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Best of luck. I’m a commercial real estate professional who has spent time as a broker, lender, and private equity investor. Residential definitely is a lot Mo

Best of luck. I’m a commercial real estate professional who has spent time as a broker, lender, and private equity investor. Residential definitely is a lot More of a ridiculous market. But ultimately as an agent, you get hired to work with mostly irrational actors (sellers and buyers). As someone who is very interested in AI and taught myself how to code (I don’t know any other real estate people who know anything about code), I think it’s going to be incredible hard to uproot the brokerage industry. It’s challenging to get buy in from many different types of old school, fragmented actors in the space. I’d love to see someone prove this can be done, but I think it’s a challenge, so best of luck. Curious to follow along. I think proptech needs real professionals who have been in the trenches to be involved because there’s just too much nuance in the industry outsiders have no idea about.

Raffi_Isanians 2y ago
Appreciate the support. We aren't necessarily trying to uproot the industry, just want to deliver a better buying experience. People deserve agents who go out and do a lot of the work for them. Our goal is to do everything we think a real estate agent should do. Lots of value to be provided.
- sahmeepee 2y ago
  Aaah, but can it show you into a room with a toilet, sink, shower and bath in it and tell you "This is the bathroom"? If not, you'll never unseat the seasoned professionals of the UK real estate sector ;)
  - threeseed 2y ago
    Neither can an AI. The whole point of real estate agents is that as a seller I don't trust my house being open to any random buyer.
keeptrying 2y ago
The ludicrous 6% fee is whats going to drive adoption by end users and in turn by brokers. Move that fee to 1% for buyer agent and you have a massive market.
- itake 2y ago
  The 6% fee was paid by the sellers, not the buyers. Buyers didn't pay anything to the agents. But even then, the buyer's agents would "refund" the buyer ~2% of the fee as a cashback incentive to use a specific agent. but recently, the rule changed so the sellers are only required to pay the 3% fee to the seller's agent and buyers need to negotiate their own deal with the buyer's agent. Currently, there are many brokerages competing on buyer's fees, dropping the fee to 1% or offering a flat-rate fee. I'm very skeptical that a 1% buyer's agent fee (matching the existing players) would move the needle much.
  - gycom 2y ago
    The 6% fee (more normally 5% around these parts, western US) is paid by the sellers, but with the buyer's money. Usually. However, it's important to note that there was never a requirement for anyone to pay anything; it was simply what was commonly put into contracts. The settlement didn't change anything about that in particular. I just sold a house a couple weeks ago. I agreed to pay my seller's agent 2.5% out of the sale price. I also, in the contract, offered to pay 2.5% to the buyer's agent. In the event that my seller's agent was also the buyer's agent, that 2.5% would be refunded to me. What actually ended up happening was that in the offer that we ended up accepting, the buyer asked us to pay 3% instead of 2.5% to their agent. We agreed.
    - greenfish6 2y ago
      The primary driving factor on all these rates is the net take home for the seller. The reason why the total fee of 6% in a 3/3 split is because if this is done, then the seller will net about 10% higher than if they used no realtor. Similarly, for the buy agent half, they will get multiple extra % of home price above that 2.5%. The structure of the MLS / commission system incentivizes sellers to take out these large fees because they will be rewarded for doing so. Only when the system is upgraded to allow sellers and buyers to find each other and pay market rates will the fees go down (we want to provide our own MLS in the longer term future)
ejstronge 2y ago
> As someone who is very interested in AI and taught myself how to code (I don’t know any other real estate people who know anything about code), I think it’s going to be incredible hard to uproot the brokerage industry. Has learning to code generated any benefit to you? What areas do you think have space for code to help buyers? I think there are many, and - 'AI' or not - a clever tool can generate real value for buyers. Things like mis-zoned units, unreported square footage, signs of buyer motivation, estimates of homeowner equity, etc. can be estimated by good buyers agents but could be made available to everyone for a small subscription.
- greenfish6 2y ago
  There is 0.5 mb of data per home in the US. Too much for a person to sift through, typically. We use LLMs to break that down into actionables for families via text message. The goal is to keep things digestable. People can understand if their unit is mis-zoned if you use it in this simple phrasing, but not what a "RM-3 District" is (common type of zoning in SF). The LLM + search abilities can explain a lot - this is how most people learn things about real estate, this process of googling phrases they don't know
xkcd-sucks 2y ago
> you get hired to work with mostly irrational actors (sellers and buyers). AI-scale personalization could help here, assuming macro scale irrationality is mostly rational in consideration of individual values (e.g. character of neighborhood, character of permitting-related town departments, etc) which could maybe turn out better in the short term as tools for human agents, but still
