The end of the Agent?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesOriginally posted by @Marc Winter:
If all buyers and sellers were fluent in the practice of real estate, perhaps agents and brokers will end up like buggy whip manufacturers. But most buyers and sellers are not experienced with the process and market values as a full-time professional and experienced agent. Most real estate clients and customers need help to close a property. Let's revisit this topic in the middle of the next market downturn to see who is left standing when all the SHTF.
Analytics are great, but real estate has always been and still remains a local business, margins and commission rates notwithstanding.
My wife is a top producing resi agent with many first time home buyers.. I listen to her on the phone sometimes and the amount of handholding that goes on.. not just from technical aspects IE the general public has very little working knowledge how real estate works.. but just the emotional hand holding.. IE dealing with inspections.. you leave it to people with no intermediary and transactions volume will plummet..
57 Replies
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
This isnt any different than what Zillow does...generates leads and sells them to agents. Zillow, and Amazon in this model need agents/brokerages to pay them money. So no, this is not likely the end of agents.
District Invest Group545 Reviews - 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Russell Brazil:
This isnt any different than what Zillow does...generates leads and sells them to agents. Zillow, and Amazon in this model need agents/brokerages to pay them money. So no, this is not likely the end of agents.
also Amazon is just giving small credits if you use the brokerages they own.. so they depend on agents not the other way around.
kind of like Costco deals..
- 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
Originally posted by @Russell Brazil:
This isnt any different than what Zillow does...generates leads and sells them to agents. Zillow, and Amazon in this model need agents/brokerages to pay them money. So no, this is not likely the end of agents.
I think the margins will become thinner for agents (minus luxury) and it will eventually be unrecognizable as we know it today. Redfin and Zillow are already trying to replace the listing agent and now Amazon is capturing the buyer (likely before buyer even knows they want to move!). Amazon is where America shops and they now incentivize every single customer to BEGIN their RE transaction in Amazon's ecosystem (people love free junk). I think its also possible that these behemoths absorb the independent brokers as well.
- 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
Originally posted by @Jay Hinrichs:
Originally posted by @Russell Brazil:
This isnt any different than what Zillow does...generates leads and sells them to agents. Zillow, and Amazon in this model need agents/brokerages to pay them money. So no, this is not likely the end of agents.
also Amazon is just giving small credits if you use the brokerages they own.. so they depend on agents not the other way around.
kind of like Costco deals..
Its not about credits...its about big data and analytics. Amazon will know if you are moving before you do because you ordered a roll of packing tape. It's a play to capture the buyer and take on Zillow and Redfin.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
Originally posted by @Greg K.:
Originally posted by @Russell Brazil:
This isnt any different than what Zillow does...generates leads and sells them to agents. Zillow, and Amazon in this model need agents/brokerages to pay them money. So no, this is not likely the end of agents.
I think the margins will become thinner for agents (minus luxury) and it will eventually be unrecognizable as we know it today. Redfin and Zillow are already trying to replace the listing agent and now Amazon is capturing the buyer (likely before buyer even knows they want to move!). Amazon is where America shops and they now incentivize every single customer to BEGIN their RE transaction in Amazon's ecosystem (people love free junk). I think its also possible that these behemoths absorb the independent brokers as well.
The discount brokerage model of Redfin has been around for as long as our current system has existed. And Redfin loses $3,000 per transaction. Zillow is not trying to replace anyone. 100% of their revenue comes from agents. People always say that about Zillow, but they have a complete lack of understanding of Zillows business model. There are tons of threata to agents businesses, but Zillow and Amazon are not them.
Margins thin and expand as the number of licensees in the market increases and decreases, and that number typically follows the economy. It has for nearly 80 years been the only measureable affect on revenues. So Im looking forward to the next recession when revenue will increase.
District Invest Group545 Reviews - 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
@Russell Brazil
Most businesses lose money before they are profitable, especially tech companies; Netflix, Facebook etc. Also, we’re it not for Redfin disruption, do you think brokers would offer 5% listing fee and 4% if you buy and sell? Not a chance. RE industry is a dinosaur that has benefited tremendously from hoarding and keeping information vague and secret from consumers. Times are changing and if you want to win, bet on the consumer. All the power is transitioning to them and democratization of industries is upon us.
- Real Estate Broker · Northeast PA · Member since 2017 · 2k+ posts · 2k+ votes7y
If all buyers and sellers were fluent in the practice of real estate, perhaps agents and brokers will end up like buggy whip manufacturers. But most buyers and sellers are not experienced with the process and market values as a full-time professional and experienced agent. Most real estate clients and customers need help to close a property. Let's revisit this topic in the middle of the next market downturn to see who is left standing when all the SHTF.
