Why Redfin, Zillow, and Trulia Haven't Killed Off Real Estate Brokers, Yet


By Patrick   Follow   Sun, 10 Mar 2013, 3:30pm   1,186 views   29 comments
In Menlo Park CA 94025   Watch (1)   Share   Quote   Permalink   Like   Dislike  

http://www.businessweek.com/printer/articles/100798-why-redfin-zillow-and-trulia-havent-killed-off-real-estate-brokers

Over the last decade, the Internet has seeped into that bedrock of the U.S. economy: the housing market. A group of growing and mostly profitable websites have sprung up to help guide consumers through what in many cases will be the largest and most nerve-wracking transaction of their lives.

Viewing Comments 1-29 of 29     Last »     See most liked comments

  1. REpro


    Follow
    Befriend (1)
    27 threads
    619 comments
    San Jose, CA

    1   4:45pm Sun 10 Mar 2013   Share   Quote   Permalink   Like (4)   Dislike  

    One main answer is: COMPLICATION
    NAR created 100’s of forms for real estate transactions makes it complicated to the max. Sellers and buyers are scare of it. Each state has different forms required and expected. When I started in RE, purchase contract was a one page with a couple of sentences. Now I use 15 pages rental agreement with my tenants. Recently I renewed rental contract with apartment rental manager where I am renting in San Jose…it grown-up to 26 pages of fine prints.
    You don’t need to fill-up ANY complicated forms when purchasing airplane ticket, vacation or buy stocks. European Union have a trend to deregulate and simplify many profession, while in US new regulations are create on daily bases. All for controlling the people, not to protect them.

  2. Patrick


    Follow
    Befriend (55)
    5,666 threads
    6,354 comments
    male
    Menlo Park, CA
    Premium

    2   4:49pm Sun 10 Mar 2013   Share   Quote   Permalink   Like (2)   Dislike  

    REpro says

    All for controlling the people, not to protect them.

    You got it brother!

    The problem is that all of the state departments of real estate are infested from top to bottom with realtors. The are unelected dictators making rules (essentially laws) to prevent the free market from working and to keep the money flowing to realtors in spite of all the harm they do to the public.

  3. C Boy


    Follow
    Befriend
    4 threads
    243 comments
    New York, NY

    3   6:31am Mon 11 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    It will happen eventually. It's to lucrative for entrapnures to ignore.

  4. RealEstateCafe


    Follow
    Befriend
    2 comments
    Cambridge, MA
    RealEstateCafe's website

    4   9:07am Tue 12 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Wish Business Week had taken time to dig deeper into reasons the "traditional" real estate business model has been resistant to change. If participants in the Consumer Revolution in Real Estate twenty years ago offered their perspectives, think they could coauthor a better article? Should we try, or at least revisit the landscape 20 years ago to identify themes and overdue reforms omitted by the BW article?

    http://bit.ly/ConsREv93

    What if we teamed up with a new generation of tech-savvy consumers and partnered with app developers to harness new technologies and business models? Can we make progress on the reVRM-Minifesto contained in this slideshow?

    DAG + ID + VRM = GameChanger
    http://bit.ly/reVRMgameChanger

  5. RentingForHalfTheCost


    Follow
    Befriend (8)
    63 threads
    2,551 comments
    Pleasanton, CA

    5   9:50am Tue 12 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    REpro says

    NAR created 100’s of forms for real estate transactions makes it complicated to the max.

    When I bought in 2003 in California I was advised to show up to the closing meeting drunk by a good friend. It is the only way I could make it through the pile of paperwork and white collar thievery still in a good mood. I'd take a pub beating over another closing meeting any day.

  6. rooemoore


    Follow
    Befriend
    47 threads
    1,380 comments
    male
    Larkspur, CA

    6   11:32am Tue 12 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Any job that can be done by robots will be done by robots.

