Redfin real estate- ready to kick the agents out?

[Brat]

There is an interesting discussion on the SeattleRain blog about Realtor services and fees. Contributors include full fee, fixed fee and RedFin agents. One proposal bounced around was hourly rate. Let's see, a menu of services type of business plan. If you paid the agent by the hour then you would 'hire' the agent who had the best skills for your needs and if you weren't satisfied you could fire them.

The one issue for many is that they would need to pay for the services whether or not the a home was bought or sold. I suspect many don't have the up-front resources to do that. The RedFin business model for sellers is actually quite close to that. No CMA until you pay their listing fee, $3,000 or $4,000 (which includes handling offers).

Al_Bundy, the rules can't include dictating the fee for services - that's illegal. Architects used to have % fees, that was declared restraint of trade. As I recall the AIA was sued for that.

 

[clifp]

While it is true that most agents only close approx 12 deals a year you must remember that the 20-80 rule applies here.... 20% of the agents do 80% of the work... so while 80% of the agents are closing 12 deals the other 20% are closing sometimes up to 100 per year...

I don't understand how anyone could view Real estate as anti-competitive... It is one of the most competitive industries... So many agents and so few clients I don't see how it could be any more competitive....

Lets do a bit of calculations; 100 deals/year * 500K (true in place like CA, HI, some east coast) *3% * 70% (top producer get more than 50%) = $1,050K in commission even after subtracting like hiring an assistant, a stager, advertising. The compensation is 700-800K. Now $50 million in sales is probably only possible for the very best in expensive markets, but I think 20 million in annual sales is not uncommon and leaves people with net salary 200-300K.
My last buying agent got about $12,000 in commission, eventhough my girlfriend and I found the house through an open house, and we did a lot of the leg work, I doubt he spent 20 hours total on the sale (although his assistant spent some time also.) He was a fairly sharp guy but not $500+ hour worth .

I agree that are lots of real estate agents out there in that respect it is a highly competitive business. But the Realtor association and the various large real estate agencies (c21, CB, ReMax) have exerted strong pressure to maintain the 6% commission rate. So agents compete with each other on everything but price. I didn't realize the industry was so effective at lobbying until watching 60 minutes, not allowing a buyer rebates in OR is blatantly anti-competitive.

It is a bloated system. I've heard that places like Britain have roughly 1/3 the agents we have in the US. I know several part-time agents with zero or one sale last year these folks just take up space.

 

[Nords]

It is a bloated system. I've heard that places like Britain have roughly 1/3 the agents we have in the US. I know several part-time agents with zero or one sale last year this folks just take up space.

IIRC correctly the Hawaii roster of active real-estate agents shrank by two-thirds between 1990-1996.

We were in the Pearl Harbor military housing office in 1995 doing some paperwork and discussing the housing market with the civil-service employee. While we were all commiserating on how little our houses were worth, I mentioned that I felt sorry for the RE agents whose commissions were being cut in half as they had to start doing double the work to sell.

Her GS-6 response was "I don't feel sorry for them. I used to be a realtor!"

 

[free4now]

The "Active Rain" blog has lots of postings on the 60 minutes show:

http://activerain.com/blogsview/98038/6-Minutes-Et-tu

 

[tryan]

All the questions you mentioned above are basically about how to screw other parties: How to falsify the value of the house so the mortgage underwriter takes on more risk, how to hide defects that would be found by the average inspector, how to find someone who will hide the fact that the deposit came from Uncle Joey.

Weell at some point you need to say "buyer beware". I've done deals (80/20) zero down where the lender of the first AND second is the SAME lender (ferget Uncle Joey). And if the buyer doesn't know the house is "old" and they're financing the closing costs they should be confined to a group home (ferget owning your own).

 

[Texas Proud]

NAR and the MLS are private entities that built their networks and databases from scratch over many years. what's wrong with having rules if you access their systems.

if you don't like it use craigslist or start your own company and make a competitor

The problem is that the people who want to use their list met the requirements to use that list EXCEPT for charging less from what I can see... and also from what the gvmt can see which is why they are being sued for anti competative practices...

There is a law in place that says you can not 'tell' your distributors what you can sell the product at... you can suggest, but not tell. If they want to discount it and make less money, that is their right..

 

[al_bundy]

even though i don't like them, I think NAR will win the lawsuit. nothing preventing anyone from starting up their own data warehouse or using craigslist or the newspaper or anything else. not like you have to use the MLS to sell a house

 

[lloyds]

I once had a house in a less than ideal area in salem oregon. I listed it with one of the more popular brokers. It went on MLS. For the one year it was on the market, the only people that ever came to view it were the realtors on their weekly walk-throughs. I put up with that crap for a year. I was young and didn't know any better. Just a bad location was what I was told. So the friday after the last listing expired I took out a small ad in the local paper. It came out on sunday, had two lookers that day, sold it to another on monday. Did all the paperwork myself, took it to the title company to finish. Easy as that. No more realtors. Bad location or not, they could have done better. I sold it for what it was listed at with the broker. A good broker can sell a lean to if they really want to.

