4 ms·

I think Open Listings has the potential to be huge. It's a great example of Schlep Blindness (http://paulgraham.com/schlep.html http://paulgraham.com/schlep.htm

I think Open Listings has the potential to be huge. It's a great example of Schlep Blindness (http://paulgraham.com/schlep.html http://paulgraham.com/schlep.html). Real estate agents have disproportionate commissions largely based on where they operate. A real estate agent in San Bernardino, CA may make $1K for selling a home, while an agent in Palo Alto makes $10K+, because, well, the house costs 10x as much. Disclaimer: My father is a broker in San Bernardino. He's mentioned to me a number of times how incredible it is that agents get to take a percentage of the selling cost rather than a fixed fee. "Doctors get rich by going into real estate," a famous quote of his. Certainly there is more competition for agents in Palo Alto, but the actual amount of work done by a real estate agent in PA is damn near equivalent to the work done by one in SB. There are standard California forms, inspections, financing etc. The only "added perks" provided by luxury firms in the Bay Area are aesthetic improvements designed to attract wealthy buyers. For those who are interested, innovation in the real estate market has been difficult due to the monopoly on housing listings. The "Multiple Listing Service" (http://www.mls.com/ http://www.mls.com/) is the only master directory of housing lists and is only made available to "Realtors". In case you didn't know, Realtors are not exceptional agents, they simply pay to be members and gain access to the MLS. My dad was a member for the longest time just to have access to the MLS. After all, when a customer asks you to help buy a home, where are you going to get your list of available properties from? In order for Open Listings to succeed they're going to have to upset the MLS. This means building their own listings. Here's my (crazy) suggestion: Hire 20+ people to drive around the Bay Area looking for "for sale" signs in order to populate their database. It's what my dad and I used to do before he paid to be a Realtor. Once we had a list of available properties we could show them to clients.

