Anonymous
Post 12/18/2015 17:16     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:This is a pretty good (if slightly dated) article on why the real estate brokerage industry hasn't been disrupted.
http://www.economist.com/node/21554204
Key takeaways are agents have more value when homes don't sell themselves in a hot market (duh) and the independent nature of the business.

My reading of the article is FAR different from yours. The article says economists find the realtor market ridiculous and are baffled as to how it survives. The article offers several theories for why the realtor market has survived:
1. When everyone's getting fat with huge housing prices, no one cares about paying a few % for a realtor.
2. "Clients are suckers" getting tricked by realtors who tell buyers that the seller is paying, while promising sellers that they'll just jack the price to pay for the commission.
3. It's a mini-monopoly with only a few big realtors in each area getting most of the sales, so the monopolistic chief real estate agency can enforce the price for everyone and prevent discounters.
4. The industry has captured the regulators and uses the regulators to keep the prices up and prevent competition.

The article guesses though that the biggest reason this ridiculous business model survives is because the realtors are using collusion and policing to block price discounters. Buyer agents steer customers to those homes that pay a full 3% commission, and away from homes that pay the agents less. Buyer agents blackball sellers that use discounts. Because this is all stealth, it's very difficult to prove.
Anonymous
Post 12/18/2015 16:16     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
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?
Anonymous
Post 12/18/2015 15:40     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
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.
Anonymous
Post 12/18/2015 15:31     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
This is a pretty good (if slightly dated) article on why the real estate brokerage industry hasn't been disrupted.

http://www.economist.com/node/21554204

Key takeaways are agents have more value when homes don't sell themselves in a hot market (duh) and the independent nature of the business.
Anonymous
Post 12/18/2015 15:18     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Redfin hasn't had nearly the success disrupting the real estate industry as Uber has had on the taxi industry. I mean, 10 years in it can't even get more than 3% market share in its home market of Seattle.

Besides, Redfin appears to be little more than a pyramid scheme to go public and enrich early investors. I don't see a sustainable business model. Mainly because they keep changing the model like every two weeks.

So the short answer is I don't think we'll see disintermediation of the real estate industry anytime soon.


Thanks, realtor. Change is inevitable.


Not a Realtor. Just someone in business who studies this sort of thing. But it's such a clever retort, calling people who disagree with you Realtors.

Look, digital has had disruptive effects on many industries...

1) Car buying. Auto dealers as we know it are nearly gone.
2) Taxi services. Uber.
3) Banking and capital markets have been transformed.
4) Insurance, etc.

But, no, not real estate. Redfin will launch its IPO and then slowly drift down in value as it misses earnings target after earnings target.


Not buying the car thing at all. The same dealerships exist that existed decades ago. Moving the haggling to email instead of in person isn't much of an improvement.


No, digitization has definitely shrunk the role dealerships play in the point of sale of a car, primarily by shifting asymmetry of information. Buyers now hold all the cards.

The chief reason this won't happen for real estate is the fact that it's a regulated industry. Cars are durable goods but still liquid assets. And anyone can sell them -- you don't need a license. There's also more supply of cars -- if you can't reach a price on a particular Prius, there's another one to buy.

You can definitely inject more transparency into the home buying process, but property is a more heavily regulated and illiquid commidity.


I've gotten better deals in person at a dealership. Plus dealers have service departments.


How did you negotiate that better deal in person? With more complete information, right?
Anonymous
Post 12/18/2015 15:12     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Overseas realtors only make about 1% on transactions. Sounds like a much more fair number.
Anonymous
Post 12/18/2015 15:08     Subject: Re:How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Does no one in the DC region offer flat fee brokerages? When I lived in Florida a few years ago, I used a fairly known flat fee realtor from another part of the state. The way it works is that his brokerage was totally licensed. I paid him something like $350, and there was also a clause that said that the buyer's agent had to pay another $350 to him. I offered her 2.5% I believe. I had my own photos taken for $175 and wrote the listing myself. Not hard to use Zillow for comps. For the flat fee, he posted the listing on the MLS and associated it with a brokerage - so it looks legit enough to other agents. Our house was well cared for and recently renovated, and I watch enough HGTV to know how to "stage" for selling. No surprise, we were under contract at asking on the first day. This worked well for me because I worked from home at the time, so easy to do open houses. The house sold for around $1m - so I saved a huge chunk of cash. We used an attorney for closing (very common in florida) so felt like I was covered for contract purposes.

