"I'm still waiting for someone to completely eliminate the need for a software engineer and charge a reasonable flat fee to bolt together some libraries and handle all the related details.
Why do we even need software engineers at this point? Everyone can find the libraries and open source tools they need online nowadays. Why does anyone need to pay a whopper paycheck to some middle-man?"
You're paying for someone's expertise, like in most industries.
I generally have a different opinion. I am somewhat in the industry (construction side) and I feel that generally most realtors dont really have much knowledge of what they are selling. Furthermore, it is relatively easy to get a real estate license (at least where I live) and the handful of acquaintances that have gotten their license really dont know more than the average person.
I actually find the lack of knowledge of most realtors very surprising (not that there arent some really good ones out there). When we were working with one to find a home, we would walk into a place and our realtor would look through the listing sheet and be like "oooh they supposedly have a good quality insulation in their walls", I would then need to explain to him what an R value means and that no they truly didnt have good insulation and what they were using as a marketing point was in fact the minimum required by code. I would then point out a few other items (jump ducts, hollow core doors, etc) that would make me feel like I was walking into a Habitat for Humanity type of home, not a $600,000+ residence.
Buying a home is the largest single investment people are likely to make in their lifetime and they have almost 0 knowledge about what they are buying and do almost no research into it other than the location. They then rely on input from someone regarding what they are buying that has very little additional information other than comparable sales and "knowledge" of the market. I wrote a business plan a little while around this, but never took past just putting some ideas on paper.
This is so true. Not only do they typically not know anything more about nay given home that you, the buyer, do. If they are on the selling side they will also outright lie about home features. I experienced this so many times on houses I visited and even on the house I ultimately purchased.
You just have you shrug your shoulders and fix whatever they misrepresented.
In my state you should file a complaint against that agent with the department/office that oversees real estate licensing. And you might be eligible to be compensated for the agents misrepresentations if you can prove them.
I'd love to. Some of the things seem difficult to prove. Such as
> Welcome Home!!! Take a seat on the PORCH SWING on your COVERED DECK and enjoy the Fall Season! Come inside this cozy home and view it's OPEN FLOOR PLAN [calling this open floor plan is a big stretch], Original HARDWOOD Floors [and they are destroyed as a result. Water damage. literally cut through to put in a furnace in the basement in one place. Covered by a carpet in the living room and destroyed as a result] and FRESH Neutral Paint. Two bedrooms and a LARGE full bath [probably as small as it gets while still being a full bath] on the Main Floor with a SUNNY eat-in Kitchen and Conveniently located MUDROOM, additional bedroom/office in the basement [not legally a bedroom]. This home features Updated ELECTRICAL [in some places sure. Half the house is still crappy old cloth wrapped wire], Updated PLUMBING throughout, Living Room is WIRED for SURROUND SOUND, [broken] SPRINKLER SYSTEM and NEW Roof with a LIFETIME transferrable Warranty! Detached Garage has HEAT & A/C, Wired for Cable and LAN line [a CAT5 cable that terminates in the floor and is not accessible to be hooked up to anything because it's in the floor!], has Electric [electricity to the building no where near code because it is fed from two sources] and a HUGE Attic space to Provide LOTS of EXTRA STORAGE. This home has a Private COVERED PATIO in the back where you can relax and enjoy YOUR NEW HOME!
There was more in the listing than this but that's just the basic bio.
I guess I'm looking for different expertise. I wouldn't trust them to have any building knowledge. I want them to know the local market. I bought a house in Los Angeles a few years ago. Because everything is so expensive we were fairly open to different areas in a radius around our jobs. It was easy to overlook neighborhoods that were a good fit just by looking at a map of house sales. I reached out to a few realtors in different parts of town. They could help answer questions about schools (and charter schools), what was low and high for the neighborhood, and other things I could find out myself, but would take too much time if I did it for a dozen neighborhoods.
They also were really helpful in scheduling walkthroughs before the house would go on the market, and scheduling all of the inspections--they also offered to be on site if I couldn't make it.
I also think they keep the sale rational when either side can get too sentimental. After inspectors found a few, minor things, the seller only offered to address them after adding another 5k onto the price (at no point was 'as-is' mentioned). This was after a few other petty things from the seller and I considered walking away. The house had been in escrow with no backup bids before we showed up. So I wouldn't be surprised if that happened last time, too.
When I was buying my house every time I asked a seller's agent a question about a house their answer was "I don't know." Every single damn time! If it wasn't written on the MLS they don't have a clue. That's even assuming the seller's agent was even physically there for the showing, only a few were.
My loan agent also told us that the taxes listed on the MLS were almost always flat out wrong so he always has to ignore the MLS and call the town when drafting up mortgages. I can't help but wonder if that's not so accidental. The taxes listed on the MLS for the house I ended up buying were wrong, for what its worth. Two municipals tax my house and the MLS only listed the tax for one of them.