 

[Brat]

even though i don't like them, I think NAR will win the lawsuit. nothing preventing anyone from starting up their own data warehouse or using craigslist or the newspaper or anything else. not like you have to use the MLS to sell a house

Not quite... The AIA had their own gig, architects didn't/don't need to belong, but because they represented the major part of the industry and propose a fee structure they were subject to the restraint of trade statutes. Frankly I think they are toast with respect to controlling the business model. True, other marketing venues are out there.. but they always were . . it's just that newspapers are loosing out to venues such as Craig's List.

Around the time the AIA lost the suit there was a recession in several parts of the country, architects were competing for projects and fees were on the table. The % fee structure went the way of drawings on velum.

 

[free4now]

Weell at some point you need to say "buyer beware".

Realtors never say "buyer beware" while marketing themselves, but they sure say it in their contracts. I've been filling out the listing forms for my condo, forms designed by the California Association of Realtors. In several places they say that the broker "Shall not be responsible for providing legal or tax advice regarding any aspect of a transaction entered into by Buyer or Seller".

The funniest form is the SBSA, a 10 page form warning of dozens of issues that arise in sales, from earthquake retrofit issues to the possibility that bad guys could see the property on the internet. After each of these dozens of items it says "Brokers do not have expertise in this area".

 

[calmloki]

I once had a house in a less than ideal area in salem oregon. I listed it with one of the more popular brokers. It went on MLS. For the one year it was on the market, the only people that ever came to view it were the realtors on their weekly walk-throughs. I put up with that crap for a year. I was young and didn't know any better. Just a bad location was what I was told. So the friday after the last listing expired I took out a small ad in the local paper. It came out on sunday, had two lookers that day, sold it to another on monday. Did all the paperwork myself, took it to the title company to finish. Easy as that. No more realtors. Bad location or not, they could have done better. I sold it for what it was listed at with the broker. A good broker can sell a lean to if they really want to.

Felony Flats in Salem? We're getting close to peddling our big ol' yaller place on the corner of 19th and Mill - I'm thinking to give Craigslist a try - an agent suggested a starting price that I'd want to buy it for - and I'm not shopping! I've had agents earnestly tell me that a large portion of their (percieved) job is to get a seller to list a place at a low enough price that it sells FAST! And while FAST sounds good, I could wait a month or two to pick an extra $10-50K up off the table.

 

[Jeffrey]

Real estate costs in other english speaking countries with similar economic and legal systems is about half of ours (e.g. Britain, Australia).

 

[Mwsinron]

Real estate costs in other english speaking countries with similar economic and legal systems is about half of ours (e.g. Britain, Australia).

Really? I didnt know that. Man why is our real estate market so jacked.

 

[Jeffrey]

Mws: Speculation in The Economist (my source for this information) is basically price-collusion among realtors to keep commissions up. (By costs, I meant primarily broker commissions.)

 

[nnkrealtor]

FREE4NOW:

In several places they say that the broker "Shall not be responsible for providing legal or tax advice regarding any aspect of a transaction entered into by Buyer or Seller".

The contracts had better say that, and the agents better abide by it. Realtors are not qualified to give legal or tax advice, if thats what the client wants the agent can suggest a good lawyer or CPA. If a Realtor gives legal or tax advice and something bad happens because of that advice, he will be sued and he will lose. Also like my broker says "never give advice or answer a question that you don't know to be 100% correct. just say I will find the answer and then go find the answer"

 

[cute fuzzy bunny]

After each of these dozens of items it says "Brokers do not have expertise in this area".

They also dont tell you that all lockbox keys have a built-in taser.

 

[samclem]

FREE4NOW:
The contracts had better say that, and the agents better abide by it. Realtors are not qualified to give legal or tax advice, if thats what the client wants the agent can suggest a good lawyer or CPA.

Realtors almost always tell buyers, especially young/new buyers, that they'll save a lot in taxes. Sometimes they'll even give them a handy sheet or an article from a magazine that points this out. In the discussions I've personally had, the realtor(c) never pointed out that the only real benefit was the portion of interest payments above the amount of the standard deduction. 20 years ago in some lower-cost housing areas and in moderately-priced homes, this meant sometimes almost zero benefit. Funny how they didn't point that out.

In my experience, most agents do give carefully worded tax "advice"--and it is designed to help agents sell houses, not to help buyers..