7Figures2Commas 12y ago
> Certainly there is more competition for agents in Palo Alto, but the actual amount of work done by a real estate agent in PA is damn near equivalent to the work done by one in SB. There are standard California forms, inspections, financing etc. The only "added perks" provided by luxury firms in the Bay Area are aesthetic improvements designed to attract wealthy buyers. Work != value. Here, you seem to have overlooked the fact that Open Listings is trying to "disrupt" the buyer's agent (although technically that's what it is). If you think the only thing a buyer's agent has to do to close deals in hot markets like Palo Alto is to submit an offer and run through the motions, you're mistaken. A great agent can be the difference between getting a property or not. > For those who are interested, innovation in the real estate market has been difficult due to the monopoly on housing listings. The "Multiple Listing Service" (http://www.mls.com/ http://www.mls.com/) is the only master directory of housing lists and is only made available to "Realtors". In case you didn't know, Realtors are not exceptional agents, they simply pay to be members and gain access to the MLS. My dad was a member for the longest time just to have access to the MLS. After all, when a customer asks you to help buy a home, where are you going to get your list of available properties from? You do realize that the number of pocket listings has grown substantially in the past several years, right? In some markets, pocket listings account for double digit percentages of sales. This, incidentally, is another reason to work with an agent who is a top producer, particularly in a hot market. They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS.
- sharkweek 12y ago
  You're absolutely right in that a hard working agent will make a difference in a hot market. When my wife and I bought our house in Seattle, there were 7 offers, all pre-inspected, waiving all contingencies, everyone escalating, etc. Our agent showed up to deliver the offer in person, talked to the sellers, an elderly couple, about us (talking up how we are one day hoping to start a family in the house, won't just tear it down, etc) and hung out while other offers came in, literally calling us every time someone else had an offer competitive to ours so we could adjust if needed. Big difference between that and submitting an online offer form. But as an aside, I think Open Listings will be huge, or at least similar flat fee models in the future (Redfin was another big step in the right direction chunking out 1.5% of the cost for consumers and removing commission for their agents)
- aabajian 12y ago
  Admittedly, I've never worked in real estate other than the brief stories with my father. >> A great agent can be the difference between getting a property or not. I've heard such success stories, and I agree with you. An agent knowledgeable about one city would be ill suited to sell homes in another. It's very difficult for an agent to transition between cities, even if that agent is excellent at selling properties in his or her current city. Success depends too much on how much an agent knows about the local region and community. The point I was trying to make was that the amount of knowledge is relatively constant (e.g. what sellers look for in a buyer), it's just a different body of knowledge that depends on the region. >> You do realize that the number of pocket listings has grown substantially in the past several years, right? No, I did not realize, sorry for my narrow perspective! >> They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS. This is again to my point - the success of an agent depends more on what they know about their region (e.g. available properties, all-cash offers vs. larger offers, etc.), than the actual amount of work. IMHO it simply isn't enough of a difference to justify a 10-fold increase in price. Palo Alto is an extreme example. There are likely niche communities where buyers would rather pay a fixed-cost and accept the risk inherent with taking a less-reputable agent.
  - 7Figures2Commas 12y ago
hayksaakian 12y ago
Even more fun: there is no "The MLS" the "MLS" is a loose associate of regional databases. every state has one, if not more MLSes. There is literally no single API/service that will tell you about every listing in every MLS. People like Zillow have to aggregate data across multiple MLS.
pmorici 12y ago
The real barrier to an individual representing themselves in a Realestate transaction has little to do with the MLS. Listings are available for most areas on sites like Zillow. Redfin, or trurila. The pain comes when it is time to write the offer contract. Standard real estate contracts and the software (zip forms) that fills in the forms is controlled by the realtor associations thought a company owned by the California realtors association. A non realtor can't get access to the standard contracts unless they get their realty license and join their sate association.
- vqc 12y ago
  is there a reason why copies of the standard contracts haven't been leaked and aggregated online?
  - pmorici 12y ago
    Well they are updated yearly so even if someone leaked the form at one point there is no guarantee that it isn't missing some required legal provision in the most current versions. There are also various addendum that you may or may not have to include which complicate things.
- kansface 12y ago
  I was under the impression that legal documents weren't subject to copyrights - or rather, they are, but are never enforced?
  - dbot 12y ago
    Legal documents definitely are copyrightable, and you'll occasionally see enforcement actions. I worked at a firm that represented a major insurance company in a IP/copyright action against another insurance company, claiming that the defendant blatantly copied several of its contracts. (I think our client prevailed.) That being said, it's often difficult to get past the merger doctrine in copyright claims over legal doctrines. There are only so many ways to express a warranty clause or choice of law provision, so it's usually a strong defense.
- 12y ago
lancewiggs 12y ago
200Square.co.nz has been doing similar to this for a number of years. It's an industry ready for disruption, but there are some pretty significant barriers in place which makes it hard. Plenty of challengers have over-raised, under-delivered and disappeared. (disclosure: investor/director)
kriro 12y ago
Real estate works surprisingly differently in different countries. In France real estate agencies are used for pretty much every deal (afaik), in Germany there's quite a lot of local listings in papers or dedicated websites that cut out the realtor (standard contracts are freely available, the process is pretty standardized). I don't know how it works in the US but in Germany eBay classifieds for rental are becoming more and more popular so that may be a direct competitor down the line.

7Figures2Commas 12y ago

> Certainly there is more competition for agents in Palo Alto, but the actual amount of work done by a real estate agent in PA is damn near equivalent to the work done by one in SB. There are standard California forms, inspections, financing etc. The only "added perks" provided by luxury firms in the Bay Area are aesthetic improvements designed to attract wealthy buyers. Work != value. Here, you seem to have overlooked the fact that Open Listings is trying to "disrupt" the buyer's agent (although technically that's what it is). If you think the only thing a buyer's agent has to do to close deals in hot markets like Palo Alto is to submit an offer and run through the motions, you're mistaken. A great agent can be the difference between getting a property or not. > For those who are interested, innovation in the real estate market has been difficult due to the monopoly on housing listings. The "Multiple Listing Service" (http://www.mls.com/ http://www.mls.com/) is the only master directory of housing lists and is only made available to "Realtors". In case you didn't know, Realtors are not exceptional agents, they simply pay to be members and gain access to the MLS. My dad was a member for the longest time just to have access to the MLS. After all, when a customer asks you to help buy a home, where are you going to get your list of available properties from? You do realize that the number of pocket listings has grown substantially in the past several years, right? In some markets, pocket listings account for double digit percentages of sales. This, incidentally, is another reason to work with an agent who is a top producer, particularly in a hot market. They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS.

