7 ms·

> "That being said, the National Association of Realtors (NAR) and their local branches are the definition of a cartel." NAR was actually investigated by the f

> "That being said, the National Association of Realtors (NAR) and their local branches are the definition of a cartel." NAR was actually investigated by the federal government (FTC i think?), who concluded much the same, but lobbying buried the report and nothing came of it. MLS's maintain power by strictly controlling access to information. they have the most up-to-date and the most detailed information about properties, buyers/sellers and sales transactions, among other things. this allows them to be the arbitors of deal flow, giving their members the advantage. and this is the linchpin that props up the 6% commission rate. it's classic rent-seeking, since marketing costs have been dropping, as you mention. a truly competitive market would probably put the commission in the 1-2% range. (i did my MBA thesis on disrupting the real estate industry) edit: here's one, but i don't think it's the one i was thinking of: https://www.justice.gov/atr/competition-real-estate-brokerage-industry https://www.justice.gov/atr/competition-real-estate-brokerag...

Artistry121 8y ago
Looks like you've got a lot going on but I'd love to learn more about your thesis and thoughts on RE. I'm working on some projects in the area.
- clairity 8y ago
  i'm a bit rusty on the details, but happy to help how i can. we were looking at the auction model as a potentially viable alternative to the commission model predominant in the US. we found this stranglehold by NAR & it's MLS network to be a key barrier to entry.
ams6110 8y ago
Property transfers, including buyer, seller, and sales price, are public record. It's all published in the newspaper. How can MLS control access to that information? Is it just that nobody else bothers to compile it from the county records?
- bronson 8y ago
  That's not useful to someone looking to buy. Listing data is held exclusively by the MLS.
- benmanns 8y ago
  Those are completed transactions, not properties listed for sale.
- clairity 8y ago
  there's usually a 30-60 day delay on the public records. MLS gets that info in a day or two, if not hours, usually from the listing agent/brokerage iirc.
- linsomniac 8y ago
  As others have mentioned, that is after the property has sold. If you are looking to buy a house, that information is not going to help you. However, even for sold information, depending on the county you are in, those public records aren't always accurate. I don't know how frequent that is, but I suggested using public records when we lost access to MLS data a few years ago, and a coworker said they had problems with that data from some counties in the past. If you are buying a house, the MLS is the place you need to go. And that is mediated by a Realtor or Broker in most cases.
- iakh 8y ago
  Purchase price is not public in all states
  - vonmoltke 8y ago
    It isn't? What states don't put that information in the property tax records?
    - evancox100 8y ago
      Texas for one. No duty by either buyer or seller to report the sale price.
linsomniac 8y ago
There's a reason that NAR has their logo on a nice building a few blocks down from the US Capitol (500 New Jersey Ave NW). :-)
StillBored 8y ago
Part of the problem is that most realtors want it that way. I live in Austin, and the push for a few years now has been to have a "silent market" where a buyer picks a "full service" realtor (AKA full commission), and gets a week or so jump on properties being listed in the MLS. This gives them a better chance to get the property before the MLS hordes descend and start bidding it up. The part I've never understood is, as a seller, why wouldn't I want my property to have the largest exposure and the most interested buyers. Presumably, having people getting into bidding wars for something i'm selling is a benefit.
- zaroth 8y ago
  Perhaps a pocket listing isn’t paying the Buyers Agent half of the fee, so saving 3% right there. Depending on the market that may be worth it versus going to the broad market and having to pay both sides of the commission.
  - MertsA 8y ago
    Pocket listings still pay both halves but are often discounted down to e.g. 5% instead of 6%. The agent tries to spin the situation as a discount to the buyer and seller as they "save" 1% on commission. One of the main justifications for why the agent "deserves" a 3% cut of the deal is that they are working to represent you and safeguard your interests. That can't happen when they're representing both sides. It's as perverse as a plaintiff and a defendant using the same lawyer to save 1% on legal fees. In a given market area there are literally thousands of real estate agents. Even with a 1% discount off the top, what do you think the odds are that the best offer on the market just so happens to be a listing that your real estate agent just so happens to be the listing agent for? Real estate is a racket.
    - StillBored 8y ago
      I get the impression the austin market is more formalized and is run more like a mini private MLS... (might be wrong), but part of the goal seems to be to keep out the discount realtors/redfin/etc.
- 8y ago
guest2143 8y ago
Nothing came of it? The whole Virtual Office Website (VOW) thing got created.. before meetings NAR and RESO intone legalese about encouraging competition. There's a lot of fear that the FTC will step back in and do something. With the level of MLS balkanization, innovation has a bunch of high hurdles.
- clairity 8y ago
  i mean, relative to what they could have done (sued for damages and broken up the monopoly), structurally nothing changed. but if you promote free and fair markets, you'd discourage/dismantle this kind of protectionism.
  - mobilefriendly 8y ago
    The Bush Justice Department did sue! https://www.justice.gov/archive/atr/public/press_releases/2005/211008.htm https://www.justice.gov/archive/atr/public/press_releases/20...
- GabeRicard 8y ago
  VOW, and IDX also. The whole reason that sites like Zillow, Redfin, etc. exist is because of the (successful) lawsuit against NAR causing them to open up their data to third party companies. I worked for a real estate company building an online real estate service since before the creation of VOW/IDX. Prior to that, the way we got access was through my boss's own real estate brokerage account with the state's main MLS. We expanded to support more MLS's in the area and each one was a huge pain in the ass. We had to have customers who were members of that MLS BEFORE they would give us access to their data. They would limit the data we had access to as much as they possibly could, and had absurd rules about what could/could not be displayed publicly, as well as privately when members of our customers' sites were logged in. It became much easier to get access to the data after the VOW/IDX implementations rolled out at each MLS.
  - paulie_a 8y ago
    Oh god the horrors that are idx. I just had flashbacks of dealing with the various schemas from different MLSs
pointillistic 8y ago
Zillow CEO argument falls on it's face. If this was such an important transaction, buyers would chose top dollar firms across the board, contractors, architects, masons, etc. Yet the fact all these survive the most competitive, bottom dollar market. Only realtors who carry no liability compared to the above, they still enjoy top dollar. This is a rigged market signal.
- spott 8y ago
  >Only realtors who carry no liability compared to the above, they still enjoy top dollar. This is a rigged market signal. Realtors are among the most sued profession out there... I'm not sure why you don't think they carry any liability.
  - pointillistic 8y ago
    An engineer or an architects is responsible for life safety, structure, etc. All carry a substantial liability insurance. What could be a pitfall for a realtor if there is above the board transaction?
JamesBarney 8y ago
> a truly competitive market would probably put the commission in the 1-2% range. This depends a lot on the price of the house. Selling a million dollar home isn't 10 times more work than selling a $100,000 condo.
- a_imho 8y ago
  And handling a money transaction is mostly orthogonal to the amount yet many (most?) are charged as base fee + percentages.
  - JamesBarney 8y ago
    But that's not really a competitive market either.
- conanbatt 8y ago
  Yes it is. Becuase the hard part is not selling it, its getting the listing. And you bet your ass that a the 10 million dollar home goes to the well dressed, swanky offices top ads agent, not your "aunt's best friend".
  - JamesBarney 8y ago
    You took my word "selling" replaced with "customer acquisition" then argued I was wrong. You're right, that the majority of the work of a 10 million dollar house is customer acquisition. And this isn't true of a 100k condo. But this was my point, 3% of a 100k home is close to the competitive market price. But 3% of a 10 million dollar home is pretty far away from the competitive market price.
    - conanbatt 8y ago
      I'll try to rephrase it: 100x the comission might have 100x the competition. As a seller of the house, you pay more but you also get better agents.