- Raffi_Isanians 2y ago
  I wouldn't say our clients are irrational, but I agree that buying a house can be stressful. The goal is to anticipate and address all of our clients' questions, including those they might not even know to ask. From our experience, this significantly reduces the frustration that typical homebuyers often feel during their purchase journey. TLDR: Oftentimes the agent not being proactive is the cause of the buyer's behavior.
matthewemiller 2y ago
I can attest to this likely being true. We are working on morfi.com, trying to build better software for mortgage professionals, and it's challenging. You can see it in reporting from firms like MeridianLink, mortgage (and probably real estate) lag behind their peers in the adoption of technology. https://s28.q4cdn.com/477693378/files/doc_financials/2023/q4/Q4-2023-MLNK-Earnings-vFF.pdf https://s28.q4cdn.com/477693378/files/doc_financials/2023/q4...
IAmGraydon 2y ago
>I don’t know any other real estate people who know anything about code CRE professional here (about a decade in the industry) who was a coder first. I think there's plenty that can be disrupted in real estate, and specially commercial real estate, where there are a lot of old problems that are ripe for solutions. It's like you said though - those who experience the problems and actually know how to write software to solve them are rare. We are in a good position for opportunity. I think that brokers can (and should) be replaced by something more efficient, but the real problem for disrupters is regulation, IMO. A program/app/SAAS cannot hold a real estate license, and therefore cannot do things like quote rates, terms, or manage transactions. As of right now, it's illegal in most states. As for the website that OP created, I think it was a nice attempt, but it seems very half-baked and the case for its value is not clear at all. There's some pretty design and not a lot of substance there.
- fallingsquirrel 2y ago
  > A program/app/SAAS cannot hold a real estate license, and therefore cannot do things like quote rates, terms, or manage transactions. As of right now, it's illegal in most states. I wonder if the app could use the same "legal workaround" that political SMS spammers use. The app queues the messages, but an intern mashes the spacebar 100 times to spam 100 different people, therefore a human sent the message, therefore the spam is legal. Now hire someone with a real estate license to mash the spacebar for your realtor app. Does it suddenly become legal?
  - forgetfreeman 2y ago
    Given the frequency with which large real estate outfits have deep ties to local and state legislative bodies I'd love to see someone who doesn't fully understand what they're fucking with stick a fork in that outlet just to see what happens to them.
hammock 2y ago
> But ultimately as an agent, you get hired to work with mostly irrational actors (sellers and buyers). I don’t think you’re making the argument you think you are. If an agent is there to be the rational for the irrational, then an AI listing agent talking to an AI buying agent are two rational beings getting more done than ever before, on behalf of sellers and buyers who are free to be themselves.
AndrewKemendo 2y ago
I’ve bought 4 and sold 3 houses over the years, and TBH the whole brokerage model seems like a two sided market scam but I’m not sure who is winning or being scammed. I’ve used brokers and not, so I’ve seen both sides. I have family that are brokers are frankly they aren’t very smart but they know how to hustle, so they do decently well. They offer a service and do that but the costs for what they do are really weird in the margins. It seems like the most perfect example of a bullshit job but somehow it benefits both sides enough that it persists because home ownership is such a (reasonably but problematically) aggressively promoted thing. Very confusing tbh.
deleted 2y ago
[deleted]
mooreds 2y ago
I worked in real estate for about 8 years as a software developer for a tech-forward brokerage. There's a ton of money and data flowing through this industry. There are plenty of dilettante agents who are far overpaid. There've been a number of startups trying to tackle this (ZipRealty, Zillow, Compass OpenDoor). My cynical take is that these startups begin with consumers, but end up serving agents and brokers, because that's where the money is. So I don't think displacing the agent relationship is going to be a winning strategy, because buying a house is a rare large purchase of a non-fungible asset which can positively or negatively affect your life. (Not talking about investors.) Just like folks hire lawyers for divorces, accountants to review ISOs, or business sellers hire brokers, there is value in hiring an expert for high-stakes, rare purchases. This is a great book about the value of middlemen: https://www.amazon.com/Middleman-Economy-Brokers-Everyday-Matchmakers/dp/1137530197 https://www.amazon.com/Middleman-Economy-Brokers-Everyday-Ma... However, there is plenty of room to improve the user experience and make things simpler, and this seems like a good start.
- MichaelZuo 2y ago
  That's a pretty good point, and probably applies to a lot more industries... i.e. is there any product in any industry with middlemen, available today, that reliably performs like the 50th percentile professional ?

