the average agent depending on what numbers you look at which completely shatters the argument our competing traditional agents try to argue which is that we are not experienced. A lot of these "old boys club" types sell their 6 properties a year and have been doing it for 20 years, a Redfin agent is hitting the same number in roughly 3 years. I always use the analogy of that surgeon who is a couple years away from retiring, been doing it for 30 years and uses the same techniques as when Eisenhower was President once every other month compared to the guy using the lasers and robot arms doing a surgery every week who doesn't have the shakes. We have to be far more efficient because we are doing far more business. Our agents also specialize in either the buy side or listing side, so while traditional agent X closed 4 buy side transactions and 2 listings a Redfin agent closed 30 buy side transactions, furthering the gap between the two models. An independent survey shows that we score 22 points higher than traditional agents in customer satisfaction. Our list side charges 4% commission compared to the 5-6% through much of the country. Our listings get twice as many views as listings with other brokerages on the internet which many of you have argued is why you don't need an agent, well if one agent could give you twice the views on your home would you use them? Our website gets it's information directly from local MLS services and updates every 15 minutes, the only other site that can make this claim is realtor.com.

There's a few reasons we've been slow to grow, for one we simply did not cover much of the country until fairly recently, we now cover somewhere north of 80% of the US population, name recognition and public education of our product is by far our biggest hurdle. Secondly, we have done almost no marketing or advertising of any kind, the instances when we did we couldn't keep up with demand. We've stuck to social media, word of mouth and constantly working on the website making it as attractive as possible as a search option for consumers, the website probably accounts for 90%+ of all of our business if I had to guess. Third, we still get a lot of push back from traditional agents, they like to brand us as a discount brokerage which connotes that we are not a full service brokerage. Not only is that not true I feel that we offer way more services and also better technology compared to the traditional brokerage all the while giving the client back some money. Reason enough for a traditional agent to trash Redfin. Hell my own father who has been a traditional agent for 25+ years almost disowned me when he heard I went to work for Redfin.

I'd be happy to answer any other questions.

What happened to David Le?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Redfin agent here. The whole goal of Redfin is to put the consumer's best interest first. Yes we refund part of the broker's commission and agents are paid a salary but the bulk of our pay comes from bonuses that are directly influenced by customer's responses to a one question survey after closing, if a customer is unsatisfied or even just marginally satisfied it has a huge impact on our pay. We are also paid to tour with our clients which is meant to make our clients never feel like they can't reach out to us, that and it seem to curtail much of the pressure to sell sell sell. The average Redfin agent in California is closing on average about 36 deals a year, top agents are around 60, anywhere between 3-9 times many as the average agent depending on what numbers you look at which completely shatters the argument our competing traditional agents try to argue which is that we are not experienced. A lot of these "old boys club" types sell their 6 properties a year and have been doing it for 20 years, a Redfin agent is hitting the same number in roughly 3 years. I always use the analogy of that surgeon who is a couple years away from retiring, been doing it for 30 years and uses the same techniques as when Eisenhower was President once every other month compared to the guy using the lasers and robot arms doing a surgery every week who doesn't have the shakes. We have to be far more efficient because we are doing far more business. Our agents also specialize in either the buy side or listing side, so while traditional agent X closed 4 buy side transactions and 2 listings a Redfin agent closed 30 buy side transactions, furthering the gap between the two models. An independent survey shows that we score 22 points higher than traditional agents in customer satisfaction. Our list side charges 4% commission compared to the 5-6% through much of the country. Our listings get twice as many views as listings with other brokerages on the internet which many of you have argued is why you don't need an agent, well if one agent could give you twice the views on your home would you use them? Our website gets it's information directly from local MLS services and updates every 15 minutes, the only other site that can make this claim is realtor.com.

There's a few reasons we've been slow to grow, for one we simply did not cover much of the country until fairly recently, we now cover somewhere north of 80% of the US population, name recognition and public education of our product is by far our biggest hurdle. Secondly, we have done almost no marketing or advertising of any kind, the instances when we did we couldn't keep up with demand. We've stuck to social media, word of mouth and constantly working on the website making it as attractive as possible as a search option for consumers, the website probably accounts for 90%+ of all of our business if I had to guess. Third, we still get a lot of push back from traditional agents, they like to brand us as a discount brokerage which connotes that we are not a full service brokerage. Not only is that not true I feel that we offer way more services and also better technology compared to the traditional brokerage all the while giving the client back some money. Reason enough for a traditional agent to trash Redfin. Hell my own father who has been a traditional agent for 25+ years almost disowned me when he heard I went to work for Redfin.

I'd be happy to answer any other questions.

What happened to David Le?

I'd like to know as well! He mysteriously stopped working there...

