Will Online Search Tools Make Realtors Obsolete? | Hacker News Reader

Will Online Search Tools Make Realtors Obsolete?

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I think that at least for the 2nd and 3rd quartiles of the market, realtors don't add much value and will eventually no longer be part of most transactions.

Very high-end homes will probably always command a "concierge" style assisted sales approach. Both the buyers and sellers will want this, and be willing to pay for it. There is a lot more margin in these homes to cover the commissions.

Very low-end or badly damaged homes may require some specialized sales assistance as well, though most of those will end up as sheriffs' auctions anyway.

Before the internet, realtors were the gatekeepers of the MLS. You had to deal with them to find out what homes were available and what features they had. Now that is all a mouse-click away. So what value does the realtor add? Not much. They set up the MLS entry, and then wait for it to sell. The transaction itself is highly standardized. The lender and title company will take care of all all the paperwork, legally required forms, etc. What assistance an agent does provide (filling in a boilerplate "offer to purchase" contract, etc.) could easly be handled online in a LegalZoom fashion.

Realtors may help with peace-of-mind for the first-time buyer or seller. I used a realtor the first time I bought a home, and when I later sold that home. Reflecting, it was pretty quickly clear that they had done very little work for the thousands of dollars they took out of my pocket. I have bought and sold FSBOs since, and never regretted it.

>> realtors don't add much value and will eventually no longer be part of most transactions.

I agree with the first part of your statement, but getting rid of them will be tougher than expected. In my area many realtors won't show listings of houses that are not listed thought another agent. So you go with an agent yourself in order to get the traffic to sell your house. Realtors are not going away without a long protracted fight.

finding the actual properties is only a very small part of what a realtor actually does. anyone can go online, or drive around the city on any given afternoon. in fact listings have been public for a long time. my very first tech job was at a real estate web startup back in 1997. rudimentary listings information was on the web nearly 20 years ago!

and they still have in-network information that isn't available publicly. you better believe the other realtors in the agency get first pick of the hot new listings. as far as i'm aware there's no law that says the seller has to sell to any one type of person. you can have a completely unlisted private sale.

the real value of an experienced realtor is making sure you are able to buy or sell the property you want, at a good price (to you), even in a hot or cold market. it's a sales and purchasing job.

once paper is signed and the pressure is on and the clock starts ticking, things can get extremely complicated. a good realtor will guide you through the process. a bad one will let a good deal slip through your fingers, costing you a fortune!

I've yet to realize a benefit from using a realtor, three houses in. My last transaction was done without realtors. Both parties did their research, we ensured all legalities were covered, and the whole thing was done for $30k less than using realtors. The first house incurred the penalty of using a realtor who used salesmanship to trick a couple of first-time kids. I don't trust them any further than I trust car salesmen.

As long as both parties are responsible and do their homework, I don't see any reason to use a realtor. In fact, if you do then that means there are two more parties you have to trust on responsibility.

> I don't trust them any further than I trust car salesmen.

Sure, they have the same incentives working against you. They both work on commission based on the amount you pay.

> I don't see any reason to use a realtor.

You're not doing it right.

First, don't work with agents ... work directly with a broker. Second, work with someone local, who knows the market really well. You look for houses and tell him what you want to see. He gets you in quickly and makes suggestions. He presents options and negotiates everything. Get your own inspector. Make sure he's detail oriented. Now give the inspection report to your broker and make him work for his commission. Beat down the price with the report. It's his job to make sure you get a better deal. Make sure he does his job.

On the seller side, their sole purpose should be to get you listed on the MLS site. The house will sell itself. You can negotiate a discount rate if the only thing they do is list your property and coordinate showing requests with you.

I have for the longest time often thought real estate agents over charged for their services.

(Side story: While looking at potentially buying a home, I realized that if I invested some time and the $500 to get the course materials, pass the state exam, and the fee to be credentialed, then I could potentially turn that into saving 2% to 3%, several thousands of dollars, when purchasing a home for myself... what's actually required and allowed will vary form state to state.)

With that said, I am a licensed real estate salesperson in my home state (but I am not practicing as I have not hung my credentials with a broker). I do believe that listing agents and brokers fees will have to come down since marketing is becoming easier and easier for everyone to do.

The greatest value that an agent can provide is that they can ensure that an offer to purchase is enforceable. Some people don't have the time to waste several weeks thinking they are buying or selling a home only to find out at closing that the deal fell through for what ever reason and that they have little or no recourse because the contract they wrote up was invalid or unenforceable.