Artistry121 8y ago

Looks like you've got a lot going on but I'd love to learn more about your thesis and thoughts on RE. I'm working on some projects in the area.

clairity 8y ago
i'm a bit rusty on the details, but happy to help how i can. we were looking at the auction model as a potentially viable alternative to the commission model predominant in the US. we found this stranglehold by NAR & it's MLS network to be a key barrier to entry.

ams6110 8y ago

Property transfers, including buyer, seller, and sales price, are public record. It's all published in the newspaper. How can MLS control access to that information? Is it just that nobody else bothers to compile it from the county records?

bronson 8y ago
That's not useful to someone looking to buy. Listing data is held exclusively by the MLS.
benmanns 8y ago
Those are completed transactions, not properties listed for sale.
clairity 8y ago
there's usually a 30-60 day delay on the public records. MLS gets that info in a day or two, if not hours, usually from the listing agent/brokerage iirc.
linsomniac 8y ago
As others have mentioned, that is after the property has sold. If you are looking to buy a house, that information is not going to help you. However, even for sold information, depending on the county you are in, those public records aren't always accurate. I don't know how frequent that is, but I suggested using public records when we lost access to MLS data a few years ago, and a coworker said they had problems with that data from some counties in the past. If you are buying a house, the MLS is the place you need to go. And that is mediated by a Realtor or Broker in most cases.
iakh 8y ago
Purchase price is not public in all states
- vonmoltke 8y ago
  It isn't? What states don't put that information in the property tax records?
  - evancox100 8y ago
    Texas for one. No duty by either buyer or seller to report the sale price.

linsomniac 8y ago

There's a reason that NAR has their logo on a nice building a few blocks down from the US Capitol (500 New Jersey Ave NW). :-)