That is a tough one. I have been in the industry for 10+ years and a lot of it in the higher end custom home side. To me a couple of things that standout as super cheap are jump ducts (basically they didnt bother to put a return air duct in a room and just put a whole in a wall with grills on either side to allow air transfer), hollow core interior doors (you can hear/feel the difference if you knock on a hollow core door versus a solid door), all stucco exterior (cheapest clading material where I live), sometimes upper floor water pressure is almost non-existent and they dont put in a booster pump, and on and on... I feel like it really varies from project to project. I have seen some where they actually spent a decent amount on the cabinet drawer/door fronts, but then didnt bother to spend a couple of hundred more on good undermount drawer guides. Others where they didnt bother to think about layout/flow in a kitchen (aka the island looks great, but if I open my fridge I cant squeeze by the island and the door to actually get anything out of it). I think generally a lot of what people are trying to build today qualifies as "modern" but to me it just looks/feels cheap. To truly do modern well is very expensive. I dont particularly like the look, but thats just my opinion.
Older construction is another area entirely. When flipping houses became popular a lot of people got into the industry who didnt know what they were doing, or they went about trying to do it as quick and cheaply as possible. I have heard that the less you know about a place you are trying to flip the better. AKA if I dont open up any walls to see if the electrical doesnt actually meet code, then I dont have to spend a bunch of money replacing it! Or I didnt get a structural engineer to look at the foundation so I dont know if there are any issues with it and therefore I dont need to disclose anything to a potential buyer.
I'm sure there are exceptions, but I've never met a realtor in the US that wasn't an outright impediment to an easy sale. For one thing, their incentives are usually adverse to one or both parties. Also, they're usually in the habit of pushing volume, and are lazy/terrible at marketing even the most compelling properties. They fail to grasp the fundamentals of customer service and fall back on scammy guilt trips and pressure sales tactics. Meanwhile, they're cutting every corner they can find.
In Japan, I had the opposite experience. Here, realtors worked really hard for me, and most of them are on a meager salary without commissions.
Expertise at what, exactly? It's often incredibly difficult to assign any value to realtors except 'knowledge of market', which should be the easiest part to automate.
Zillow and Redfin have attempted to automate just the valuation of properties (with enourmous resources behind them), and still aren't as accurate as traditional appraisers. It's easy?
Edit: Even Zillow agrees. There's a million dollar prize if you can do better.
So? Real estate agents aren't appraisers and shouldn't do "official" appraisals because of misaligned incentives (among other reasons).
Appraisals are kind of weird anyways, they are only an somewhat educated guess until someone actually buys the property and they are pretty individually subjective. My friend had 3 different appraisers come to her house and do three different appraisals and they all varied by quite a bit and one was absurdly high, much higher than the others, and extremely unrealistic (IMO). Appraisers also have information that algorithms don't because they actually go to the house and view the property with their own eyes. They can take into account better the condition of the property and "soft," more subjective inputs that you can only tell by actually viewing the property. It's not really directly comparable to an algorithm since there's just a subjective bend to the whole process and there's much more information available to appraisers.
Not only that but when the bank does an appraisal for a mortgage the appraiser's job is only to justify the selling price. They start with the agreed upon selling price and they use data to justify it, they don't go into it blind, they consider and analyze the agreement of sale as part of the valuation. Zillow obviously can't take that info account as Zillow doesn't have that information. So you're comparing apples (a market analysis based on public information) to oranges (a justification of a privately agreed upon sale price).
An appraisal is also cheap, especially compared to a real estate agent. Ours was a flat $425.
Fair point! A realtor can still walk a property to perform a market analysis, which is still more accurate than an automated valuation.
I'm exhausted by the never ending comments here "it's easy! Anyone can do this!" when it's clearly not. I'm simply countering the disingenuity, whether the source is ignorance or arrogance.
In markets where anything can happen and buyers overbid on the order of 100-300k over asking price simply because they want it and will do anything to get it, it is very difficult to accurately estimate the value and/or selling price of a home.
also, ever wonder why the home appraisal comes in right at the offer price during the loan process? its not a coincidence. the appraised price typically has more to do with conducting a business transaction in the interest of all parties involved and less to do with an actual valuation of the home.
The market value of a thing is what someone is willing to pay for it. The appraisal usually comes in at the offer amount because the appraisal is ordered by the bank providing the loan. The appraiser knows/has the offer and works backwards to ensure that other people would likely offer the same amount as the current offer/buyer.
Thats what I'm saying. It's rare at that late stage of the process (at least according to my real estate agent friend) for the appraisal to come in off the mark. Nobody wants to see the deal fall through in the last stages.