 

[lloyds]

19th and Mill in Salem "felony flats". Pretty funny. Those used to be really nice areas. I was right on mission street. When we bought it the highway department was supposed to come through and buy up all those properties within the year. They surprised everyone and just built a soundwall instead.

 

[Nords]

In the discussions I've personally had, the realtor(c) never pointed out that the only real benefit was the portion of interest payments above the amount of the standard deduction.

Around here, with $400K mortgages not that uncommon, the standard deduction is a small fraction of the mortgage interest. I can see why it might be "forgotten".

In my experience, most agents do give carefully worded tax "advice"--and it is designed to help agents sell houses, not to help buyers..

Always!

 

[calmloki]

19th and Mill in Salem "felony flats". Pretty funny. Those used to be really nice areas. I was right on mission street. When we bought it the highway department was supposed to come through and buy up all those properties within the year. They surprised everyone and just built a soundwall instead.

Ya - I remember when they moved a number of the houses for that overpass - It SHOULD be a nice area - there are a scattering of great old houses. The felony flats moniker is something I've heard for the last 20 years from potential tenants calling to answer an ad. Makes me grit my teeth - it requires extra care on the yards and exterior because it can backslide into low rent scumdoggy digs too easily. I'm tiring of fighting it from 15 miles away.

 

[Texas Proud]

Realtors never say "buyer beware" while marketing themselves, but they sure say it in their contracts. I've been filling out the listing forms for my condo, forms designed by the California Association of Realtors. In several places they say that the broker "Shall not be responsible for providing legal or tax advice regarding any aspect of a transaction entered into by Buyer or Seller".

The funniest form is the SBSA, a 10 page form warning of dozens of issues that arise in sales, from earthquake retrofit issues to the possibility that bad guys could see the property on the internet. After each of these dozens of items it says "Brokers do not have expertise in this area".

They say that because the LEGALLY can not give tax advice nor legal advice as that is not their profession...

And they are NOT experts in the other items listed... they are SALESMEN... nothing more..

 

[Brat]

So, how is the sale of your condo going?

If it has sold how good was the advise... listing price, negotiations? Give us the scoop!!

 

[free4now]

The condo sale is going slow. I've had it on the market 10 days now and it has only had a few buyer visits, and less than a dozen realtor visits.

While I like the redfin business model, I'm disappointed with the level of service. My redfin agent just seems too busy; he almost never does things as quickly as he says he will, so I find myself having to double and triple check up on him all the time. Maybe that 60 minutes story kicked them over their capacity to serve.

I wanted to have my place all ready when it hit the market with the disclosures filled out and all the paperwork ready to make an offer, since several units in my complex have recently sold in about a week. But Redfin assumes you want to list your property on MLS on the day you submit your $3000 payment to engage their services. It ended up taking two weeks of constant prodding on my part before redfin could give me and turn around the disclosures, even though I turned them around in just 1 day. And it was almost two weeks after I hired them that they got me comparables, and pretty pathetic comparables (only three units with minimal information, whereas most other agents had given me a dozen or so comps).

But I am happy to deal with that kind of hassle to save five figures.

What is annoying is that something is preventing me from getting many agent visits, and I suspect it's just that agents are not interested in working with Redfin. Ive had lots of neighbors stop by at open homes and they always comment about how my price seems a bit low and how clean and inviting the place is, and I've done web marketing fairly well I think, getting good photos.

The 3 bedroom condo right next door to my 2br condo was on the market around the same time I listed mine, and they got 41 realtor visits and sold it in 6 days with multiple offers (apparently for $675,000, over the asking price of $645,000). My 2br which is in better condition is listed for $615k. In the past few months 2brs (slightly nicer) have sold for $630k and $640k in less than a week, and 2brs listed at $604k and $610k have received offers quickly, so I think my pricing is pretty good.

It does seem like good local real estate agents are better at building a buzz around their properties. I only got three agents at the tuesday broker tour that I held, while the 3br next to mine got more than 20 visits. I can't figure out exactly how they made that happen, but I do know that they had an offer deadline right from the start. Maybe that somehow motivated the agents.

One thing I think I did wrong was that in my FAQ website I explained that buyers without an agent can get back 2/3 of the 3% commission. I think that might have turned off buyers agents, so I removed that after a few days.

 

[free4now]

BTW you can see my listing here.

 

[Spanky]

The 3 bedroom condo right next door to my 2br condo was on the market around the same time I listed mine, and they got 41 realtor visits and sold it in 6 days with multiple offers (apparently for $675,000, over the asking price of $645,000). My 2br which is in better condition is listed for $615k. In the past few months 2brs (slightly nicer) have sold for $630k and $640k in less than a week, and 2brs listed at $604k and $610k have received offers quickly, so I think my pricing is pretty good.

Is it one of those luxury condos or simply it is located in some inflated areas, i.e., CA or Florida.