  7. Good time Charlie


    Follow
    Befriend
    13 comments

    7   11:39am Tue 12 Mar 2013   Share   Quote   Permalink   Like (2)   Dislike  

    Wayyyy too much incentive for dishonesty in RE with agents. $6k for a $300k house sale is huge bucks. Heck if the agent is the listing and selling agent they may pull down 6% or $12k for the same sale. People will put narcotics in their nether-regions and try and smuggle it across the border for that kinda dough. I bet a hitman is cheaper, lol.

  8. chemechie


    Follow
    Befriend
    102 comments
    Wheeling, WV

    8   12:04pm Tue 12 Mar 2013   Share   Quote   Permalink   Like (2)   Dislike  

    The last property I bought was private party, negotiated direct with the owner, a contract I wrote, and a couple papers from a local lawyer for the deed and county filing. The financing was also fairly simple paperwork - but I only found it because it was a neighbor who I knew was looking to sell.
    Realtors keep a large hand in the process because most listings are listed by and through them - its inertia at work, and will take a concerted effort and lots of successful sales by owner to make a difference. I think if the real estate boom had kept going in 2007 more progress could have been made, but the downturn helped recement realtors influence.

  9. Patrick


    Follow
    Befriend (55)
    5,666 threads
    6,354 comments
    male
    Menlo Park, CA
    Premium

    9   12:08pm Tue 12 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    chemechie says

    Realtors keep a large hand in the process because most listings are listed by and through them - its inertia at work

    Yup. That's why I'm re-trying this idea of letting buyers say what they want and having sellers with specific property for sale come to buyers.

    One that gets its own forward momentum, I think it will keep working. But getting the first million buyers to list what they is going to be hard.

    What would make it take off faster?

  10. zzyzzx


    Follow
    Befriend (10)
    873 threads
    7,426 comments
    Baltimore, MD

    10   12:14pm Tue 12 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    The comparison to what the agents get on other countries was also very interesting:

    where there may only be one agent involved in the transaction, such as the U.K. (a 1 percent to 2 percent fee), Germany (3 percent to 6 percent), Israel (4 percent), and the Netherlands (1.5 percent to 2 percent)

  11. Mobi


    Follow
    Befriend
    1 threads
    263 comments

    11   12:20pm Tue 12 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    Yup. That's why I'm re-trying this idea of letting buyers say what they want
    and having sellers with specific property for sale come to buyers.


    One that gets its own forward momentum, I think it will keep working. But
    getting the first million buyers to list what they is going to be hard.


    What would make it take off faster?

    I don't know whether your idea will work or not. But usually a market place is populated by items for sale to show to the buyers. You are doing backwards here. There are "wanted" category on classifieds and craiglists but I generally like to check the for-sale list rather than listing my "wishes."

  12. Patrick


    Follow
    Befriend (55)
    5,666 threads
    6,354 comments
    male
    Menlo Park, CA
    Premium

    12   12:38pm Tue 12 Mar 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Indeed, it is backwards to have buyers list what they want, but we need something radically different to break the stranglehold of the current system.

  13. Mobi


    Follow
    Befriend
    1 threads
    263 comments

    13   1:53pm Tue 12 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    Indeed, it is backwards to have buyers list what they want, but we need
    something radically different to break the stranglehold of the current
    system.

    The problem of building a "forward" alternative (to MLS) markets is that MLS is a monopoly and has a huge advantage in listing size. Doing it backwards does have the benefit by not directly competing with MLS. I guess it depends on the size of your buyer list (and how serious they are) and the make up of the fee and services. Good luck.

  14. wave9x


    Follow
    Befriend
    12 threads
    161 comments

    14   9:51pm Tue 12 Mar 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Good time Charlie says

    Wayyyy too much incentive for dishonesty in RE with agents. $6k for a $300k house sale is huge bucks. Heck if the agent is the listing and selling agent they may pull down 6% or $12k for the same sale. People will put narcotics in their nether-regions and try and smuggle it across the border for that kinda dough. I bet a hitman is cheaper, lol.

    Check your math... It's actually worse.