I agree with you! That's why you can't automate a valuation, unless you can magically poll through digital means potential buyers in a market on demand. You don't know what the property is worth until it's on the market and you have bona fide offers in hand.
>A realtor can still walk a property to perform a market analysis, which is still more accurate than an automated valuation
Wow, how on earth do you know that!? That's a pretty bold statement and I don't really see anything to justify it at all. You start with "algorithm aren't as accurate as traditional appraisers" and then conclude from that "real estate agents (who aren't appraisers!) can give a more accurate market analysis than algorithms." There's a big leap there.
Even if this was true that real estate agents do a better job than automatic algorithms it's still kind of irrelevant because an appraiser cost somewhere in the neighborhood of $300-$600 where as an agent costs $5,000-$10,000+. If you need an appraisal you hire an appraiser, not an agent.
Don't professional appraisers actually go to the property and look around?
As for the rest, why should the process of selling a house require "expertise"? Apart from inspections, which require domain knowledge of infrastructure.
>why should the process of selling a house require "expertise"?
At a fundamental level, one could say sellers don't require outside expertise to sell a home. Real estate agents are optional. There is a concept called "for sale by owner" which is a strategy some homeowners use. They can list the house on their own (not on MLS though), vet potential buyers, coordinate the showing of the home (appointments and/or open houses), etc. They can also get a real-estate lawyer to draw up contract papers, handle earnest money, etc.
However, most sellers do not want to mess with all the above. They literally do not have the "expertise" to do it all themselves. (Yes, the homeowners can sell a car on Craigslist but selling a home is a step change in complexity.) Hence, you end up with middlemen like real estate agents.
Some people think real-estate agents only exist because they have a monopoly on the MLS computer listings. That's not true. Even if somebody disrupted MLS database with Zillow listings, real estate agents would still exist. Selling a house is a complicated enough affair that intermediaries who specialize in it would always be a natural emergent phenomenon. The real economic question is whether they can keep charging 6% commissions as the internet evolves.
The real economic question is whether they can keep charging 6% commissions as the internet evolves
That's the point. In pre-internet ages, there was a huge information imbalance that kind of validated that 6% (also, there wasn't such a ridiculous housing bubble).
Someone mentioned a real estate agent making 1250 dollars/hour. I would be willing to jump whatever hoops were needed to make that kind of money if I were in the U.S.
Well, the percentage is only part of the point. Some commenters in this thread are truly perplexed why the agents even _exist_.
They exist because sellers want them to exist. I'm saying it's naive to think that a new revolutionary website with a slick UI/UX would make agents obsolete. Agents may make less money (e.g. forces of free market lowers their median income from $45k to $20k) but the agents won't go away. If you have a population of people that don't want to do something (hassle work of selling) and a segment of population willing to specialize in relieving that hassle, then boom, you inevitably end up with agents. A new website or smartphone app doesn't remove the desires for that business relationship.
>Someone mentioned a real estate agent making 1250 dollars/hour.
Most agents don't make much money[1]. (Median is ~$45k.) There are a handful of superstar agents selling multi-million dollar mansions but most agents are selling more modest properties.
Getting the appraisal from the place that's selling to you seems like an inherent and obvious conflict of interest. Ideally the appraisal should be a flat flee from a third party.
In the context of your comment, what value do you see realtors providing w/r/t appraisals?
The developer's expertise is often not needed, such as Wix, Google Sheets/Excel, Wordpress, etc. Developers will be middlemen less and less as technology progresses, same as realtors.
I can see some of the expertise coming into play on the selling side.
Can you give me a few examples of what kinds of value one gets while buying?
From what I can tell the main service that my realtor offered when I buying my place was access to the MLS. We found the houses we wanted to look at and he gave us access.
Dollars per hour he was doing very well working with me, although I might be an exception.
In my most recent homebuying experience, my realtor was able to point out several facts about the house based on the surrounding market that saved me about $40k. It also helps that I don't pay for the realtor on the buy side.
What's your argument against a good realtor who saves you any amount when it's coming out of the seller's fee?
Edit: By the time you've come to visit a home you're buying, the seller has already agreed to the commission percentage with their agent. The money is already spent.
The money from the seller isn't free. For example there is a chance that I could get them to sell the house to me for less than what I am buying it for. If for example the seller met me half way on those fees that's a decent amount off of cash.
When I was buying my home the loan person I worked with is family so she helped me more than my realtor. Looked into neighborhoods for me etc. It could be that they were looking out for me more than normal.
I am in a market where houses sell instantly, more or less you look at a house and make an offer within out 24 hours or else it's gone. Which is crazy but the realtor didn't even get much of a chance to look into things here for us.
