Startups That Launched at Y Combinator Winter 2015 Demo Day 2
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Real estate agents have disproportionate commissions largely based on where they operate. A real estate agent in San Bernardino, CA may make $1K for selling a home, while an agent in Palo Alto makes $10K+, because, well, the house costs 10x as much. Disclaimer: My father is a broker in San Bernardino. He's mentioned to me a number of times how incredible it is that agents get to take a percentage of the selling cost rather than a fixed fee. "Doctors get rich by going into real estate," a famous quote of his.
Certainly there is more competition for agents in Palo Alto, but the actual amount of work done by a real estate agent in PA is damn near equivalent to the work done by one in SB. There are standard California forms, inspections, financing etc. The only "added perks" provided by luxury firms in the Bay Area are aesthetic improvements designed to attract wealthy buyers.
For those who are interested, innovation in the real estate market has been difficult due to the monopoly on housing listings. The "Multiple Listing Service" (http://www.mls.com/) is the only master directory of housing lists and is only made available to "Realtors". In case you didn't know, Realtors are not exceptional agents, they simply pay to be members and gain access to the MLS. My dad was a member for the longest time just to have access to the MLS. After all, when a customer asks you to help buy a home, where are you going to get your list of available properties from?
In order for Open Listings to succeed they're going to have to upset the MLS. This means building their own listings. Here's my (crazy) suggestion: Hire 20+ people to drive around the Bay Area looking for "for sale" signs in order to populate their database. It's what my dad and I used to do before he paid to be a Realtor. Once we had a list of available properties we could show them to clients.
Work != value.
Here, you seem to have overlooked the fact that Open Listings is trying to "disrupt" the buyer's agent (although technically that's what it is). If you think the only thing a buyer's agent has to do to close deals in hot markets like Palo Alto is to submit an offer and run through the motions, you're mistaken. A great agent can be the difference between getting a property or not.
> For those who are interested, innovation in the real estate market has been difficult due to the monopoly on housing listings. The "Multiple Listing Service" (http://www.mls.com/) is the only master directory of housing lists and is only made available to "Realtors". In case you didn't know, Realtors are not exceptional agents, they simply pay to be members and gain access to the MLS. My dad was a member for the longest time just to have access to the MLS. After all, when a customer asks you to help buy a home, where are you going to get your list of available properties from?
You do realize that the number of pocket listings has grown substantially in the past several years, right? In some markets, pocket listings account for double digit percentages of sales.
This, incidentally, is another reason to work with an agent who is a top producer, particularly in a hot market. They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS.
Big difference between that and submitting an online offer form.
But as an aside, I think Open Listings will be huge, or at least similar flat fee models in the future (Redfin was another big step in the right direction chunking out 1.5% of the cost for consumers and removing commission for their agents)
>> A great agent can be the difference between getting a property or not.
I've heard such success stories, and I agree with you. An agent knowledgeable about one city would be ill suited to sell homes in another. It's very difficult for an agent to transition between cities, even if that agent is excellent at selling properties in his or her current city. Success depends too much on how much an agent knows about the local region and community. The point I was trying to make was that the amount of knowledge is relatively constant (e.g. what sellers look for in a buyer), it's just a different body of knowledge that depends on the region.
>> You do realize that the number of pocket listings has grown substantially in the past several years, right?
No, I did not realize, sorry for my narrow perspective!
>> They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS.
This is again to my point - the success of an agent depends more on what they know about their region (e.g. available properties, all-cash offers vs. larger offers, etc.), than the actual amount of work.
IMHO it simply isn't enough of a difference to justify a 10-fold increase in price. Palo Alto is an extreme example. There are likely niche communities where buyers would rather pay a fixed-cost and accept the risk inherent with taking a less-reputable agent.
Knowledge is money. This is just as true in real estate as it is in, say, software development.
And yeah, many properties never hit the MLS, so a solution would be more of a networking solution, rather than just something to replace the MLS, because that would not change much. Many times it's not even a issue with information being available, it's kept off the MLS because they want to get their contacts in on it first. It's a I'll help you, you help me type thing.
It's not just Open Listings clients that won't see the listing but all potentially interested buyers who don't have an agent who is friends with the listing agent (most buyers). It's definitely in the agent's short-term best interest to cultivate these relationships but ultimately the consumer suffers.
Luckily, this type of listing is relatively uncommon and most good agents see the value of getting as many eyeballs on their listing as possible.
Pocket listings account for a not insignificant percentage of sales in some markets. According to one source, in Q1 2013, they made up as much as 25% of sales in certain Northern California markets[1].