[Anonymous]

The test isn't that hard if you have the right skill set - most of the women I've seen at the test site who were taking the salesperson test seemed extremely concerned about how to use their financial calculators. The class just goes over the legal requirements of transactions, ethics, contracts and definitions, and basic finance so they can calculate PITI. I was taking an all-day licensing test at the same time, and they all felt quite sorry for me (I felt sorry for me too actually!).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yeah count me in the camp who think realtors are overpaid, not all of them though.

Listing agents, yes.

Buyer's agents, maybe, but not necessarily. When I bought my place in DC, we probably toured dozens of houses, put in 3 offers, 2 of which fell through. The final transaction was a ginormous pain in the ass as the seller was a greedy flipper. I felt that my buyer's agent earned her commission.

If I were to sell my place though, I don't think a listing agent should be pocketing $15K for merely listing the property and attaching a lock box to the place. Maybe $2-3K for listing, pictures and lock box seem more appropriate.

Listing agents do a lot more than "merely listingg the property and attaching a lock box to the place." That's like saying doctors merely take your vital signs, or journalists merely write a story, or tax accountants merely file tax returns.

Hello realtor,

In the best case scenario, you are paying listing agents for their expertise on pricing and also their negotiation skills. But 1. there's this thing called the interne,t so you can figure out what the appropriate list price yourself and 2. agents are incentivized to get you to list/sell your house at a low a price as possible so most of them are worthless on negotiations.

I'm pretty sure you think you understood Freakonomics. But you didn't.

Have you missed the boatloads of research/experts saying Freaknomics is mostly a load of baloney?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yeah count me in the camp who think realtors are overpaid, not all of them though.

Listing agents, yes.

Buyer's agents, maybe, but not necessarily. When I bought my place in DC, we probably toured dozens of houses, put in 3 offers, 2 of which fell through. The final transaction was a ginormous pain in the ass as the seller was a greedy flipper. I felt that my buyer's agent earned her commission.

If I were to sell my place though, I don't think a listing agent should be pocketing $15K for merely listing the property and attaching a lock box to the place. Maybe $2-3K for listing, pictures and lock box seem more appropriate.

Listing agents do a lot more than "merely listingg the property and attaching a lock box to the place." That's like saying doctors merely take your vital signs, or journalists merely write a story, or tax accountants merely file tax returns.

Hello realtor,

In the best case scenario, you are paying listing agents for their expertise on pricing and also their negotiation skills. But 1. there's this thing called the interne,t so you can figure out what the appropriate list price yourself and 2. agents are incentivized to get you to list/sell your house at a low a price as possible so most of them are worthless on negotiations.

I'm pretty sure you think you understood Freakonomics. But you didn't.

Have you missed the boatloads of research/experts saying Freaknomics is mostly a load of baloney?

I'm sure it came as a surprise to you. I didn't need that sort of external validation to know this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Listing agents do a lot more than "merely listingg the property and attaching a lock box to the place." That's like saying doctors merely take your vital signs, or journalists merely write a story, or tax accountants merely file tax returns.

Stop comparing yourselves to doctors and lawyers. They study hard to get where they are. You took a week long class.

I'm not a Realtor, but I would love to see you pass the exam after just a week of classes.

I'd be happy to oblige if you put up a $10k wager.

Absolutely. Tell me the logistics of this. Can we put it in escrow somewhere?

Escrow would be the smart thing for us to do. I haven't found any leading reputable sites for it. Have you?

DPOR site says exam application processing takes up to 2 weeks so that may be a logistical issue for us. Class is already 60 hours worth of time so it could take about 3 weeks total which violates our intended terms.

You said you could pass it after "just a week of classes." That's the deal. Escrow.com would hold money in escrow, but it sounds like you're already changing the terms. You want to do the full study/course, I'm sure you COULD pass it -- the passage rate is about 20% for a first-time taker, so it's not outside the realm of possiblity.

But, you said you could do it after a week of review... Of course, you've since discovered that you can't actually TAKE the exam without completing the formal class. So, you've merely confirmed my point that you don't have the first clue about what you're talking about.

Which is a shame, because I could use your $10,000.

It's still "just a week of classes" so if you're okay with only that stipulation then let's proceed.

You were smart to shy away from the bet. I passed the exam. Since there was no bet, I took the course over 2.5 months, but I would have easily taken off a week from work to complete the requirements and take the exam. I thought the DPOR processing was 2 weeks, but that's just for the license. The PSI processing only took 24 hours. I wish I'd known so that I'd be $10k richer today.

[Anonymous]

"Our list side charges 4% commission compared to the 5-6% through much of the country."

Wow. I would never go with Redfin at 4% if could get a experienced agent who knows my neighborhood at 4.5%, which is what I'd likely be able to negotiate down to.

[Anonymous]

Anonymous wrote:"Our list side charges 4% commission compared to the 5-6% through much of the country."

Wow. I would never go with Redfin at 4% if could get a experienced agent who knows my neighborhood at 4.5%, which is what I'd likely be able to negotiate down to.

You underestimate how greedy agents are (and the splits they have to pay), or overestimate your own negotiating abilities.