>Can you give me a few examples of what kinds of value one gets while buying?
If a buyer is unfamiliar with the area (e.g. job relocation), a competent agent can point out the desirable & the unpublicized undesirable aspects of particular neighborhoods. The agent knows the area intimately and that knowledge can be worth paying for to avoid buying the wrong house.
If I'm living in the same house for 20 years and I see a house right down the street from me go up sale that would be perfect for my elderly parents so I could keep an eye on them, I wouldn't need a buyer's agent since I would already know more about that house/neighborhood than any agent would.
> If a buyer is unfamiliar with the area (e.g. job relocation), a competent agent can point out the desirable & the unpublicized undesirable aspects of particular neighborhoods.
This is just utter rubbish. Buyer's agent has absolutely no incentives to publicize undesirable aspects as the agent is still paid half of the commission on the sale price which means that the agent has all the incentives to inflate the price.
But lets pretend that this is the exclusively buyers agent? Well, the thing is - if this buyer's agent is not working for buyers only brokerage he or she is still going to be not on a right side because the brokerage needs cooperation of the sellers agents. In fact, the customer of a buyers agent is seller's agent, NOT the buyer. Even worse, where a buyer can do 2-3 transaction via agent ( unlikely really but possible ) the agents that represent the other side are likely to do dozens of transactions with him or her.
It is even worse for the buyer only brokerages ( they do exist but they are super rare ).
Seems like an awful large price to pay for some low-quality, fear-mongering, dog whistling. Seems like a great way to encourage people to spend more than they want to!
Isn't that basically what SaaS is? Companies that would have had to hire engineers to do bespoke work can contract out to a SaaS vendor and get what they need for a fixed fee.
SaaS doesn't make sense every case, just like Redfin doesn't, but it's still valid.
Those SaaS vendors are still paying developers; if a cookie cutter self-service model works for your needs as a customer, more power to you.
Rarely has that appeared to be the case in the dozens of real estate transactions I've been through, and it might explain why Redfin can't grow faster; people want to have their hand held through the largest transaction of their life, and those who can charge more for those services will.
Meh, at some point, it always becomes a matter of perspective. If the same work is getting done, then you just shift around who does it or how it's paid for.
Rarer, but more valuable, is discovering new work to do, or old work that doesn't need to be done, and then either inserting it or taking it out of an existing market/process/role/job/company, while still managing to get paid for your own contributions.
Agree. But you are wasting your time on HN arguing those points. On HN (many) people are curious, think they rise to a challenge, and think they have the time and bandwidth to defeat any obstacle or achieve any goal they want. And are additionally willing to DIY it just for sport. The shocking thing is how little they understand how 'normal' folks operate. Wanting simple, easy and not necessarily having either the time, intelligence or desire to cut out a useful middleman.
Also I love when people decide that the way someone else earns a living makes them overpaid and not worth what the market is paying them.
In the end as I said in another comment most people selling real estate aren't making tremendous money doing it with all the time wasted on people who don't end up buying.
You can compile your own information of houses that may be for sale that aren't for sale and approach the owner directly and try to buy it. You can also approach people who had their houses listed that took them off the market and approach them after the listing expired.
Think I am making this up? That is exactly what I did with one property that I bought. It was listed one year and never sold. I wrote a letter to the owner saying I wanted to buy it, struck a deal, and bought it. Simple common sense.
Let's say you are interested in a condo (as only one example could be houses in a development) in a particular building. Send a postal letter to everyone in the building. Say you are a serious buyer and ask them if they want to sell. In a large enough building you will get people that are thinking about selling and you can strike a deal.
Management offices (at condos) often know who might be selling as well. Contact them.
I have gotten deals for buying real estate from property management companies as well. They send me leads and I don't have to use a realtor at all. They know I am a buyer because I have communicated that to them. Also helps to buy small gifts for the person that holds that info or at least be super nice.
> You can compile your own information of houses that may be for sale that aren't for sale and approach the owner directly and try to buy it. You can also approach people who had their houses listed that took them off the market and approach them after the listing expired.
In some markets it is not possible due to what is known as "pocket listings".
""I'm still waiting for someone to completely eliminate the need for a software engineer and charge a reasonable flat fee to bolt together some libraries and handle all the related details."
That can be done (and is done) for cookie-cutter projects such as websites.
A company I consulted for offers 600 dollar CMS websites, no extra fees.
I've also paid amazingly low prices for other kind of "bolt-library-together" projects.
A lot of companies do overpay, but there's also a lot of variance between projects.
Why do we even need software engineers at this point? Everyone can find the libraries and open source tools they need online nowadays. Why does anyone need to pay a whopper paycheck to some middle-man?"
You're paying for someone's expertise, like in most industries.