sharkweek 12y ago
You're absolutely right in that a hard working agent will make a difference in a hot market. When my wife and I bought our house in Seattle, there were 7 offers, all pre-inspected, waiving all contingencies, everyone escalating, etc. Our agent showed up to deliver the offer in person, talked to the sellers, an elderly couple, about us (talking up how we are one day hoping to start a family in the house, won't just tear it down, etc) and hung out while other offers came in, literally calling us every time someone else had an offer competitive to ours so we could adjust if needed. Big difference between that and submitting an online offer form. But as an aside, I think Open Listings will be huge, or at least similar flat fee models in the future (Redfin was another big step in the right direction chunking out 1.5% of the cost for consumers and removing commission for their agents)
aabajian 12y ago
Admittedly, I've never worked in real estate other than the brief stories with my father. >> A great agent can be the difference between getting a property or not. I've heard such success stories, and I agree with you. An agent knowledgeable about one city would be ill suited to sell homes in another. It's very difficult for an agent to transition between cities, even if that agent is excellent at selling properties in his or her current city. Success depends too much on how much an agent knows about the local region and community. The point I was trying to make was that the amount of knowledge is relatively constant (e.g. what sellers look for in a buyer), it's just a different body of knowledge that depends on the region. >> You do realize that the number of pocket listings has grown substantially in the past several years, right? No, I did not realize, sorry for my narrow perspective! >> They're far more likely to be tapped into the networks that will give their clients access to properties that haven't hit the MLS. This is again to my point - the success of an agent depends more on what they know about their region (e.g. available properties, all-cash offers vs. larger offers, etc.), than the actual amount of work. IMHO it simply isn't enough of a difference to justify a 10-fold increase in price. Palo Alto is an extreme example. There are likely niche communities where buyers would rather pay a fixed-cost and accept the risk inherent with taking a less-reputable agent.
- 7Figures2Commas 12y ago

hayksaakian 12y ago

Even more fun: there is no "The MLS" the "MLS" is a loose associate of regional databases. every state has one, if not more MLSes. There is literally no single API/service that will tell you about every listing in every MLS. People like Zillow have to aggregate data across multiple MLS.

pmorici 12y ago

The real barrier to an individual representing themselves in a Realestate transaction has little to do with the MLS. Listings are available for most areas on sites like Zillow. Redfin, or trurila. The pain comes when it is time to write the offer contract. Standard real estate contracts and the software (zip forms) that fills in the forms is controlled by the realtor associations thought a company owned by the California realtors association. A non realtor can't get access to the standard contracts unless they get their realty license and join their sate association.

vqc 12y ago
is there a reason why copies of the standard contracts haven't been leaked and aggregated online?
- pmorici 12y ago
  Well they are updated yearly so even if someone leaked the form at one point there is no guarantee that it isn't missing some required legal provision in the most current versions. There are also various addendum that you may or may not have to include which complicate things.
kansface 12y ago
I was under the impression that legal documents weren't subject to copyrights - or rather, they are, but are never enforced?
- dbot 12y ago
  Legal documents definitely are copyrightable, and you'll occasionally see enforcement actions. I worked at a firm that represented a major insurance company in a IP/copyright action against another insurance company, claiming that the defendant blatantly copied several of its contracts. (I think our client prevailed.) That being said, it's often difficult to get past the merger doctrine in copyright claims over legal doctrines. There are only so many ways to express a warranty clause or choice of law provision, so it's usually a strong defense.
12y ago

lancewiggs 12y ago

200Square.co.nz has been doing similar to this for a number of years. It's an industry ready for disruption, but there are some pretty significant barriers in place which makes it hard. Plenty of challengers have over-raised, under-delivered and disappeared. (disclosure: investor/director)

kriro 12y ago

Real estate works surprisingly differently in different countries. In France real estate agencies are used for pretty much every deal (afaik), in Germany there's quite a lot of local listings in papers or dedicated websites that cut out the realtor (standard contracts are freely available, the process is pretty standardized). I don't know how it works in the US but in Germany eBay classifieds for rental are becoming more and more popular so that may be a direct competitor down the line.