Raffi_Isanians 2y ago

Appreciate the support. We aren't necessarily trying to uproot the industry, just want to deliver a better buying experience. People deserve agents who go out and do a lot of the work for them. Our goal is to do everything we think a real estate agent should do. Lots of value to be provided.

sahmeepee 2y ago
Aaah, but can it show you into a room with a toilet, sink, shower and bath in it and tell you "This is the bathroom"? If not, you'll never unseat the seasoned professionals of the UK real estate sector ;)
- threeseed 2y ago
  Neither can an AI. The whole point of real estate agents is that as a seller I don't trust my house being open to any random buyer.

keeptrying 2y ago

The ludicrous 6% fee is whats going to drive adoption by end users and in turn by brokers. Move that fee to 1% for buyer agent and you have a massive market.

itake 2y ago
The 6% fee was paid by the sellers, not the buyers. Buyers didn't pay anything to the agents. But even then, the buyer's agents would "refund" the buyer ~2% of the fee as a cashback incentive to use a specific agent. but recently, the rule changed so the sellers are only required to pay the 3% fee to the seller's agent and buyers need to negotiate their own deal with the buyer's agent. Currently, there are many brokerages competing on buyer's fees, dropping the fee to 1% or offering a flat-rate fee. I'm very skeptical that a 1% buyer's agent fee (matching the existing players) would move the needle much.
- gycom 2y ago
  The 6% fee (more normally 5% around these parts, western US) is paid by the sellers, but with the buyer's money. Usually. However, it's important to note that there was never a requirement for anyone to pay anything; it was simply what was commonly put into contracts. The settlement didn't change anything about that in particular. I just sold a house a couple weeks ago. I agreed to pay my seller's agent 2.5% out of the sale price. I also, in the contract, offered to pay 2.5% to the buyer's agent. In the event that my seller's agent was also the buyer's agent, that 2.5% would be refunded to me. What actually ended up happening was that in the offer that we ended up accepting, the buyer asked us to pay 3% instead of 2.5% to their agent. We agreed.
  - greenfish6 2y ago
    The primary driving factor on all these rates is the net take home for the seller. The reason why the total fee of 6% in a 3/3 split is because if this is done, then the seller will net about 10% higher than if they used no realtor. Similarly, for the buy agent half, they will get multiple extra % of home price above that 2.5%. The structure of the MLS / commission system incentivizes sellers to take out these large fees because they will be rewarded for doing so. Only when the system is upgraded to allow sellers and buyers to find each other and pay market rates will the fees go down (we want to provide our own MLS in the longer term future)

ejstronge 2y ago

> As someone who is very interested in AI and taught myself how to code (I don’t know any other real estate people who know anything about code), I think it’s going to be incredible hard to uproot the brokerage industry. Has learning to code generated any benefit to you? What areas do you think have space for code to help buyers? I think there are many, and - 'AI' or not - a clever tool can generate real value for buyers. Things like mis-zoned units, unreported square footage, signs of buyer motivation, estimates of homeowner equity, etc. can be estimated by good buyers agents but could be made available to everyone for a small subscription.

greenfish6 2y ago
There is 0.5 mb of data per home in the US. Too much for a person to sift through, typically. We use LLMs to break that down into actionables for families via text message. The goal is to keep things digestable. People can understand if their unit is mis-zoned if you use it in this simple phrasing, but not what a "RM-3 District" is (common type of zoning in SF). The LLM + search abilities can explain a lot - this is how most people learn things about real estate, this process of googling phrases they don't know

xkcd-sucks 2y ago

> you get hired to work with mostly irrational actors (sellers and buyers). AI-scale personalization could help here, assuming macro scale irrationality is mostly rational in consideration of individual values (e.g. character of neighborhood, character of permitting-related town departments, etc) which could maybe turn out better in the short term as tools for human agents, but still