Yes, you can have an attorney write up the contract for a few hundred dollars. In many states though the attorney can't practice real estate though (show houses or negotiate, they can only write up the legal document they are instructed to do).

In my state an agent can't list a house without first viewing it. What many don't realize is the amount of time traveling and showing homes that an agent spends time doing.

I see prices coming down and less and less and more contracts with brokers that pay a flat fee for an MLS listing and a yard sign. The owner will be responsible for showing and negotiating with potential buyers unless some other compensated arrangement is made with the listing broker. Commissions will only be paid to an agent/broker that actually procures a buyer.

What people need to realize is that when buying or selling, when dealing with brokers/agents EVERYTHING is negotiable. The number one thing to work on before buying or selling real estate is to work on your negotiating skills and realize EVERYTHING IS NEGOTIABLE.

I can't recommend You Can Negotiate Anything by Herb Cohen enough!

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(Non-Affiliate Link): http://www.amazon.com/You-Can-Negotiate-Anything-Negotiator/...

Here are the primary difficulties that owners report when selling themselves (FSBO).

- Understanding and performing paperwork: 18%

- Getting the right price: 13%

- Preparing/fixing up home for sale: 12%

- Helping buyer obtain financing: 3%

- Attracting potential buyers: 3%

- Selling within the planned length of time: 7%

- Having enough time to devote to all aspects of the sale: 6%

source: http://www.realtor.org/field-guides/field-guide-to-quick-rea...

But yea I bet that there will be fewer realtors. Eventually there will be a TaxCut for FSBO paperwork, and as for prep there are already on-demand cleaning crews and on-demand handy workers. That just leaves appraisal.

Realtors won't disappear, but especially in residential, their fees will shrink along with their duties involved in the sale. You'll probably start to see "Express Realtors" getting 1%.

Will Online Search Tools Make Realtors Obsolete?

Yes.

Maybe today, maybe tomorrow, or maybe in five years (which is really the blink of an eye on a historical timescale). There is no way that these guys can keep charging 6% for what they do in the long run.

I purchased my last home from these guys, who provide a pretty cool search tool: http://www.mmsre.com/residential/

There are a lot of things to sign and paperwork to do - it would be very difficult to do all of that without a real estate agent - I wouldn't even know where to start

Honestly (and I'm assuming you live in the US, and that things work pretty much the same everywhere) it's a lot less complicated than you think it is and the agent does a lot less than you think they might. At both of my closings (buying and selling) with an agent, their only real concern was getting their commission check.

You can get a boilerplate "offer to purchase" contract online. You make an offer, and make it contingent on an inspection and an approval of financing (even if you're preapproved, it's good to have this in there just in case something doesn't work out, e.g. a significant problem with the appraised value).

Assuming you are taking out a mortgage, the lender will make sure everything is legal (they don't want to lose their collateral) and it's all very standardized anyway. If you are still nervous, hire a real-estate attorney to help with the offer and closing. That will still likely be far cheaper than paying a commission to an agent.

That's what I'm going through right now as a prospective first-time homeowner. I have no idea where to start, what paperwork is involved, how to get this or that, etc. I need someone where I can call or stop in and ask advice. Someone to remind me that deadline X is coming up. Someone to help negotiate not only the price, but the paperwork as well.

Is 6% too much? Maybe. Or maybe its exactly what people will pay for their work. Who else can I talk to as an expert on everything related to home buying? And how much will they charge?

i live in a hot market (cambridge, ma) and recently sold my condo and simultaneously bought a single family home. i used a realtor, who took 4% of the purchase price. In the end, it seemed like a pittance for the amount of work she did and value she added. the stakes are high, the time is tight, and sophisticated buyers and sellers have many tricks they can use to alter the price by tens of thousands of dollars - my realtor guided me past all of that.

but more fundamentally, she marketed my home. That's really what they do. The Redfin listing is just the beginning. She told me what work I had to do on the place, how to "stage" the unit to make it look bigger, and when to sell (very important).

when i started getting offers in, she helped me filter out the ones who were just going to dick with me on price post-offer, when my leverage had plummeted.

All while she was making me a savvy buyer of another place at the same time. Wow! I thought she was underpaid.

Not completely, but the margins will collapse and it will go back to what it once was: a nice way for part-time workers to make a bit of money.

Startup idea: I'm a seller. Hi realtors, you may submit an itemized, fixed price bid on helping me sell my home.

I don't normally do this, but I am going to flag this one: Posted by a realtor, basic premise being that realtors add value. Regardless of truth, definitely self-serving, not particularly interesting.

Too slashvertisy for my tastes.

it's just that 6% commission fee is a bit too high these days.

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