  15. upisdown


    Follow
    Befriend
    1 threads
    1,618 comments

    15   10:02am Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    Yup. That's why I'm re-trying this idea of letting buyers say what they want
    and having sellers with specific property for sale come to buyers.


    One that gets its own forward momentum, I think it will keep working. But
    getting the first million buyers to list what they is going to be hard.


    What would make it take off faster?

    I like your idea, and also think it's attractive when considering that a large part of the home buying decision is the local schools, mainly public ones. But it's very hard to compete against anentrenched entity such as the MLS and the people behind it that enjoy their monopoly because of their past and current political lobbying. Mass ad buying and a consolidated group listing media as the MLS is has made the morph into electronic media as a necessity to survive.

    And look what they've(NAR) done in the past to the FSBO types to maintain their hegemony. They enjoy being either the sole source of info and part of every sales transaction or almost 100%, and despise anyor all types of competition. Their market/business model depends on it and there's no other proof than their own ridiculous commissions.

    Targeting a market will be costly for quite a while until some profits can come from it, and then the NAR or their local gang of vultures will most predictably come after you and inevitably type you up with litigation costs to drain you of your finances. It's cheap for them in numerous ways, but not for you.

    Any type of business plan should factor that into the equation and minimize that (probable) threat.

  16. Patrick


    Follow
    Befriend (55)
    5,666 threads
    6,354 comments
    male
    Menlo Park, CA
    Premium

    16   10:12am Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    upisdown says

    NAR or their local gang of vultures will most predictably come after you and inevitably type you up with litigation costs to drain you of your finances.

    Fortunately I'm just selling advertising here, and the NAR case against FSBO.com case was thrown out on 1st amendment grounds.

    So I think a lawsuit against me merely for selling advertising would just be free publicity for my service.

    I just need buyers to somehow all realize that it's in their own interest to list what they want on Patrick.net, to provide some counterweight to the MLS.

    Once it got rolling, it would get press, which would make it yet more popular, and away we go.

    When the SEC finally makes it legal for businesses to directly solicit investors (they are already late in doing it) then I could sell shares in the business, and each tiny shareholder would be an evangelist for the idea. That's one way to market it, and it would provide working capital too.

    Another idea I saw is to run a contest, where whatever other site refers the most new buyers gets $100 each week. Not sure that would work, but might be worth trying.

  17. upisdown


    Follow
    Befriend
    1 threads
    1,618 comments

    17   10:30am Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    Fortunately I'm just selling advertising here, and the NAR case against
    FSBO.com case was thrown out on 1st amendment grounds.

    But that lawsuit involved some costly lawyers that were cheap for the NAR, but probably not so cheap for the entity behind the FSBO. That was also an angle that was employed by the NAR, a long process to an actual court of law, whereas the NAR was trying to burn out the opposition's resources that paid for their lawyers.

    Patrick says

    I just need buyers to somehow all realize that it's in their own interest to
    list what they want on Patrick.net, to provide some counterweight to the
    MLS.

    I think that you're right, but most people take the path of least resistance and head straight for the MLS, especially since anybody can access it from the internet and not even have to deal with a RE agent at all. The MLS enjoys that hegemony mainly because of it's own existance. It's kind of like someone wanting to buy a used car and they go straight to the dealers to find one, where the markup is very high and more likely better deals can be had from private sellers. With todays various types of financing, people are lazy and want things "turn-key".

  18. Patrick


    Follow
    Befriend (55)
    5,666 threads
    6,354 comments
    male
    Menlo Park, CA
    Premium

    18   10:43am Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Sure, I'm also trying to appeal to the laziness of buyers by letting sellers come to them. What's not to like?

    I think someone should do it for used cars as well, letting buyers say what they're looking for, and then charging sellers some tiny fee to mass mail relevant buyers. Hell, I may do that too.

  19. upisdown


    Follow
    Befriend
    1 threads
    1,618 comments

    19   10:50am Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    Once it got rolling, it would get press, which would make it yet more
    popular, and away we go.

