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YES! It is about time that realtors get disrupted. They take 6% out of most housing transactions and add very little value. They managed to put themselves in t

YES! It is about time that realtors get disrupted. They take 6% out of most housing transactions and add very little value. They managed to put themselves in the critical path by lobbying and regulatory capture. You don't get access to the listings and MLS open houses unless you go with a realtor. They also made the process artificially complex. Most other countries seem to rely on direct customer to customer for most transactions, with a notary making sure the contracts are binding. Why can we not do that in the US?

lbotos 3y ago
Eh, I think a lot of realtors are not worth it, but a good one is. As a buyer I got an excellent rate from their recommended lender, I got a solid lawyer rec, and I got experienced guidance throughout the whole process. Was it expensive? Yes, but was it worth it? In my case, very much so.
- ramraj07 3y ago
  All good but 6% is outrageous. 1% each is going rate in many other countries and I don’t see what value even a stellar realtor offers that’s worth more given current housing prices.
- newZWhoDis 3y ago
  >As a buyer I got an excellent rate from their recommended lender No you didn’t, they suckered you on a good rate and screwed you with stealth fees on closing costs. With a few hours of hunting I saved $50k, beating their rate and cash to close. “Preferred lenders” are almost always a scam, but as always DYOR
  - ziddoap 3y ago
    I'm surprised at how confident you are saying that based on a 5 sentence post from someone you don't know anything about.
    - phanimahesh 3y ago
      True. They should've added a probably in there. Preferred lenders usually are just as good as any other, or said differently, no better than anyone else except maybe for expedited paperwork. The bit about offering lower rates and sucking up more net in assosciated costs, hidden or plain, is not uncommon though.
- bigstrat2003 3y ago
  Same. I was very glad to have worked with a realtor when I bought my home, and I'll gladly work with him again if and when I choose to sell my home and buy another. He was well worth his fee.
- hackernewds 3y ago
  Are they worth 6% of $700k for buying a house? That is yearly income
  - nojvek 3y ago
    A median 4B house in greater Seattle area is now 1.5M+. 6% of that is 90,000. Buyer and seller agent each take 45,000. That’s about a Tesla for each of them. Good realtors make a fortune without creating any productive value in economy. The house stays the same, just a big tax on exchange. Add that to lending fees, title fees, escrow fees and you’re easily looking at ~8% of transaction gone poof.
- wonnage 3y ago
  Lenders aren't gonna give you a preferential rate because of the realtor, I can't imagine paying for a laywer recommendation, and guidance is not worth 3% of my home's value. What counts as "guidance" anyway? A realtor can't be relied upon for structural issues, you'll need an inspection. They can't tell you anything about the market that you couldn't dig up yourself in 5 minutes searching Redfin. HOAs, contract language, and other legal matters will need a lawyer. You're basically gonna have to find a dedicated professional for anything that matters. The limited benefits I can think of are: - you're buying in a tight market, and they can find some off-market listings through their network - a reputable buyer's agent might make your offer seem more legit
  - lbotos 3y ago
    I didn't get a special rate because of the recommendation, of the 3 lenders I was reviewing, the recommended lender had the best rate and I had the bonus that the realtor and the lender had worked together many times so they were a well-oiled machine. Trust me, I hate the idea of middlemen, and I do hope the system can get more efficient.
djfdat 3y ago
I feel like its similar to car dealerships. Once you've decided to take on a realtor, there's now a social pressure to buy/sell. You feel like you can't spend too long looking, and taking up the realtor's time. I feel like these institutions exist to pressure unsure people into making unsure decisions by trying to get them to gloss over details that might not matter.
- shostack 3y ago
  Screw that. Be up front with where you are in your process but don't cave to pressure from someone whose financial incentives do not fully align with yours. Be polite but firm, and if they don't want to work with you there's plenty of others who will.
- FireBeyond 3y ago
  My realtor's commission when I bought this house 2 years ago amounted to about $30,000. I don't feel too guilty about taking up her time for 3-4 hours a week for 2 1/2 months. Even if we assume she did the same amount again, if not double, lets say 10 hours/week for those 10 weeks, her 'hourly rate' (which I figure similar to a contractor, as there are of course other expenses) still comes to $300/hr, which is approaching associate/partner levels at a "reasonable" law firm (not white shoe or corporate).
xur17 3y ago
Strongly agree. That said, is this actually going to change how Redfin operates? They used to rebate part of the agent fee in certain markets, but at least in my market, they no longer do. Now they're the same price as everyone else while providing a slightly worse service.
- trts 3y ago
  their agents get their commission partially structured based on the customer satisfaction feedback following the transaction, or used to. So the incentive is at least somewhat more in favor of the consumer.
yalok 3y ago
in my area, MLS very rarely has something unique that's not on Zillow already. And Zillow is way easier to use, usually has more information/history on the property...
j-a-a-p 3y ago
> Most other countries seem to rely on direct customer to customer for most transactions Realtors are everywhere. In the Netherlands selling a house is mostly exclusive to realtors, and there are good non-realtor alternatives available at a fixed fee for more than a decade. But the consumer wants a realtor. Note that in NL the realtor agreement is exclusive, meaning you cannot use multiple realtors, contrary to many other countries. The result is a much lower realtor fee or appr. 1.5%.
- eddythompson80 3y ago
  Even in informal economies there are informal realtors, and they will demand their cut.
jdjdjdjdjduuuu 3y ago
There's realtors in Canada...
bdcravens 3y ago
In Texas, on new builds, you don't need a realtor, but they don't discount the commission from the price. I went ahead and let my sister-in-law, who is a realtor, get the commission. (No, it wasn't a kickback kind of a situation)

lbotos 3y ago

Eh, I think a lot of realtors are not worth it, but a good one is. As a buyer I got an excellent rate from their recommended lender, I got a solid lawyer rec, and I got experienced guidance throughout the whole process. Was it expensive? Yes, but was it worth it? In my case, very much so.

