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Comment by hospitalJail | Hacker News Reader

About 10 years ago, me and my wife took LSD on a vacation, and the sheer uselessness of a real estate agent appeared to us.

What does a real estate agent do? They unlock doors.

Who are real estate agents? We can all think of a few real estate agents, none of them are top performers. They are usually on their ~4th career before the age of 30. They are the type of person to wear a suit in public to pretend that it makes them important.

I know an exception to the rule, except he sells multi-family real estate, and owns ~10 single family homes himself. I'd hardly call him a real estate agent at this point, he is a landlord.

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I disagree with this. You pay a realtor because a good one stays up to date with what's happening in the market, has a network of vetted contractors/potential buyers/other connections, has up-to-date frameworks for handling the processes and timing of tricky situations that can arise.

Sure, you can do all that yourself if you want, but for the average person, they are providing value.

A Rolodex and a limited understanding of the real estate market. If they really had expert housing market knowledge would they be working as a real estate agent?

IME the ones who are successful long-term and make serious money do indeed use their market knowledge, connections, and access to make real estate plays themselves. Move into owning rentals, do some flipping, that kind of thing. The easiest path seems to be having a spouse who's in a different, but relevant, career (e.g. general contractor).

Having been through buying a home I think I’ll push back on that a little: our agent knew what was a fair price, what we’d likely be able to push the sellers down to, advised us through the whole process.

Rental brokers on the other hand… now they’re absolutely useless and you can sometimes pay astronomical brokers fees just so they can sit between you and the landlord.

I had a similar experienced, though I'm biased by being related to an agent, but having worked with good ones and bad ones, there can be a difference. Bad agents are glorified door unlockers and sign placers, but good ones have experience marketing, know the market well enough to make recommendations, help with staging and making a property attractive, and advocating for their client during sales. If the game was different, maybe they'd be redundant, but a good agent is a real ally and can move a house quickly.

You do not need an agent to know a fair price lol

You aren’t wrong, but it means you have to do your own research and generally only have access to public information. A realtor who knows their market has done that research for you (saving you time) and generally has information beyond what you can get off Zillow et al.

I don't need a mechanic to repair my car, either. I could spend hours doing the research, risk maybe being wrong and fix the thing myself. Or I could hire a professional.

Same. Our realtor wasn’t in any hurry to sell us a house (showed us 40 houses over about 7 different days actually) and wasn’t afraid to point out the negatives of the house and what we should be looking for in a good first home and take into consideration if we ever wanted to resell it. I learned quite a bit from him during the process.

He also didn’t mind seeing a bunch of houses because even if we weren’t interested in a house it built up his knowledge about the market and could possibly recommend the house to others.

We did have another realtor that wasn’t like that though when we were considering moving to another state, who mainly was just there to show houses and never pointed anything out, in fact she barely talked.

Didn’t really see the value with her, although shortly after the mortgage rates jacked up fast and made moving less appealing (we looked just before the Fed jacked up interest rates), so we didn’t go any further in the process anyway.

> our agent knew what was a fair price, what we’d likely be able to push the sellers down to, advised us through the whole process.

I've seen cases where the sales agent knew the seller's minimum and basically told that to the buyer. They didn't negotiate on the seller's behalf so much as negotiate to get the deal done quicker.

I'm sure the buyer's agent looked good to the buyer. This scenario and the one you describe are almost indistinguishable, depending on which party you are.

Even an incompetent agent serves a very valuable purpose in a real estate purchase.

Without the agents, you'd have two people attempting to negotiate a 6 (or 7, nowadays!) figure purchase directly. Before it was over, you'd hate the other party too much to ever complete a sale.

Agents sit between the two parties and have a vested interest in seeing a transaction take place. They talk to each other and soften the communication so that you can tell someone you want to pay them fifty-fucking-grand less money for the single largest asset in their life that they were counting on to fund their retirement, and have that met with a counter-offer instead of an angry storming off.

A good real estate agent can provide a lot of value, especially if you're a first-time buyer.

* They've seen a lot of houses, and know what to look out for even before you commit to calling in inspectors.