Raffi_Isanians 2y ago
I wouldn't say our clients are irrational, but I agree that buying a house can be stressful. The goal is to anticipate and address all of our clients' questions, including those they might not even know to ask. From our experience, this significantly reduces the frustration that typical homebuyers often feel during their purchase journey. TLDR: Oftentimes the agent not being proactive is the cause of the buyer's behavior.

matthewemiller 2y ago

I can attest to this likely being true. We are working on morfi.com, trying to build better software for mortgage professionals, and it's challenging. You can see it in reporting from firms like MeridianLink, mortgage (and probably real estate) lag behind their peers in the adoption of technology. https://s28.q4cdn.com/477693378/files/doc_financials/2023/q4/Q4-2023-MLNK-Earnings-vFF.pdf https://s28.q4cdn.com/477693378/files/doc_financials/2023/q4...

IAmGraydon 2y ago

>I don’t know any other real estate people who know anything about code CRE professional here (about a decade in the industry) who was a coder first. I think there's plenty that can be disrupted in real estate, and specially commercial real estate, where there are a lot of old problems that are ripe for solutions. It's like you said though - those who experience the problems and actually know how to write software to solve them are rare. We are in a good position for opportunity. I think that brokers can (and should) be replaced by something more efficient, but the real problem for disrupters is regulation, IMO. A program/app/SAAS cannot hold a real estate license, and therefore cannot do things like quote rates, terms, or manage transactions. As of right now, it's illegal in most states. As for the website that OP created, I think it was a nice attempt, but it seems very half-baked and the case for its value is not clear at all. There's some pretty design and not a lot of substance there.

fallingsquirrel 2y ago
> A program/app/SAAS cannot hold a real estate license, and therefore cannot do things like quote rates, terms, or manage transactions. As of right now, it's illegal in most states. I wonder if the app could use the same "legal workaround" that political SMS spammers use. The app queues the messages, but an intern mashes the spacebar 100 times to spam 100 different people, therefore a human sent the message, therefore the spam is legal. Now hire someone with a real estate license to mash the spacebar for your realtor app. Does it suddenly become legal?
- forgetfreeman 2y ago
  Given the frequency with which large real estate outfits have deep ties to local and state legislative bodies I'd love to see someone who doesn't fully understand what they're fucking with stick a fork in that outlet just to see what happens to them.

hammock 2y ago

> But ultimately as an agent, you get hired to work with mostly irrational actors (sellers and buyers). I don’t think you’re making the argument you think you are. If an agent is there to be the rational for the irrational, then an AI listing agent talking to an AI buying agent are two rational beings getting more done than ever before, on behalf of sellers and buyers who are free to be themselves.

AndrewKemendo 2y ago

I’ve bought 4 and sold 3 houses over the years, and TBH the whole brokerage model seems like a two sided market scam but I’m not sure who is winning or being scammed. I’ve used brokers and not, so I’ve seen both sides. I have family that are brokers are frankly they aren’t very smart but they know how to hustle, so they do decently well. They offer a service and do that but the costs for what they do are really weird in the margins. It seems like the most perfect example of a bullshit job but somehow it benefits both sides enough that it persists because home ownership is such a (reasonably but problematically) aggressively promoted thing. Very confusing tbh.

deleted 2y ago

[deleted]

mooreds 2y ago

I worked in real estate for about 8 years as a software developer for a tech-forward brokerage. There's a ton of money and data flowing through this industry. There are plenty of dilettante agents who are far overpaid. There've been a number of startups trying to tackle this (ZipRealty, Zillow, Compass OpenDoor). My cynical take is that these startups begin with consumers, but end up serving agents and brokers, because that's where the money is. So I don't think displacing the agent relationship is going to be a winning strategy, because buying a house is a rare large purchase of a non-fungible asset which can positively or negatively affect your life. (Not talking about investors.) Just like folks hire lawyers for divorces, accountants to review ISOs, or business sellers hire brokers, there is value in hiring an expert for high-stakes, rare purchases. This is a great book about the value of middlemen: https://www.amazon.com/Middleman-Economy-Brokers-Everyday-Matchmakers/dp/1137530197 https://www.amazon.com/Middleman-Economy-Brokers-Everyday-Ma... However, there is plenty of room to improve the user experience and make things simpler, and this seems like a good start.

MichaelZuo 2y ago
That's a pretty good point, and probably applies to a lot more industries... i.e. is there any product in any industry with middlemen, available today, that reliably performs like the 50th percentile professional ?