All that said, when we were moving back to DC, we used an agent remotely to go check stuff out for us. We wouldn't have been able to buy without her help since we didn't want to come up for every house. She totally earned the 3% on that $1m house.

So do those types of flat fee brokers not exist here? They're not for everyone, but it sure worked for us.




zillow will give you the sales price so you can use it for comps...




Usually delayed and rarely do you get enough information to really make an apples-to-apples. I mean, good luck with it, but oy.



We're in DC and the info is usually up within a month of closing. We live in a rowhouse neighborhood and it's really easy to keep track of what comes on the market. It's also a very easy market for comparing comps: don't compare condos to rowhouses. Rowhouses are either the small variety (1300-1800 sf) or the large variety (over 2000), and within that are either "gut", "liveable" or "fully updated". Parking affects price, as does rentable basement apartment. You can get all of that from looking at the online listing pics (that stay up on redfin for ages). I had a realtor advise me my old house in Columbia Heights should ask $375k - based on comps. We thought that was crazy, listed at $525k and were under contract after the open house at full asking. This is not rocket science.


It's far from rocket science. Realtors simply aren't necessary with the Internet. We found our home on our own and simply had someone unlock the door and be present during the inspection. He also showed up at the closing. Yet he earned around 40k for that. Maybe he showed the house to others and maybe he didn't. I realize agents sometimes have to spend weeks/months showing clients around. The entire model is messed up and doesn't make any sense.

I also find that real estate agents often mess up deals. You're adding a middle man to the transaction and you have no control over what they say behind your back to the other party. It just complicates things. Real estate agents often encourage you to bid up as well. I had multiple agents try to get me to offer ridiculous amounts for a home that closed for much less.

My favorite experience was having a realtor tell me I needed to make a competitive offer because there's already an offer on the table. The offer he was referring to was mine. Long story.

Only reason I would rely on an agent would be if I moved across the country and knew nothing about neighborhoods, the market etc. but purchasing a home in a small city like DC with all of the information I need online? No way.
Anonymous
Post 12/18/2015 14:01     Subject: Re:How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Having sold a home in the past year, I was really annoyed most of the time with our agent. I felt at the end of the day we could have done as good a job as he did, due to bait and switch of what was said he would do (staging, agents open house) and what he actually did (coordinated showings and negotiations...) when push came to shove and we were ready to show him the door, in fact we did...delisted and everything, he made last minute deal that was in our interest come through. Can't help feeling like he only got serious when he realized he was going to loose the commission altogether, but whatever, it's done. We wouldn't recommend him to our friends.

Meanwhile, we have a buyers agent that has been an absolute dream to work with. We haven't finished the process yet, but she communicates with us constantly, is kind and has given us tons of insight in terms of the perceptions of various areas in Mclean and Arlington, something we needed since we were moving from out of state and had no basis for comparison of one community to another. I think the fly by night, part time gig, do 3 houses a year kind of agents give all the other agents a bad rep. I also agree that at the end of the day, you will always be your own best advocate.
Anonymous
Post 12/18/2015 13:59     Subject: Re:How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Does no one in the DC region offer flat fee brokerages? When I lived in Florida a few years ago, I used a fairly known flat fee realtor from another part of the state. The way it works is that his brokerage was totally licensed. I paid him something like $350, and there was also a clause that said that the buyer's agent had to pay another $350 to him. I offered her 2.5% I believe. I had my own photos taken for $175 and wrote the listing myself. Not hard to use Zillow for comps. For the flat fee, he posted the listing on the MLS and associated it with a brokerage - so it looks legit enough to other agents. Our house was well cared for and recently renovated, and I watch enough HGTV to know how to "stage" for selling. No surprise, we were under contract at asking on the first day. This worked well for me because I worked from home at the time, so easy to do open houses. The house sold for around $1m - so I saved a huge chunk of cash. We used an attorney for closing (very common in florida) so felt like I was covered for contract purposes.

All that said, when we were moving back to DC, we used an agent remotely to go check stuff out for us. We wouldn't have been able to buy without her help since we didn't want to come up for every house. She totally earned the 3% on that $1m house.

So do those types of flat fee brokers not exist here? They're not for everyone, but it sure worked for us.




zillow will give you the sales price so you can use it for comps...




Usually delayed and rarely do you get enough information to really make an apples-to-apples. I mean, good luck with it, but oy.



