Are Realtors days numbered?

Seattle, WA · Member since 2014 · 308 posts · 170 votes

I saw an interesting interview on CNBC today of Colony Capital CEO Tom Barrack whose firm has $34 billion under management. He spoke about the many changes in housing but touched on a real interesting point. He compared realtors fee`s to brokerage fees and said its days are numbered. He states that these fee's are the last of this type of fee left in the market place. I have to agree. I think its only a matter of time before this goes away. As a stock trader it would have been unheard of and impossible to have traded without a broker. Now you still have brokers but they are for a select few that need some hand holding or large portfolios. I can certainly see this evolving the same way with Zillow and Auction.com. I know the brokers went away kicking and screaming as all those good paying jobs went away. I would expect the same reaction here but times do change. Some may pop up oh we will need them to open the door and show the homes and all the other things a realtor does but again the same was said of brokers. I for one would like that 6% in my wallet. Some may feel different.

Here is the link to the video if you care to view it.

http://video.cnbc.com/gallery/?video=3000311073

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Doug Merriott

Residential Real Estate Agent · Tierra Verde, FL · Member since 2013 · 276 posts · 130 votes

12y

Most Realtors do just 4-5 transactions per year and make about $20k. Many, including me, practice real estate in their spare time. My goal is to do 4-5 transaction per month. My goal is to provide a level of service that makes my clients feel comfortable, proud and grateful for choosing to use me as their Realtor. I think that goals separate the 4-5/year, just get by crowd from those that choose excellence.

Many of my investor friends deride Realtors, sometimes even in good humor. The fact of the matter remains that 9 out of 10 houses are sold using Realtors. I don't see this changing any time soon. A good agent is more than just a robot that enters information in the MLS. A good agent can tell a tale of your home that will interest the internet viewer to want to come by and take a look. A good agent can take photos or hire a great photographer to highlight your homes best points. A good agent can steer you to deals, whether they are on the MLS or wholesale. A good agent looks out for your best interests before their own.

In a world where many folks are more and more overworked I don't see people wanting to take the time to show their home, or figure out contracts and disclosures. I don't see people relocating to new cities driving around aimlessly trying to find a good home in a good neighborhood.

As far as the fees I will just quote a friend of mine who introduced himself at a REIA meeting immediately after a $295 listing service guy, he said; "I am a Realtor and I charge 6%, because I am worth it.". If you don't value your Realtor's service, fire them.

Realtors are not essential, but neither is your car. You can buy a home without a Realtor just like you can get to work without your car but both will make the journey a whole lot easier.