    One issue that I forgot to cover was that your idea has to be agent-proof, as in a way that you're not doing any leg work for agents. My own observations and opinions of RE agents is that 97% of them are very lazy, and the remaining 3% have some savvy or smarts other than basic common sense. Even though the lower ends of the brokerage do most of the work and the upper enjoys an unresonable results of that work, where else can somebody do that little and yet get paid that kind of money(commission). And the hotter the (female)agent, the better that they do.

    You might have already covered this topic but I just haven't read it. I'm not asking you to spill any secrets that address that, just some food for thought.

  20. upisdown


    Follow
    Befriend
    1 threads
    1,618 comments

    20   10:58am Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    I think someone should do it for used cars as well, letting buyers say what
    they're looking for, and then charging sellers some tiny fee to mass mail
    relevant buyers. Hell, I may do that too.

    That's a must for the high-end collecter car market. Sure there are some buyers that buy their lifetime dream of a certain make/model of car, but the investor-collecter uses and agent that speializes in a certain type/make of car and know the current and past markets for them. Most times they're weel worth their money, but not always.

    But if you replicate that type of marketing or service for a prospective buyer, aren't you then an underpaid type of RE agent without the name recognition and resources of a RE company?

  21. Patrick


    Follow
    Befriend (55)
    5,666 threads
    6,354 comments
    male
    Menlo Park, CA
    Premium

    21   1:37pm Wed 13 Mar 2013   Share   Quote   Permalink   Like (1)   Dislike  

    upisdown says

    But if you replicate that type of marketing or service for a prospective buyer, aren't you then an underpaid type of RE agent without the name recognition and resources of a RE company?

    Not if it's just advertising from sellers to relevant buyers. Then I'm just an advertiser, and I won't be underpaid if I can get enough volume.

    robertoaribas says

    I am willing to buy tailored wrinkle free shirts in nice designs, up to $30 each. size 17.5 34/35

    also flat front wrinkle free dress pants, 32/32. cuffed or straight depending.

    I am also willing to get a massage 1 to 2 hours, deep tissue in the scottsdale area.

    I shall sit back and wait for my offers.

    Only problem is that you posted to the wrong forum for those things. Maybe the right forums don't exist yet, but they certainly could exist. Hell, I'd be happy if you'd start a new category and say what you want there. Anyone can create a new category on Patrick.net now on the "New Thread" page.

  22. curious2


    Follow
    Befriend (4)
    118 threads
    4,508 comments

    22   1:51pm Wed 13 Mar 2013   Share   Quote   Permalink   Like (1)   Dislike  

    The most familiar examples of buyers advertising to sellers might be the "Help Wanted" section of newspapers, and now the job sites where employers post listings to solicit applicants. It works because job seekers, i.e. sellers of labor, look there. Both sides save the transaction costs associated with headhunters, who are the brokers/realtors of the job market.

    Trying to reduce those transaction costs is like what Charles Schwab did for the stock market in the 1970s, when discount brokers began replacing "full service" (i.e. huge fee) brokers. In the stock trading environment, buyers and sellers both disclose bid/ask prices for particular securities, and professional subscribers pay for access to different levels of quotes (free sites give away 20-minute delayed trade prices, retail sites provide current bid/ask, pros buy access to limit order information - stoploss etc. - so they have a better chance of predicting what's next).

    It might work, there are familiar examples in other industries, but there are network effects and habits to consider. People buy and sell many items on eBay because that's where the buyers and sellers are.

  23. Patrick


    Follow
    Befriend (55)
    5,666 threads
    6,354 comments
    male
    Menlo Park, CA
    Premium

    23   1:57pm Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    How did eBay get to that position? Were they just first to have a general flea market on the web?

  24. SoftShell


    Follow
    Befriend
    13 threads
    3,912 comments
    Brilliant, OH

    24   1:57pm Wed 13 Mar 2013   Share   Quote   Permalink   Like (1)   Dislike  

    So is that you, your wife, or your wet dream?

    rooemoore says

    Any job that can be done by robots will be done by robots.