StillBored 8y ago

Part of the problem is that most realtors want it that way. I live in Austin, and the push for a few years now has been to have a "silent market" where a buyer picks a "full service" realtor (AKA full commission), and gets a week or so jump on properties being listed in the MLS. This gives them a better chance to get the property before the MLS hordes descend and start bidding it up. The part I've never understood is, as a seller, why wouldn't I want my property to have the largest exposure and the most interested buyers. Presumably, having people getting into bidding wars for something i'm selling is a benefit.

zaroth 8y ago
Perhaps a pocket listing isn’t paying the Buyers Agent half of the fee, so saving 3% right there. Depending on the market that may be worth it versus going to the broad market and having to pay both sides of the commission.
- MertsA 8y ago
  Pocket listings still pay both halves but are often discounted down to e.g. 5% instead of 6%. The agent tries to spin the situation as a discount to the buyer and seller as they "save" 1% on commission. One of the main justifications for why the agent "deserves" a 3% cut of the deal is that they are working to represent you and safeguard your interests. That can't happen when they're representing both sides. It's as perverse as a plaintiff and a defendant using the same lawyer to save 1% on legal fees. In a given market area there are literally thousands of real estate agents. Even with a 1% discount off the top, what do you think the odds are that the best offer on the market just so happens to be a listing that your real estate agent just so happens to be the listing agent for? Real estate is a racket.
  - StillBored 8y ago
    I get the impression the austin market is more formalized and is run more like a mini private MLS... (might be wrong), but part of the goal seems to be to keep out the discount realtors/redfin/etc.
8y ago

guest2143 8y ago

Nothing came of it? The whole Virtual Office Website (VOW) thing got created.. before meetings NAR and RESO intone legalese about encouraging competition. There's a lot of fear that the FTC will step back in and do something. With the level of MLS balkanization, innovation has a bunch of high hurdles.

clairity 8y ago
i mean, relative to what they could have done (sued for damages and broken up the monopoly), structurally nothing changed. but if you promote free and fair markets, you'd discourage/dismantle this kind of protectionism.
- mobilefriendly 8y ago
  The Bush Justice Department did sue! https://www.justice.gov/archive/atr/public/press_releases/2005/211008.htm https://www.justice.gov/archive/atr/public/press_releases/20...
GabeRicard 8y ago
VOW, and IDX also. The whole reason that sites like Zillow, Redfin, etc. exist is because of the (successful) lawsuit against NAR causing them to open up their data to third party companies. I worked for a real estate company building an online real estate service since before the creation of VOW/IDX. Prior to that, the way we got access was through my boss's own real estate brokerage account with the state's main MLS. We expanded to support more MLS's in the area and each one was a huge pain in the ass. We had to have customers who were members of that MLS BEFORE they would give us access to their data. They would limit the data we had access to as much as they possibly could, and had absurd rules about what could/could not be displayed publicly, as well as privately when members of our customers' sites were logged in. It became much easier to get access to the data after the VOW/IDX implementations rolled out at each MLS.
- paulie_a 8y ago
  Oh god the horrors that are idx. I just had flashbacks of dealing with the various schemas from different MLSs

pointillistic 8y ago

Zillow CEO argument falls on it's face. If this was such an important transaction, buyers would chose top dollar firms across the board, contractors, architects, masons, etc. Yet the fact all these survive the most competitive, bottom dollar market. Only realtors who carry no liability compared to the above, they still enjoy top dollar. This is a rigged market signal.

spott 8y ago
>Only realtors who carry no liability compared to the above, they still enjoy top dollar. This is a rigged market signal. Realtors are among the most sued profession out there... I'm not sure why you don't think they carry any liability.
- pointillistic 8y ago
  An engineer or an architects is responsible for life safety, structure, etc. All carry a substantial liability insurance. What could be a pitfall for a realtor if there is above the board transaction?

JamesBarney 8y ago

> a truly competitive market would probably put the commission in the 1-2% range. This depends a lot on the price of the house. Selling a million dollar home isn't 10 times more work than selling a $100,000 condo.

a_imho 8y ago
And handling a money transaction is mostly orthogonal to the amount yet many (most?) are charged as base fee + percentages.
- JamesBarney 8y ago
  But that's not really a competitive market either.
conanbatt 8y ago
Yes it is. Becuase the hard part is not selling it, its getting the listing. And you bet your ass that a the 10 million dollar home goes to the well dressed, swanky offices top ads agent, not your "aunt's best friend".
- JamesBarney 8y ago
  You took my word "selling" replaced with "customer acquisition" then argued I was wrong. You're right, that the majority of the work of a 10 million dollar house is customer acquisition. And this isn't true of a 100k condo. But this was my point, 3% of a 100k home is close to the competitive market price. But 3% of a 10 million dollar home is pretty far away from the competitive market price.
  - conanbatt 8y ago
    I'll try to rephrase it: 100x the comission might have 100x the competition. As a seller of the house, you pay more but you also get better agents.