[Anonymous]

Anonymous wrote:

Anonymous wrote:"Our list side charges 4% commission compared to the 5-6% through much of the country."

Wow. I would never go with Redfin at 4% if could get a experienced agent who knows my neighborhood at 4.5%, which is what I'd likely be able to negotiate down to.

You underestimate how greedy agents are (and the splits they have to pay), or overestimate your own negotiating abilities.

It is not the greed of the agents to be concerned about, but the greed of the sellers. The sellers want all the money, agents get paid a small portion of the money they get for sellers.

If you don't like the model or the way real estate agents work, do it yourself. It is just another service, like changing the oil in your car.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:"Our list side charges 4% commission compared to the 5-6% through much of the country."

Wow. I would never go with Redfin at 4% if could get a experienced agent who knows my neighborhood at 4.5%, which is what I'd likely be able to negotiate down to.

You underestimate how greedy agents are (and the splits they have to pay), or overestimate your own negotiating abilities.

It is not the greed of the agents to be concerned about, but the greed of the sellers. The sellers want all the money, agents get paid a small portion of the money they get for sellers.

If you don't like the model or the way real estate agents work, do it yourself. It is just another service, like changing the oil in your car.

oil changes are appropriately priced, and a gateway to upsell. real estate services are the upsell, and the best scam in the world. agents get paid a huge sum of money in the dc area for the amount of actual work necessary to close on a particular transaction.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think there's a bit of a myth about how commissions (and transaction costs) are lower overseas.

Total round-trip transaction costs in Italy range from 8.88% to 22.70%of the property value. Registration tax is 3% for main homes and 7% for second homes. Nonresident buyers pay a fixed registration tax of 7%. The real estate agent’s commission is between 3% and 8% plus 22% VAT; typically split between buyer and seller.

France it's 1.5-5%, plus 20% VAT.

Germany is 3-6%, plus 19% VAT.

The Netherlands is 2%-4% plus 21% VAT.

Russia is 5% for properties under $2 million (it's 2% for higher value properties).

Switzerland is 3% to 5% plus 7.6% VAT.

So U.S. realtors should extract a larger commission because the U.S. charges less in sales tax than other countries? How does that follow?

That isn't what I said. Someone said overseas commissions are 1%. Clearly they are not.

France, Germany, Russia, Switzerland all in the 5-6% range too.

US ranges from 0-7%. Average is about 5.5.

In Australia, much real estate is sold by auction. The commission rate is typically 1-3%.

[Anonymous]

Anonymous wrote:Overseas realtors only make about 1% on transactions. Sounds like a much more fair number.

Yeah, I think people are thinking too big. I don't think Uber for real estate will solve this. Just brokerages undercutting each other on commissions. Commissions have already dropped from 6 to 5. 1 seems fair.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think there's a bit of a myth about how commissions (and transaction costs) are lower overseas.

Total round-trip transaction costs in Italy range from 8.88% to 22.70%of the property value. Registration tax is 3% for main homes and 7% for second homes. Nonresident buyers pay a fixed registration tax of 7%. The real estate agent’s commission is between 3% and 8% plus 22% VAT; typically split between buyer and seller.

France it's 1.5-5%, plus 20% VAT.

Germany is 3-6%, plus 19% VAT.

The Netherlands is 2%-4% plus 21% VAT.

Russia is 5% for properties under $2 million (it's 2% for higher value properties).

Switzerland is 3% to 5% plus 7.6% VAT.

So U.S. realtors should extract a larger commission because the U.S. charges less in sales tax than other countries? How does that follow?

That isn't what I said. Someone said overseas commissions are 1%. Clearly they are not.

France, Germany, Russia, Switzerland all in the 5-6% range too.

US ranges from 0-7%. Average is about 5.5.

In Australia, much real estate is sold by auction. The commission rate is typically 1-3%.

I saw a house hunters like this. It seemed nerve wrecking.

I am a demanding client but as long as my realtor is responsive, I don't really care about their commission. I just see it as a cost of doing business.

[Anonymous]

How does Compass for into the model or not? They are new to town (the last year or so) and seem to be doing well?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:"Our list side charges 4% commission compared to the 5-6% through much of the country."

Wow. I would never go with Redfin at 4% if could get a experienced agent who knows my neighborhood at 4.5%, which is what I'd likely be able to negotiate down to.

You underestimate how greedy agents are (and the splits they have to pay), or overestimate your own negotiating abilities.

It is not the greed of the agents to be concerned about, but the greed of the sellers. The sellers want all the money, agents get paid a small portion of the money they get for sellers.

If you don't like the model or the way real estate agents work, do it yourself. It is just another service, like changing the oil in your car.

No, there's a middle option, car mechanics competing. Jiffy lube undercuts the "expert who knows your car".

As i wrote above, commissions used to be 6, then 5. Now 4 with Redfin. This is the real, undramatic story. Realtor commissions are simply getting squeezed.