  25. SoftShell


    Follow
    Befriend
    13 threads
    3,912 comments
    Brilliant, OH

    25   2:00pm Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    9K & 18K

    Good time Charlie says

    Wayyyy too much incentive for dishonesty in RE with agents. $6k for a $300k house sale is huge bucks. Heck if the agent is the listing and selling agent they may pull down 6% or $12k for the same sale. People will put narcotics in their nether-regions and try and smuggle it across the border for that kinda dough. I bet a hitman is cheaper, lol.

  26. curious2


    Follow
    Befriend (4)
    118 threads
    4,508 comments

    26   2:02pm Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    How did eBay get to that position? Were they just first to have a general flea market on the web?

    eBay did have first mover advantage and a lot of publicity, and then network effects reinforced their lead, but they also innovated to stay ahead of competitors. For example, detailed category trees and feedback scores help real buyers/sellers find each other faster and more reliably. The eBay site merged with half.com, which became effectively the "buy it now" feature, and PayPal, which became the payment mechanism. (They made mistakes too: hired CEO Meg Whitman decided to buy Skype because she imagined somehow buyers and sellers wanted to talk with each other, but that "feature" never took off, in fact it was even less popular than her unfortunate campaign for governor.)

    Craig's List displaced newspapers' classified advertising, and includes both landlords and sellers and "housing wanted", but it is full of spammers and lacks eBay's feedback ratings and the search functions are not standardized so it's like trying to find a needle in a haystack, i.e. there is a lot of room for improvement and an improved model might succeed. CL charges landlords but not tenants or buyers.

  27. BoomAndBustCycle


    Follow
    Befriend
    43 threads
    504 comments

    27   2:39pm Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    wave9x says

    Good time Charlie says

    Wayyyy too much incentive for dishonesty in RE with agents. $6k for a $300k house sale is huge bucks. Heck if the agent is the listing and selling agent they may pull down 6% or $12k for the same sale. People will put narcotics in their nether-regions and try and smuggle it across the border for that kinda dough. I bet a hitman is cheaper, lol.

    Check your math... It's actually worse.

    Well, the 6% commission is split more ways than one.. so his math is more accurate than yours.

    buyers agent.. seller's agent... and a broker... all split that 6% on the $300K home.... might even be more people involved.. if say you buy on REDFIN...

    but atleast they charge a fairer 4.5%...

    So no one person is getting more than $6K in cashin that particular transaction.

  28. SoftShell


    Follow
    Befriend
    13 threads
    3,912 comments
    Brilliant, OH

    28   3:09pm Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    Not if the broker is also the selling agent....
    This must be part of your "bust" cycle...

    BoomAndBustCycle says

    wave9x says

    Good time Charlie says

    Wayyyy too much incentive for dishonesty in RE with agents. $6k for a $300k house sale is huge bucks. Heck if the agent is the listing and selling agent they may pull down 6% or $12k for the same sale. People will put narcotics in their nether-regions and try and smuggle it across the border for that kinda dough. I bet a hitman is cheaper, lol.

    Check your math... It's actually worse.

    Well, the 6% commission is split more ways than one.. so his math is more accurate than yours.

  29. zzyzzx


    Follow
    Befriend (10)
    873 threads
    7,426 comments
    Baltimore, MD

    29   6:13pm Wed 13 Mar 2013   Share   Quote   Permalink   Like   Dislike  

    curious2 says

    eBay did have first mover advantage and a lot of publicity, and then network effects reinforced their lead, but they also innovated to stay ahead of competitors. For example, detailed category trees and feedback scores help real buyers/sellers find each other faster and more reliably.

    I think Yahoo auctions could have been another eBay, but they decided to start charging fees well before they should have.

Premium member Patrick is moderator of this thread.

Email

Username

Watch comments by email
Home   Tips and Tricks   Questions or suggestions? Mail p@patrick.net   Thank you for your kind donations

Page took 248 milliseconds to create.