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Bradley Bogdan
Investor · Eureka, CA · Member since 2014 · 233 posts · 222 votes
12y
A few people have started down my path of thought, but haven't quite followed it as far as I do, so I'll toss in my two cents.
IMHO, we are discussing two separate things when we discuss the profession of agents/brokers in this thread: The profession itself, and the MLS.
I'll start first with the MLS. People have pointed out that its a local database, with exclusive access and information. Currently, the only real competitors to the MLS are websites that "scrape" data and compile it, ala Zillow, Trulia, etc. This is why they aren't able to ever match the speed and accuracy of the MLS, they're always depending on the MLS to provide the data first, and then only checking back every so often. With that model, everyone pointing out here that they will always be a step behind is correct, they absolutely will be. They don't control the information themselves, they just compile from what they can scrape.
The issue for NAR is that its highly unlikely that they will be able to maintain a monopoly on that data forever. With the money and clout that sites like Zillow now have, and the potential goldmine that would result from breaking NAR's monopoly on the data, all of a sudden you have a strong financial incentive for someone like Zillow to find a way to incentivize agents/brokers to list with them and not just the MLS, or perhaps instead of the MLS if access is made cheap/free/or even profitable. It hasn't happened yet, and may not happen tomorrow, but it will happen sooner than later. There is too much money involved for it not to happen.
The profession of agents/brokers, unlike the stock brokers and travel agents mentioned in other posts, is a value added profession as well as a gate keeper profession. By this I mean that most people can't effectively search for and purchase a home on their own without access to data, regulations, and contacts with title companies, escrow, etc. (the gate keeper portion) but also can't evaluate, negotiate and manage the functions of buying or selling a property (the value added portion). As I explained before, whenever there is strong financial incentive to break a monopoly on data, it usually happens, which means the gate keeper portion of the profession isn't something that agents/brokers can bank on forever. When the gate keeper professions of stock brokers and travel agents lost their stranglehold on the data, most didn't have value to add and thus disappeared. On the flip side, the value added portion of the profession is something that will likely never go away, simply because most buyers are not well read investors like those here on BP, most are buying a house with no intention of ever doing it again. Agents/brokers that make the process easy, understandable, quick and friendly will continue to earn excellent money and can charge a good commission.
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Mark Creason
Real Estate Lender and Broker · Dallas, TX · Member since 2013 · 966 posts · 500 votes
12y
Bradley,
Interesting view point. I would disagree that Zillow would be able to get agents to list with them, as an agent would potentially be cutting their own throat to do so. Agents provide a unique service in that hey know local knowledge, that a statistical analysis will not be able to correctly predict with a Zillow.
Mark
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Mary B.
Real Estate Investor · Lansdowne, PA · Member since 2013 · 1k+ posts · 656 votes
12y
Are CPA's days numbered being as though there are all sorts of accounting software available at a very affordable price? Often much cheaper than what one would pay to hire an accountant. Same situation. Many of them have fallen and made comebacks after serious gameplan adjustments. Yet others have succumb to the competitor's blow (technology). To everyone on here comparing educational requirements of r.e. agents to other industry professions, its to state what? One has nothing to do with the other. They're different fields altogether, wtf? I won't get into how many accountants and tax attorneys misrepresent themselves & their clients, perform illegal actions(embezzlement &schemes) repeatedly to the government. Yet its the client that pays enormously through the nose as a result. Many of them wouldn't be in hot water with uncle sam if it weren't for those professionals that they entrusted to represent them. So if you're pulling wrap sheets of the compared professions r.e. agents are definitely wearing the flying colors. Of course there will always be a need for accountants / tax attorneys somewhere by someone. However due to quicken, tax act etc the little people can afford to do their own taxes and not lose the bulk of their refund to the preparer. In no way am I anti-accountant, just stating my case.
Kudos,
Mary
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
12y
Always be a need for realtors... commission will get negotiated as they have been for years. however buyer's and sellers need that buffer to put deals together.. buyers that are not educated in the process need representation so they don't get totally hosed as we know many sellers don't exactly tell the truth about their properties.
Its the reason that any good agent will always tell the SEller to leave the home when a prospective buyer is coming through... you don't want the seller blabbing something out that drives the buyer away... Or ego's get involved when buyer low balls etc etc.
The above is for Joe and Jane homeowner selling to Jim and Mary home buyer.
Can you by pass RE brokers in the wholesaling of properties that are vacant.. I think that is very evident as there are thread after thread about wholesaling on BP and whether you can do it without a license etc this activity already exists.
Then you take the busy professional they don't have the time or the hard working Truck driver how is he going to sell his home when he is on the road or the airline pilot who is on a 6 day trip half way around the world how is he going to sell his home.
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
12y
In 2003 14% of homes were sold FSBO
In 2005 Zillow was founded
In 2013 9% of homes were sold FSBO
Is the debate over yet?
Source
Source
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Terri Lewis
Flipper/Rehabber · Elkhart, IN · Member since 2014 · 197 posts · 41 votes
12y
The new home buyers are always going to be there. There will always be a flow of them, with the need to use a Realtor. The only ones that feel confident to purchase with out an agent are people like us, that understand what we are doing and would rather not give up the percent of commissions to a third party, and can buy direct form a property owner. Or sell direct to another investor. There has been too many seller that has not upheld there fiduciary duties to end buyers and have developed bad word of mouth to the RE illiterate OO. Also putting more regulations on our transactions, "Dodd Frank".
As for Allstate, my word are "you are in no hands". I have a passionate dislike for the company. I'm in the second time around with one of their insured causing the accident and know what jerks they are to deal with. They must have a large percent set aside for attorney's to keep from paying claims, instead of paying claims and saving legal fees. The FTC should check them out. If we handled RE in the same manor, non of us would be allowed to do any deals with out a Realtor.
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Peter G.
Panama City Beach, FL · Member since 2013 · 29 posts · 7 votes
12y