We're in DC and the info is usually up within a month of closing. We live in a rowhouse neighborhood and it's really easy to keep track of what comes on the market. It's also a very easy market for comparing comps: don't compare condos to rowhouses. Rowhouses are either the small variety (1300-1800 sf) or the large variety (over 2000), and within that are either "gut", "liveable" or "fully updated". Parking affects price, as does rentable basement apartment. You can get all of that from looking at the online listing pics (that stay up on redfin for ages). I had a realtor advise me my old house in Columbia Heights should ask $375k - based on comps. We thought that was crazy, listed at $525k and were under contract after the open house at full asking. This is not rocket science.
Anonymous
Post 12/18/2015 13:29     Subject: Re:How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
new poster here. We have bought recently and will soon be selling.
I like our agent but the fees he is getting are high.
I found the place we bought - not his fault since it was word of mouth.
We live in a hot neighborhood so I expect our current house to sell in a week or two in the spring.
Comps are not that hard to figure out if you do some online searching especially since I know both neighborhoods well.
The agent has suggested that we do a bunch of work on the house as it will look better, fairly common sense stuff.
Also, he recommended I get it staged.
All good advice but really not a lot of work for him.
I think this industry is just waiting to be disrupted in some way.

Anonymous
Post 12/18/2015 11:51     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
No one has cracked this code yet, but it's bound to happen eventually because there's money to be made by disrupting this industry. When? Could be next year or in another twenty but it's bound to happen.
Anonymous
Post 12/18/2015 11:40     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:

I've gotten better deals in person at a dealership. Plus dealers have service departments.


You missed the point.
Anonymous
Post 12/18/2015 11:35     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:
Anonymous wrote:Redfin? Probably never. It's been how long, they have under 1% of the market, are not profitable, and will go the way of pets.com shortly.

Doesn't mean that this market won't change drastically - maybe google has something in store. Or amazon. But housing is not a commodity market.

I'll answer a different way - real estate sales will change 10 years after car sales change, and I have no confidence that will be while I or my kids are alive.


Uh, the last two cars I bought, I negotiated with 10-15 dealers via email and it was a bidding war to get the lowest price so they'd win my business. Plus, with the internet, I could research exactly what a rational price would be.

WAY different from when I purchased cars in the past. Have you not bought a car lately? Because it really sounds like you don't know what you're talking about.


I did the same thing for our last cars too. So much easier.
Anonymous
Post 12/18/2015 11:33     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Redfin hasn't had nearly the success disrupting the real estate industry as Uber has had on the taxi industry. I mean, 10 years in it can't even get more than 3% market share in its home market of Seattle.

Besides, Redfin appears to be little more than a pyramid scheme to go public and enrich early investors. I don't see a sustainable business model. Mainly because they keep changing the model like every two weeks.

So the short answer is I don't think we'll see disintermediation of the real estate industry anytime soon.


Thanks, realtor. Change is inevitable.


Not a Realtor. Just someone in business who studies this sort of thing. But it's such a clever retort, calling people who disagree with you Realtors.

Look, digital has had disruptive effects on many industries...

1) Car buying. Auto dealers as we know it are nearly gone.
2) Taxi services. Uber.
3) Banking and capital markets have been transformed.
4) Insurance, etc.

But, no, not real estate. Redfin will launch its IPO and then slowly drift down in value as it misses earnings target after earnings target.


Not buying the car thing at all. The same dealerships exist that existed decades ago. Moving the haggling to email instead of in person isn't much of an improvement.


No, digitization has definitely shrunk the role dealerships play in the point of sale of a car, primarily by shifting asymmetry of information. Buyers now hold all the cards.

The chief reason this won't happen for real estate is the fact that it's a regulated industry. Cars are durable goods but still liquid assets. And anyone can sell them -- you don't need a license. There's also more supply of cars -- if you can't reach a price on a particular Prius, there's another one to buy.

You can definitely inject more transparency into the home buying process, but property is a more heavily regulated and illiquid commidity.


I've gotten better deals in person at a dealership. Plus dealers have service departments.
Anonymous
Post 12/18/2015 11:31     Subject: How many years until realtors are replaced by Redfin/Uber/Zillow/etc?
Anonymous wrote:Probably 5 years or less. The Redfin business model requires agents to work for a salary and earn small commissions. The traditional companies have focused on having the largest number of agents rather than having agents who work. People are no longer willing to pay the transactional costs and wil use more streamlined, less expensive means of buying and selling properties.


People still pay transaction costs. Realtor.com was around in the 1990's and was used just like people use zillow-surfing and filtering. There is more in the mls than shows up on redfin. And who are the agents?