* They've seen a lot of closings, and can handle all of the title/law crud. "Quick closing" can be a big plus to some sellers.

* They've seen a lot of negotiations, and can help you get a feel for how the other party is thinking.

There certainly are people who unlock the door, stare at their phone all day, and collect their commission. Those aren't very good agents, even if they can get the job done when the market is extremely short on supply.

Strongly disagreed. Unless you regularly buy and sell houses, when it comes to buying a house, you are out of your depth. You need the help of a professional, and you want one who is looking out for your interests.

I admit finding a real estate agent who you can trust is not easy. I don't know how to do it, other than from who you know. I was lucky, and ours was a friend of my wife's family.

Just find one who has been working through a few downturns. Hot markets spawn real estate agents like locust, but downturns burn out all but the best.

There are plenty of next-to-useless agents, just like there are plenty of next-to-useless software developers.

Our agent (used twice, 15 years apart) was great. Both times, in strong sellers markets, so lots of offers made and rejected. Lots of last second "OMG, just listed, can we see it NOWNOWNOW!"

Very expensive, but so is a house.

Now that I've been through the process a few times, could I do it without? Probably. At the right price, would I use an agent regardless? Absolutely. The old 6% rate seems quite high for a basic sale given online MLS listings, though for a very specific home in a small market, might still be worth that (I'm think lake homes in my neighborhood - rare listings, selling for $50k+ premium over non-lake on same street, often have a buyer lined up before listing, so really hard to actually buy one without an agent who knows people).

> me and my wife took LSD on a vacation

Did dropping acid enhance your vacation, or does LSD also stand for something else?

Ha! I feel like I’m in the crazy house as you’re the only other person who has asked that…all these well thought out responses that seem completely oblivious to the doozy of an introduction.

“So I once played poker with a gorilla and [insert point]” and everybody only talks about the point and not the gorilla???

¯\_(ツ)_/¯

Taking LSD on a vacation is a pretty mundane thing for many people.

Realtors thrive on nepotism though and double ending jobs with their friends or even themselves. There's plenty of homes that are bought and sold without hitting any public listing site. Agents just might call up another agent the know and go "Hey I got a buyer for a 3br in these neighborhoods, you guys got anything coming up?" and vice versa. Without an agent you are locked out of that side of the market and probably at a serious disadvantage, overpaying for property that didn't manage to sell through this "premarket" for whatever reason which could in fact be for red flag issues.

I have to say I found estate agents quite useful (mostly when I was renting). I much preferred dealing with a letting dept. of a reputable estate agency than random landlords. Yes, I had good landlords(funnily enough when I was quite poor in the cheapest accommodation possible), but I had bad ones too. I never had a bad renting experience with an agency. Stuff always got repaired on time, cleaners got hired to clean common areas, electricity and gas got inspected regularly. All those things are not a certainty with random landlords and you only find out once you've moved.

When I bought my first house, my agent was invaluable. He certainly helped me avoid a bunch of bad decisions.

He never actually said "don't buy this house" at any property we looked at, but he would point out things I wouldn't have thought about like, "it's nice, but I wonder if there's a lot of noise from that street later in the day when people are home from work" or "I guess you wouldn't want to play with marbles in here" (house with a sloping floor likely due to foundation shifting) and a lot of other remarks to point out things that I, as an apartment dweller, wouldn't have considered.

I may have gotten that first house entirely due to him: I wanted to lowball the offer, but he pointed out that that neighborhood was a hot area and the house was very reasonably priced. I later found out that there was actually a slightly higher offer than mine, but since I had offered the asking price and came in first, the owners thought it was only ethical that they sell to me.

I've certainly met useless RE agents since, but there are definitely some that earn their percentage! The guy who sold my last house was also a builder and he fixed a problem that would have held up the sale on his own dime!

> He never actually said "don't buy this house" at any property we looked at, but ...

Taking hints from realtors is a skill. They are so subtle. I got exactly the same experience.