I believe in five years the percentage of the real estate transactions using a real estate agent will be substantially lower. The real estate agent will play a role but technology will diminish their role and bring knowledge to the hands of the buyers and sellers. The real estate lobby is strong in Washington but Washington has been looking to provide competition to the MLS system to reduce the cost of the transaction. Just like the stock/insurance/post office has been affected technology will reduce the cost of the transaction.
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Sean Brooks
Bear, DE · Member since 2014 · 178 posts · 65 votes
12y
@Bradley Bogdan
Good point but I'm going to reveal something about the MLS. They generate their money of a user base access system. So a big company like Zillow doesn't get a discount. The MLS charges each person wanting to access the data so they may more money. We don't receive a brokerage rate so everyone doesn't get access without joining.
So how is Zillow-Trulia going to solve the problem of getting this data?
And all of the MLS are setup this way?
They also only give access to Real Estate Professionals like agents, office brokers, appraisers, and an unlicensed assistant, the broker of record of your office and your office must belong to the MLS.
See the MLS is the Real Zillow, Trulia etc.
Because they don't have access, I've seen properties off by as much as $50k. Inaccurate information shared with the public can cost. Now how is that helping someone or better yet - how bad is that hurting someone.
Real Estate Investing is not just tied to purchasing a property for a low price and selling for a profit. It's apart of a larger market, and understanding what's happening in the market is key. A good Realtor can help and investor navigate and that investor can concentrate on funding the deals. It doesn't cost money when they help purchase a property, only when you sell. We also carry insurance. How many investors think about insurance. Wholesaler can end of in a law suit.
With the data collected through the MLS and other sources the public doesn't have access too, this information is very useful.
This is why the law states in some places I'm not sure if it applies to every state, that if you are a Realtor selling a property you own, you must reveal this to the public. You know what others do not know.
The Team Concept is written about by BiggerPockets and this is the list for success. If you assemble this team you'll make life easier and do more deals.
Mortgage Broker/Loan Officer - A mortgage broker is the person responsible for getting you loans – especially if you are going “conventional” (not hard or private money). You want someone who has the experience of working with other investors and you want that person to be creative and smart. Many loan officers have a pipeline of buyers (or future buyers); real estate investors can use the help of local loan officers to build a list of buyers and lease purchasers for their properties.
Real Estate Attorney - It is important to have someone on the team who can go through contracts, and who knows the legalities of all your moves. Don't try to pinch pennies by ignoring this valuable member of your team. You don't need to meet for hours with your attorney each week, but want someone to be available when you need them. Having an attorney who is skilled with real estate investing is highly important for the success of your career. Keep in mind, attorneys can also be compensated through fees collected at acquisition or disposition of a property.
Escrow Officer or Title Rep - If you live in a state that uses Title & Escrow companies, your escrow officer or title rep is the person responsible for closing the deal - taking you from "the offer" to "the keys." Having a good one on the team helps to close deals that much quicker. You always want people looking out for YOUR interests.
Accountant - As you acquire properties, doing your own taxes and bookkeeping becomes increasingly difficult. As soon as possible, hire an accountant (preferably a Certified Public Accountant). Your numbers guy should also be well aware of the ins and outs of real estate and preferably own rental properties of their own. Come tax time, this is the man to help you through the write-offs. A good tax accountant will save you more than they cost.
Insurance Agent - Insurance is a must, and as in investor you will probably be dealing with a lot of insurance policies. Be sure to shop around for both the best rates and the best service. Do not skimp out on getting insurance, as you never know when you'll need that policy.
Contractor - A good contractor seems like the hardest team member to find, but can often make or break your profit margin. You want someone who gets things done on time and under budget! Be sure that your contractor is licensed/bonded/insured to protect you. Don't simply hire the cheap guy.
Supportive Family & Friends - Having the support and backing of loved ones is important in any endeavor. If your spouse or family is not on board - don't invest until they are.
Realtor - An exceptional real estate agent is fundamental in your investing career. You or your spouse may even choose to become a real estate agent yourself to gain access to the incredible tools that agents have. Either way- having an agent that is punctual, a go-getter, and eager, is important. Real estate agents are paid from the commission when a property is sold. In other words – for the buyer, an agent is FREE. They can be an excellent resource for contract real estate work which may include the following activities: birddogging, referring buyers, showing properties, open houses, broker price opinions, etc.
Property Manager - If you don't want to actively manage your properties, a good property manager is important to have. A good property manager can be hard to find – but finding one that can efficiently manage your rentals will make your life significantly easier.
Great Handyman - Someone to take care of the little things that come up on a daily basis is imperative to have on board. Ask for referrals from other landlords for the best handymen; they typically don't need to advertise but work almost entirely on referrals from a small group of investors and homeowners.
http://www.biggerpockets.com/real-estate-investing/business-plan
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Bradley Bogdan
Investor · Eureka, CA · Member since 2014 · 233 posts · 222 votes
12y
@Sean Brooks
I'm not saying Trulia/Zillow will continue to access the MLS for data. As I mentioned, they will have to create their own set of data, not merely copy the MLS' to display, if they want to continue expanding and improving. The MLS isn't free for anyone, for Realtors or crawler websites. Everyone who has access pays for such. If you look at the history of MLS, the concept of restricted access/monopoly of the database has been challenged in the courts on many occasions. This alone should tell you that there's significant financial incentive for access to the database. If there wasn't, full MLS access would be open to anyone. On average, it wouldn't have an effect on the market, the same properties would still be for sale, so restricted access has been a tool to gate keep for the profession, just as stock brokers had. I don't know how for sure it will happen, if I did, I'd go work for one of those companies and make a ton of money.