> The problem is that by not putting a home on the open market, the seller never finds out how much it's really worth.
You are making a couple of major assumptions:
1. Optimizing for price is best accomplished by maximizing the number of potential buyers.
2. Optimizing for price is the primary/only motivation of a seller, and outweighs all other considerations, such as speed, privacy and risk.
Neither is always true, especially at the high end of the market. A good agent is going to understand his or her seller's needs and employ a strategy that makes the most sense, and it's the seller's responsibility to decide whether the agent's recommended approach is acceptable. Absolute statements (pocket listings are good/bad) are easy to make but ignore the fact that different scenarios reasonably lend themselves to different sales approaches.
[1] http://speakingofrealestate.blogs.realtor.org/2013/05/16/mls...
Oh, and I have a feeling that many of those hard-working buyer's agents are probably less hard-working if the buyer is black, since this has been a long-running issue.
There are a number of "Solicitors Property Centers" where groups of solicitors got together to create websites listing all of the properties in their areas:
http://www.espc.com - Edinburgh
http://www.aspc.co.uk - Aberdeen
http://www.hspc.co.uk - Highlands
There is literally no single API/service that will tell you about every listing in every MLS.
People like Zillow have to aggregate data across multiple MLS.
That being said, it's often difficult to get past the merger doctrine in copyright claims over legal doctrines. There are only so many ways to express a warranty clause or choice of law provision, so it's usually a strong defense.
MLS is absolutely huge in most of the non-dense U.S. It's not that much of a hindrance for people to self list on Zillow if you live in California where tons of people use Zillow. It's more of a hindrance in rural areas where you'll get far less eyes on your listing if you're only on Zillow than if you were in MLS. The power of MLS comes from the fact that it's aggregated everywhere for you and it's what agents use for their buyers. Also, it's still extremely popular for house buyers to utilize agents, because it seems like it's just a free service and buyers don't need to do any legwork at all. Agents will arrange times for you to visit a property, will make phones calls for you,
As far as contracts, I'm certain a Google search for "Purchase Agreement" will get you a boilerplate contract for free or for just a few bucks. The bulk of the paperwork in a real estate transaction happens with the title and mortgage, which a title company or attorney will handle for you. I'm not going to go out of my way to insult real-estate agents, but they aren't attorneys and aren't doing any legal work on behalf of anyone. They are just presenting or filling out boilerplate contracts or forwarding stuff from the state/title company/underwriter/etc.
http://www.zillow.com/wikipages/For-Sale-By-Owner-Flat-Fee-M...
If you google for the standard contract you will find results but they are often not the latest and if it isn't specific to the state you risk leaving off clauses required by the law like lead paint disclosures etc... who's inclusion is property dependent. The initial contract is filled out buy the buyer not the title agent.
When I purchased the house, I paid a lawyer $50 to give me a fill-in-the-blank purchase agreement, review it with me, and make a few small edits. Real estate transactions are very standardized and you can go to any local lawyer and figure out the paperwork with fees that don't come close to what an agent will take. If you're a buyer and you're taking out a mortgage to buy the property, then the bank is going to force you to follow a prescribed set of guidelines and will line up all the legal stuff for you for closing, and will at least tell you what paperwork they need from you before they can begin the closing process, including stuff like lead paint disclosure.
(disclosure: investor/director)
I can see there's innovation here and hard work but not much is inspiring.
I'd guess that's more of a good thing than a bad one.
IMO the bio/med slant and almost (not quite...) complete absence of anything social or IoT is interesting, and possibly an indicator of future YC strategy.
I'm slightly surprised some of these projects think they need YC. E.g. if MashGin is anywhere close to working it's likely going to have investors dropping off big piles of cash at their lab day, night, weekends, and major holidays.
there needs to be a medium.com for rfp/rfi/rfq etcs that has digital signatures, and allows anyone, no matter how little technology experience they have to jump in and make and collaborate on industry documents and contracts.
I see their point about the high average cost of most medical devices, but I'm interested in why they started out with an infusion pump... that market is pretty competitive, even in the low-cost segment.
Seed, Kickpay: Xero.com, others in their ecosystem. (data)
NextTravel: Serko.com (direct competition, large)
Industrial microbes: lanzatech.com (did this with 1 use case)
Valor: taggle.com.au (long lasting remote meters)
Open Listings: 200square.co.nz (similar)
Spire: fphcare.co.nz (respiratory specialists)
Smarking: frogparking.com (the parking sensors)
Pretty Instant: magicmemories.com (tourist photos)
This is a typo, right? Or is it a pun that I'm not getting? :)