Not exactly real estate agents for buying/selling but related:

I remember reading about the fact that, at the time, most apartments in NYC were "broker only" (aka you can only see and then rent an apartment if you are using a licensed real estate broker).

The more I thought about this, I started to see the benefits for both sides:

- for the landlord: the broker acts as a filter for people who are serious vs "looky loos" (actual quote from a real broker)

- for the tenant: the broker wants repeat business so they will, in theory, only deal with reputable landlords

- for the tenant part 2: if you are a busy, hard working individual, the broker acts as your "agent" (in the principal agent sense of the word) to save you time by going and finding apartments for you so that you can focus on your high paying job.

The problem with brokers is that they can charge 1-2 months rent. That means you can easily be left with a 8k bill for moving into a new apartment.

The job literally could not exist anywhere else because no one would pay it. But they aren't making any more land in Manhattan and they aren't building subway lines quick enough so landlords get to pass that expense off to tenants

If you are a top earning investment banker or lawyer, it's still worth it to pay that rather than spending 10+ hours of your time going to apartments etc. Most of "seeing apartments" is "let me get to the apartment by cab (stuck in traffic) or by subway (oh, delays, oh well)" so it's even less efficient for you to do that vs a broker.

In the South East of England I found that estate agents were very proactive, stereotypical Audi TT-driving widemen who wore suits and had good haircuts and would work hard to make a sale. When it came time to sell then I found them to be lazy and almost useless, taking bad pictures, writing incorrect descriptions and showing no urgency. I guess they figure that the house will sell one way or another and the difference between a good or bad listing might only be a few % of the sale price, which means their cut will only change by £100 or so.

Alternately in the North East then I had a much different experience (albeit only on the buying side) - estate agents were almost exclusively women who answered phones, and viewings were done by the sellers themselves.

Honestly, I had this exact same attitude before my last home purchase. We began by assuming that Redfin was good enough. By the time the deal closed, we really appreciated what an experienced agent with at least a vague awareness of real-estate law could do. When the FSBO seller tried to back out at the last minute, our (obviously motivated) buyer's agent was able to set him straight. Without his help, I'm certain the situation would have turned into a nightmare scenario involving actual lawyers.

That doesn't mean I won't try the easy/cheap way first next time, but it does mean I no longer dismiss all realtors as useless parasites who need to be "disrupted" at all costs.

>What does a real estate agent do? They unlock doors.

Think of real estate agents through the perspective of the 10x programmers we love to talk about here. The multitude of agents are as you describe - they publish listing photos from their phone, they know how to open a door, and then can mostly write down what you tell them on standardized forms. A 10x agent on the other hand, will absolutely benefit you in the same way that a 10x programmer will outproduce. Classic 80/20 rule stuff, where you want to be working with the 20 and ignore the 80.

> What does a real estate agent do? They unlock doors.

> Who are real estate agents? We can all think of a few real estate agents, none of them are top performers. They are usually on their ~4th career before the age of 30. They are the type of person to wear a suit in public to pretend that it makes them important.

Let's not pretend the software engineering world isn't full of hubris. Even the title itself is illegal in parts of the world because our career isn't a real engineering field.

What does a software engineer do? They type on a keyboard.

> What does a real estate agent do? They unlock doors.

I think it depends on the local market, but this was certainly my feeling when trying to rent a place in London. I visited 15 properties in a couple of days. Most agents just unlocked the door, sometimes seeing the place for the first time, most often clueless about the place. Actually a couple of them weren't even able to open the door and didn't have the right key.

This is probably because in London, the flat will rent in a few days anyway. There isn’t any incentive for relatable agents to try any harder.

I wouldn't go quite that far. They also handle the paperwork and coordination with the other agent, which is not a trivial job. It's highly questionable if the value they add is worth 5% of the gross sale price of the house, especially in our amazingly inflated markets, but few if any agents seem interested in working at hourly rates.

In the UK paperwork is mostly done - surprisingly slowly - by lawyers.

This is the practice in many countries and even several US states. The listing services we have in the US are not universal either, which I think performs a really important role in providing information to the public and creating a more level informational playing field.