If you'd like an example in another industry, look at the car industry. Pricing there, like real estate, in the pre-internet age was tough for a consumer to establish what their current of future car was worth. Kelley Blue Book was a start, but obviously couldn't account for regional variation or supply. There was financial incentive for someone like cars.com to come along and provide listings for both dealers and individuals. I could see Zillow/Trulia offering some sort of package deal in the future, where an individual can list their property for a flat rate or a low percentage that includes things like escrow, estimate, etc. and doesn't include the MLS. Once they develop a certain amount of business through this budget, low frills service, they pressure buyers agents to take a lower percentage to work the buyer half of the deals as well. If successful, Zillow/Trulia makes a ton of money being a budget middleman, like eBay or cars.com, and breaking the monopoly on information.
As I said before, this won't replace good real estate agents, but it will create a big change in the way properties are bought or sold, and it will happen probably sooner rather than later, because there's big money involved.
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Account Closed
Agawam, MA · Member since 2014 · 10 posts · 0 votes
12y
I do agree with comment of Jay C. that real estate agents is more like a lawyer.
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Richard C.
Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
12y
The post title (clearly intended to get attention) no one is really arguing that realtors will disappear. Just that the role and the compensation structure will change.
And yet most of the push back is taking the for of, "Realtors will never disappear!!!!"
No, they won't. But the job will change. All jobs do, and this is a job with a very, very low barrier to entry, that has kept its well-compensated position due largely to control over information. And that information is slipping out of their control.
I think it would be foolish to assume realtors are going to disappear overnnight. But I think it would be downright idiotic to assume that, uniquely among all professions, they will be immune from disruptive change brought on by technology.
And the notions that a real estate agent is in any meaningful way analogous to an attorney is just silly.
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Jay Phillips
Manhattan, NY · Member since 2012 · 44 posts · 31 votes
12y
Zillow, Trulia, etc. (RedFin excluded) don't see themselves as real estate companies. They are content companies that sell advertising -- mostly to real estate agents looking for buyers. Their content is provided by the participating MLS systems with the approval of individual brokers through an opt-in/opt-out. Their cost for content is very low.
I don't think they have an interest in changing that model -- seems to be working well for them and they're not likely to do anything to bite the hand that feeds them. Brokers could put Zillow and Trulia out of business in an afternoon, if they banned together and just turned off the syndication option in their MLS settings. It seems to work for all involved, even if there is an uneasy truce between the Zillows of the world and the brokerage industry.
The MLS is more than a database. Yes, its heart is a database but it's also a regional cooperative that provides the rules and infrastructure to facilitate agents being able to work together to sell property. Members agree to abide by the rules, which includes everything from commission splits to signage to how and when listings must be updated to operating the electronic lockbox systems.
Most buyers are pretty clueless and need assistance navigating the process. Most sellers are equally clueless and also have an uncanny ability to kill a deal. Ask any buyers agent if they want a seller around at a showing. I just don't see the self-service eTrade model ever catching on in a big way. Technology has certainly changed the industry and will continue to. Most buyers select the houses they want to see from a website, be it an agent's website or syndicated sites of the Zillow sort. Used to be that agents selected properties for their clients from MLS listings on pinbar computer paper. I know that anyone who remembers this is dating themselves. Buyers are much more empowered now, but the agents are still here.
Using a buyers agent is a great deal for your typical buyer. And as long as agents have the buyers, sellers will pay commissions to sell their houses.
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Leslie Pappas
Professional · San Francisco, CA · Member since 2014 · 876 posts · 301 votes
12y
the agents' central job is negotiation. There's a lot more to it than that, however, this is their fundamental benefit. In addition, especially here in California, working to promote the clients' legal rights and protect them from lawsuits is another important responsibility of the realtor.
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William Hochstedler
Broker · Logan, UT · Member since 2013 · 1k+ posts · 1k+ votes
12y
I completely disagree with Tom Barrack that there are no brokerage models left.
What are Ameritrade, ETrade, Schwab, etc? Stock Brokers whose models leveraged technology to prevail in the marketplace.
Talent brokers haven't gone anywhere.
Because of technology, travel agents experienced a massive upheaval. But we're still relying on third party services to book anything more than an airplane ticket, hotel stay, or car rental.
We're in a service based economy, primarily driven by the growth in the financial sector. Economists are telling us that job security requires better training and education--not that people won't require professional services because of the internet.
Zillow/Trulia are in the same space as the MLS, not real estate agents. As their data sets grow it will become a more and more valuable tool. But it will be very tricky for them to go head-to-head with the MLS as that is their current source of content and, subsequently, revenue (from agents).
I certainly see the landscape changing and winning players emerging who are best able to leverage technology. But so far, the internet has not made much traction dealing with non-fungible goods like jewelry. And there will always be a market for highly specialized professional services in any industry that still exists.
Wm
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Richard C.
Bedford, NH · Member since 2012 · 2k+ posts · 1k+ votes
12y
The best thing realtors and real estate agents could do to ensure their continued relevance (other than be good at their jobs) is to raise barriers to entry, and do so in such a way that the professionalism and service level provided increases as well.
Like with dramatically higher education requirements.
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Jeremy T.
Investor · Pittsburgh, PA · Member since 2014 · 266 posts · 240 votes
12y
I agree with @Richard C.
To become a licensed engineer, I had to graduate with a Bachelors degree in my field of study, pass the 8 hour fundamentals of engineering exam, find someone who was willing to hire me in a bad economy, practice as an "engineer-in-training" for 4 more years, only then can I sit to take another 8 hour exam for the chance to become a licensed engineer.
IMO raising the barrier to entry beyond 'heartbeat and ability to read' would be a good way to weed out the pretenders. Hence the reason why thermodynamics is placed squarely in the latter portion of the sophomore year engineering curriculum.
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Jay C.
OP
Seattle, WA · Member since 2014 · 308 posts · 170 votes
12y
@Richard C.
You get the point dead on that so many on here miss. Too many posts here are stuck on the "here and now" and give no credit to what we have witnessed in the last decade.
@Jeremy T.
Dead on good post. Like in your field alot matter with barrier to entry and for a realtor its very low.
Good posts
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Jesse T.
Herndon, VA · Member since 2014 · 1k+ posts · 324 votes
11y
Originally posted by @Richard C.:

The best thing realtors and real estate agents could do to ensure their continued relevance (other than be good at their jobs) is to raise barriers to entry, and do so in such a way that the professionalism and service level provided increases as well.
Like with dramatically higher education requirements.
It seems like real estate commissions are very poorly distributed. I think the potential for big paydays combined with the low barrier to entry causes an oversupply of real estate agents.
I think a lower commission structure would do something to decrease the oversupply and also motivate the realtors to increase standards - at the very least to the level that is required for brokers currently.
I think in the retail residential environment, the sellers agents generally are over compensated. I think the system could work with a smaller overall commission and a bigger slice of the compensation going to the buyers agent(maybe partially funded by the buyers).
Another alternative might be a relatively small commission as profit to the agent/broker but most costs passed on to the party that is represented.
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NA Jones
Flipper · Port Deposit, MD · Member since 2014 · 280 posts · 171 votes
11y
I'm trying to picture the purchase or sale of a home for the average joe (who can count on one hand the times they'll do it in their lifetime) and it's tough.
Gone are the days that buyers feel they need an agent to "find them" a house. Buyers find their own house. But an agent provides access to that house, and guides the buyer along in a transaction that is, for the average joe, intimidating and complicated.
And really, I don't necessarily believe a good agent can "sell" a house. Houses sell themselves. Location, prices, etc. Are good pictures and an enticing description important? Absolutely. Will they alone get potential buyers in the door if it's overpriced or in a warzone? Nope. Listing agents don't "sell" houses. Listing agents coordinate showings and protect their sellers assets. Letting strangers wander around their home is not something most people are entirely comfortable with, but for some reason the presence of a licensed agent comforts them. Then the listing agent guides the seller along in a transaction that is, for the average joe, intimidating and complicated.
It's not the access to information that makes the job of a Realtor, nor is it even the mountains of paperwork, I think it's the access to the house. The rest of it all? Perks. Perks that cost 6% ;)
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Eva Salas
Real Estate Investor · Silicon Valley, CA · Member since 2012 · 169 posts · 52 votes
11y
@Mark Creason
Couldn't agree with you more. I have worked with WONDERFUL agents and their expertise, dedication, and excellent service has left me with very high standards. It was a pleasure doing business with these professionals, as I know my expectations can and should be met. When you've had the best...
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John Mitchell
Real Estate Investor · Great Falls, VA · Member since 2014 · 25 posts · 3 votes
11y
commercial retail brokers aren't going anywhere any time soon. It was tried during the dot com days with a number of start ups. There are way too many variables and local knowledge rules. It will be a long time before you can click and lease or buy a building as easily as you do stocks.
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Jesse T.
Herndon, VA · Member since 2014 · 1k+ posts · 324 votes
11y
Originally posted by @Bradley Bogdan:

@Sean Brooks
If you'd like an example in another industry, look at the car industry. Pricing there, like real estate, in the pre-internet age was tough for a consumer to establish what their current of future car was worth. Kelley Blue Book was a start, but obviously couldn't account for regional variation or supply. There was financial incentive for someone like cars.com to come along and provide listings for both dealers and individuals. I could see Zillow/Trulia offering some sort of package deal in the future, where an individual can list their property for a flat rate or a low percentage that includes things like escrow, estimate, etc. and doesn't include the MLS. Once they develop a certain amount of business through this budget, low frills service, they pressure buyers agents to take a lower percentage to work the buyer half of the deals as well. If successful, Zillow/Trulia makes a ton of money being a budget middleman, like eBay or cars.com, and breaking the monopoly on information.
As I said before, this won't replace good real estate agents, but it will create a big change in the way properties are bought or sold, and it will happen probably sooner rather than later, because there's big money involved.
To continue the car analogy here is someone(OpenDoor) looking to become the CarMax of homes:
http://fortune.com/2015/06/02/future-house-shoppin...
I don't think they aim to completely take over the real estate market, but they do have an interesting model. I think it is smart for them to model their offers with a 5.5% transaction costs vs. building the lower price into their offer. This keeps them closer to the retail market vs. looking like big fish in the "We buy Homes" crowd.
I see them as focusing on inventory similar to CarMax - "low mileage", good condition and standard inventory. They do some minor touch ups and then sell in the retail market. They don't necessarily need to outright reject homes that don't meet their criteria, they can just offer a low enough price they can be quickly re-sold, and let the seller usually go another route.
I don't know that they will be able to stick with 100% no price negotiations, but I think they will have a lot less price flexibility than the typical seller.
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Sean Brooks
Bear, DE · Member since 2014 · 178 posts · 65 votes
11y
@Jesse T. Here's what everyone gets confused. We tend to compare industries that do not match. I get what you're saying but these website are just that, technology companies and as always they think to build a website and they can solve everything related to life.The problem is that their technology individuals and not real estate professionals. They have no clue what's involved. I know a lot about the technology side because I did that for years. Now if you matched purchasing Real Estate with the stock market I would say you have a great comparison -both are forms of investments that have the ability to appreciate or depreciate. A car only depreciates. Now when you compare purchasing a car to a home/land it does not compare. Real Estate is the biggest purchase of a person's life. This is why it's regulated by local and federal laws which none of the website follow. They do not take class about the laws. They take a fraction from the MLS like pictures, description, address, listing agents name. All the real information about the property is not shared because these are the legal documents but there added to the MLS. Zillow/Trulia information is not always accurate. Read this article -
http://www.biggerpockets.com/renewsblog/2012/12/20/searching-real-estate-trulia-zillow/
If you left asking the value of you home to a website you would never find out the true value. Real Estate is way more complex then Kelly Blue Book. Mortgage payments which Zillow uses to evaluate what a home is worth is completely wrong. That's misleading to consumers. What about ForSalebyOwner which is suppose to help people sell their homes on their own - on average a Realtor gets more money for the sale. Normally the buyer is smart and uses a lawyer to get the best deal.
Look up the history on why Realtors were created. You have honest and dishonest people that hide facts about their properties because of the amount of money involved and a Realtor can catch some of these hidden facts like water in the basement, they can bring some of these issues into question before listing a property. Most people that complain about realtors are investors that feel they don't want to pay a commission. Most investors are good at accessing properties but have no clue about the law and why Realtors are so important. The good investors know it's important to have key players like contractors, electricians, plumbers, a realtor, an attorney apart of their team. I always challenge anyone that things its easy to become a Realtor to take the classes, then take the state boards which include Federal law - pass or fail I guarantee they'll be a better more knowledgeable investor.
Oh I forgot to talk about Opendoor - does this make sense?
The startup built its own price models and algorithms, which mine public and private data to generate a fair offer price within minutes of the seller’s online submission. In return, Opendoor charges the seller a fee—about 2-4% more than they would pay a traditional real estate broker.
So now people should pay more 2-4% for a website that thinks price is all which a seller is looking for when it can be more complex then that. But the concept of them purchasing the home from the seller using a line of credit is nothing new just look around your town for the signs that read we purchase homes fast.
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James DeRoest
Investor · Century, FL · Member since 2015 · 950 posts · 603 votes
11y
Originally posted by @Jay C.:

I saw an interesting interview on CNBC today of Colony Capital CEO Tom Barrack whose firm has $34 billion under management. He spoke about the many changes in housing but touched on a real interesting point. He compared realtors fee`s to brokerage fees and said its days are numbered. He states that these fee's are the last of this type of fee left in the market place. I have to agree. I think its only a matter of time before this goes away. As a stock trader it would have been unheard of and impossible to have traded without a broker. Now you still have brokers but they are for a select few that need some hand holding or large portfolios. I can certainly see this evolving the same way with Zillow and Auction.com. I know the brokers went away kicking and screaming as all those good paying jobs went away. I would expect the same reaction here but times do change. Some may pop up oh we will need them to open the door and show the homes and all the other things a realtor does but again the same was said of brokers. I for one would like that 6% in my wallet. Some may feel different.

Here is the link to the video if you care to view it.

http://video.cnbc.com/gallery/?video=3000311073

It's not going anywhere soon. Simple reason is that there are too many vested interests in selling real estate.
The realty boards up and down the country, with their expensive mls systems, lovely offices (ours is a brand new building right next to the Gulf of Mexico), realtors, brokers, realty schools, etc, are not suddenly going to find other jobs because of a bunch of websites.
All these people work in a regulated environment, what will happen is that the websites will become regulated.
What you are seeing today with companies like Uber, zillow, and so forth pushing individual sales of sorts, is a push against regulations. The regulators will win, although it might take a bit of time.
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Jesse T.
Herndon, VA · Member since 2014 · 1k+ posts · 324 votes
11y
Originally posted by :

Oh I forgot to talk about Opendoor - does this make sense?
The startup built its own price models and algorithms, which mine public and private data to generate a fair offer price within minutes of the seller’s online submission. In return, Opendoor charges the seller a fee—about 2-4% more than they would pay a traditional real estate broker.
So now people should pay more 2-4% for a website that thinks price is all which a seller is looking for when it can be more complex then that. But the concept of them purchasing the home from the seller using a line of credit is nothing new just look around your town for the signs that read we purchase homes fast.
For sellers it mainly comes down to price and speed. Currently in general sellers have to chose between one or the other. To maximize price it takes time to make some repairs, find a good agent, list, negotiate and wait for closing. Investors buy quickly but the discount is very steep.
For many buyers it is much more complicated than that and there are a lot of opportunities for agents to add value.
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