5 ms·

Buying a house is among the largest purchases of many peoples' lives. It could be worth the $5,000-$50,000 (~6% of value in U.S.) for the piece of mind. People

by wyc 9y ago

Buying a house is among the largest purchases of many peoples' lives. It could be worth the $5,000-$50,000 (~6% of value in U.S.) for the piece of mind. People are used to using realtors. I don't think enough economists and business people give culture enough credit for its impact on businesses and finances. It's common enough that if the buyer tries to make direct contact with the seller, all parties are startled and the deal falls through entirely. Next, there are established network effects in the real estate industry. Companies that have tried to offer a flat-fee house brokerage service at scale have been met by massive resistance from existing realtors, who then dissuade their many buyers and sellers from even considering those services. I think this has been a brick wall for a long time.

soVeryTired 9y ago
I'm pretty sure purplebricks in the UK are flat-fee.
Simon_says 9y ago
That fee could easily be 3-6 months salary. That's a hefty price to pay for culture and piece of mind.
- acdha 9y ago
  Spread over a 30 year mortgage? I'm not saying it's nothing but many people really value peace of mind.
  - Simon_says 9y ago
    Is your argument that agents are so expensive that hiring them necessitates taking out a 30-year loan? That's not a great argument. I don't think the time horizon of the mortgage is relevant. 3-month's income is 3-month's income.
    - acdha 9y ago
      > I don't think the time horizon of the mortgage is relevant. I think that view is less prevalent than it might seem. Many people look at this as one large purchase which they intend to use for decades, which involves a number of other upfront expenses but almost always also assumes significant tax savings and appreciation over that same time period. I've heard plenty of people talk about that as just the price to pay for getting in on that long-term gain and clearly it hasn't caused that many people to not buy houses or bail to an alternative so far. One of the reasons for that seems to be that some people value having what they perceive as an expert representing them. I like RedFin – and had a great experience using them when I bought my current house – but it was interesting seeing how some people thought it was great when we mentioned that but others — generally but not exclusively older — were really scared that there was going to be some sort of unnoticed problem with the house[1] or a technicality which would cause the deal to fall through. 1. Yes, they knew this was replacing the realtor and not the inspector. No, that did not end the concern.
ryuker16 9y ago
The reason direct contact fails is due to the contract sellers repped by an agent sign: voiding the contract by going around they're back still is a fee. It lasts 6 months or so...after it fails to sell, you should be good assuming they don't switch to another one immediately. Some buyer agents might not want to deal with FSO though.

by wyc 9y ago

soVeryTired 9y ago

I'm pretty sure purplebricks in the UK are flat-fee.

Simon_says 9y ago

That fee could easily be 3-6 months salary. That's a hefty price to pay for culture and piece of mind.

acdha 9y ago
Spread over a 30 year mortgage? I'm not saying it's nothing but many people really value peace of mind.
- Simon_says 9y ago
  Is your argument that agents are so expensive that hiring them necessitates taking out a 30-year loan? That's not a great argument. I don't think the time horizon of the mortgage is relevant. 3-month's income is 3-month's income.
  - acdha 9y ago
    > I don't think the time horizon of the mortgage is relevant. I think that view is less prevalent than it might seem. Many people look at this as one large purchase which they intend to use for decades, which involves a number of other upfront expenses but almost always also assumes significant tax savings and appreciation over that same time period. I've heard plenty of people talk about that as just the price to pay for getting in on that long-term gain and clearly it hasn't caused that many people to not buy houses or bail to an alternative so far. One of the reasons for that seems to be that some people value having what they perceive as an expert representing them. I like RedFin – and had a great experience using them when I bought my current house – but it was interesting seeing how some people thought it was great when we mentioned that but others — generally but not exclusively older — were really scared that there was going to be some sort of unnoticed problem with the house[1] or a technicality which would cause the deal to fall through. 1. Yes, they knew this was replacing the realtor and not the inspector. No, that did not end the concern.

ryuker16 9y ago

The reason direct contact fails is due to the contract sellers repped by an agent sign: voiding the contract by going around they're back still is a fee. It lasts 6 months or so...after it fails to sell, you should be good assuming they don't switch to another one immediately. Some buyer agents might not want to deal with FSO though.