ramraj07 3y ago
All good but 6% is outrageous. 1% each is going rate in many other countries and I don’t see what value even a stellar realtor offers that’s worth more given current housing prices.
newZWhoDis 3y ago
>As a buyer I got an excellent rate from their recommended lender No you didn’t, they suckered you on a good rate and screwed you with stealth fees on closing costs. With a few hours of hunting I saved $50k, beating their rate and cash to close. “Preferred lenders” are almost always a scam, but as always DYOR
- ziddoap 3y ago
  I'm surprised at how confident you are saying that based on a 5 sentence post from someone you don't know anything about.
  - phanimahesh 3y ago
    True. They should've added a probably in there. Preferred lenders usually are just as good as any other, or said differently, no better than anyone else except maybe for expedited paperwork. The bit about offering lower rates and sucking up more net in assosciated costs, hidden or plain, is not uncommon though.
bigstrat2003 3y ago
Same. I was very glad to have worked with a realtor when I bought my home, and I'll gladly work with him again if and when I choose to sell my home and buy another. He was well worth his fee.
hackernewds 3y ago
Are they worth 6% of $700k for buying a house? That is yearly income
- nojvek 3y ago
  A median 4B house in greater Seattle area is now 1.5M+. 6% of that is 90,000. Buyer and seller agent each take 45,000. That’s about a Tesla for each of them. Good realtors make a fortune without creating any productive value in economy. The house stays the same, just a big tax on exchange. Add that to lending fees, title fees, escrow fees and you’re easily looking at ~8% of transaction gone poof.
wonnage 3y ago
Lenders aren't gonna give you a preferential rate because of the realtor, I can't imagine paying for a laywer recommendation, and guidance is not worth 3% of my home's value. What counts as "guidance" anyway? A realtor can't be relied upon for structural issues, you'll need an inspection. They can't tell you anything about the market that you couldn't dig up yourself in 5 minutes searching Redfin. HOAs, contract language, and other legal matters will need a lawyer. You're basically gonna have to find a dedicated professional for anything that matters. The limited benefits I can think of are: - you're buying in a tight market, and they can find some off-market listings through their network - a reputable buyer's agent might make your offer seem more legit
- lbotos 3y ago
  I didn't get a special rate because of the recommendation, of the 3 lenders I was reviewing, the recommended lender had the best rate and I had the bonus that the realtor and the lender had worked together many times so they were a well-oiled machine. Trust me, I hate the idea of middlemen, and I do hope the system can get more efficient.

djfdat 3y ago

I feel like its similar to car dealerships. Once you've decided to take on a realtor, there's now a social pressure to buy/sell. You feel like you can't spend too long looking, and taking up the realtor's time. I feel like these institutions exist to pressure unsure people into making unsure decisions by trying to get them to gloss over details that might not matter.

shostack 3y ago
Screw that. Be up front with where you are in your process but don't cave to pressure from someone whose financial incentives do not fully align with yours. Be polite but firm, and if they don't want to work with you there's plenty of others who will.
FireBeyond 3y ago
My realtor's commission when I bought this house 2 years ago amounted to about $30,000. I don't feel too guilty about taking up her time for 3-4 hours a week for 2 1/2 months. Even if we assume she did the same amount again, if not double, lets say 10 hours/week for those 10 weeks, her 'hourly rate' (which I figure similar to a contractor, as there are of course other expenses) still comes to $300/hr, which is approaching associate/partner levels at a "reasonable" law firm (not white shoe or corporate).

xur17 3y ago

Strongly agree. That said, is this actually going to change how Redfin operates? They used to rebate part of the agent fee in certain markets, but at least in my market, they no longer do. Now they're the same price as everyone else while providing a slightly worse service.

trts 3y ago
their agents get their commission partially structured based on the customer satisfaction feedback following the transaction, or used to. So the incentive is at least somewhat more in favor of the consumer.

yalok 3y ago

in my area, MLS very rarely has something unique that's not on Zillow already. And Zillow is way easier to use, usually has more information/history on the property...

j-a-a-p 3y ago

> Most other countries seem to rely on direct customer to customer for most transactions Realtors are everywhere. In the Netherlands selling a house is mostly exclusive to realtors, and there are good non-realtor alternatives available at a fixed fee for more than a decade. But the consumer wants a realtor. Note that in NL the realtor agreement is exclusive, meaning you cannot use multiple realtors, contrary to many other countries. The result is a much lower realtor fee or appr. 1.5%.

eddythompson80 3y ago
Even in informal economies there are informal realtors, and they will demand their cut.

jdjdjdjdjduuuu 3y ago

There's realtors in Canada...

bdcravens 3y ago

In Texas, on new builds, you don't need a realtor, but they don't discount the commission from the price. I went ahead and let my sister-in-law, who is a realtor, get the commission. (No, it wasn't a kickback kind of a situation)