Same in the US, and for a separate set of fees on top of the realtors 5-6%.

>few if any agents seem interested in working at hourly rates

It’s because most agents work as self-employed contractors under the auspices of a brokerage, and the brokerage is not going to allow that. And/ or, in a state using standardized legal documents, we don’t even have a form for that, which means we’d need to come up with an hourly contract from scratch - and the brokerages will put their foot down on that too.

I think you are being a little unfair to them, but at the same time...

They get 5% of most single family residential transactions. And recently it was 6% that was standard. And the industry works really hard to protect those profits.

It is a lot of money that comes right out of consumers pockets.

I had a client who only sold 5million$+ estates and I went with them a few times on showings and I bought quite a few houses myself in the 5-20k range. The effort made by the estate agent was the same; close to nothing. I don’t know what’s wrong with these people and they definitely don’t deserve the commission. But when I ask just give me the location and the keys, they don’t do that. So totally useless and yet they want to come with you.

Yes, just hand the keys to someone's home to a complete stranger, what could possibly go wrong.

Eh, with security cameras for ~$20 per camera, you can buy a lot of security cameras for the 25k commission.

Heck, you can buy over 1000 security cameras and still save money.

There was a now deleted reply to that, probably intended as a joke, about how the cost of electricity for all those cameras would wipe out the profit.

I was curious and did the math. I'm using motion sensitive security cameras that only record and upload when motion is detected. At the places with the most expensive residential electricity in the US or the EU 1000 of those cameras would need under $5 of electricity per year. There's also the thing that the cameras upload to. I don't know how much power that uses, but it is powered by a 5 W USB power supply so can't be more than $22/year.

This is the most cliched HN thought pattern I've ever seen.

Here you have to sign a contract (so competitors or the owner don't sell it cheaper to you) and they take a copy of your passport and proof of residency. So not exactly strangers. And in this cases where I asked for the keys, they were local realestate agents I went to school with. Not that anybody locks their door over here; it's just often not clear what the location is to prevent personal negotiations.

> it's just often not clear what the location is to prevent personal negotiations.

Oh no, we had a bug once when our software uploaded the property to the web with the address unlocked. The place got swarmed by people who would just enter the property at any time, not giving a damn about the owner's privacy. They were ringing the doorbell, asking about the price and if they could see the place right then and there. Agents are the first line of defense against shitty people.

Agents are facilitators of the deal. They are the lubricant that gets the deal done.

Agents are the friction that increases transaction costs.

There's a South Park episode about this

If your wife and you took LSD and it "appeared" to you that all doctors do is run around in stupid white coats, would that reveal more about the field of medicine or the two of you?

"It requires professional help to facilitate emotionally charged, million+ dollar transactions" would be the more useful insight.

Very few people chose to forego aan agent when dealing in RE, there's a reason for that. I am a finance dude quite capable of negotiating etc and I still found out agent super valuable and would use her again.

It's possible you know crappy agents who deal in low-end transactions but again that may reveal more about you than the field.

This will sound harsh, but mostly real estate agents are suckers who are actively getting scammed by the brokerage. Brokerages have a virtual monopoly (oligopoly) on listings and comparable sale prices though MLS (I'm in Canada but I think the US is the same) and as such it's in most seller's and buyers interests use them. Agents are getting charged all sorts of scam fees to market themselves in exchange for getting to tap into the MLS. Every ad and stupid video and contract and mailer and whatnot is getting sold to them by the brokerage who is siphoning off all the money they can. The real suckers are the agents, even if they don't really do anything.

There might be some nuance here between the US and Canada - would love to chat over frosty beverages and learn more and the system up there as eventually I’d like to expand into BC. The MLS fees (I belong to two and will likely join a third and possibly fourth) aren’t terrible and I would say listing services are generally a good thing for both the consumer public and agents. But - as you note - the public has a very limited view of all the ways brokerages and various third-parties try to scam and fleece agents. The overall system is exploitative of agents and that has a role in the cost to consumers for real estate services. And, name brand online services are just another third party looking to make money off agents.

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