Analytics are great, but real estate has always been and still remains a local business, margins and commission rates notwithstanding.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Greg K.:
@Russell Brazil
Most businesses lose money before they are profitable, especially tech companies; Netflix, Facebook etc. Also, we’re it not for Redfin disruption, do you think brokers would offer 5% listing fee and 4% if you buy and sell? Not a chance. RE industry is a dinosaur that has benefited tremendously from hoarding and keeping information vague and secret from consumers. Times are changing and if you want to win, bet on the consumer. All the power is transitioning to them and democratization of industries is upon us.
your probably too young to know of this firm.. HELP YOU SELL this came out in the late 70s.. big discount broker.. Commission are and have always been negotiable.. nothing is set in stone.. the 6 or 7 % became customary and some shops wont vary.. others will especially independent brokers.. Vegas is a perfect example there are big billboards along the freeway with all sorts of discount brokers. IE 1k list fee etc. Amazon is giving credits to those who use the brokers that work for Amazon subsidiary.. Amazon is not trying to lower revenues by circumventing their own agents.. they are trying to drive business to them with perks..
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Marc Winter:
If all buyers and sellers were fluent in the practice of real estate, perhaps agents and brokers will end up like buggy whip manufacturers. But most buyers and sellers are not experienced with the process and market values as a full-time professional and experienced agent. Most real estate clients and customers need help to close a property. Let's revisit this topic in the middle of the next market downturn to see who is left standing when all the SHTF.
Analytics are great, but real estate has always been and still remains a local business, margins and commission rates notwithstanding.
My wife is a top producing resi agent with many first time home buyers.. I listen to her on the phone sometimes and the amount of handholding that goes on.. not just from technical aspects IE the general public has very little working knowledge how real estate works.. but just the emotional hand holding.. IE dealing with inspections.. you leave it to people with no intermediary and transactions volume will plummet..
- 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
Originally posted by @Marc Winter:
If all buyers and sellers were fluent in the practice of real estate, perhaps agents and brokers will end up like buggy whip manufacturers. But most buyers and sellers are not experienced with the process and market values as a full-time professional and experienced agent. Most real estate clients and customers need help to close a property. Let's revisit this topic in the middle of the next market downturn to see who is left standing when all the SHTF.
Analytics are great, but real estate has always been and still remains a local business, margins and commission rates notwithstanding.
I agree. Most people do need to be guided, but more and more, consumers are doing this by being empowered by data and a perceived unbiased entity or third party. Look at Carvana, they are totally disrupting the Auto Stealership model by empowering consumers with ease and transparency. I think certain clients (luxury especially) will always want and need a concierge service when buying or selling. But, for the average Joe, I'm not so sure a buyer's agent will be necessary. Often times, you can learn more as a consumer about a property via Zillow than the buyer's agent knows or cares to devote the time. It also appears that Zillow could very soon employ agents to list/show properties and almost act as an unbiased third party, ensuring the interests and transparency of both sides and thereby eliminating buyer's agents.
- 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
Originally posted by @Jay Hinrichs:
Originally posted by @Greg K.:
@Russell Brazil
Most businesses lose money before they are profitable, especially tech companies; Netflix, Facebook etc. Also, we’re it not for Redfin disruption, do you think brokers would offer 5% listing fee and 4% if you buy and sell? Not a chance. RE industry is a dinosaur that has benefited tremendously from hoarding and keeping information vague and secret from consumers. Times are changing and if you want to win, bet on the consumer. All the power is transitioning to them and democratization of industries is upon us.
your probably too young to know of this firm.. HELP YOU SELL this came out in the late 70s.. big discount broker.. Commission are and have always been negotiable.. nothing is set in stone.. the 6 or 7 % became customary and some shops wont vary.. others will especially independent brokers.. Vegas is a perfect example there are big billboards along the freeway with all sorts of discount brokers. IE 1k list fee etc. Amazon is giving credits to those who use the brokers that work for Amazon subsidiary.. Amazon is not trying to lower revenues by circumventing their own agents.. they are trying to drive business to them with perks..
Good points! And yes, that was before my time :)
I find all this fascinating, as I've been considering diving into the RE client-side business as I'm already investing. But, I currently have a lucrative career in the IT space that I'm not ready to give up without first doing my homework. Being in the tech space, and trying to read the writing on the wall, I firmly believe there are BIG changes coming to the RE business in the next five years.
I get that there may have always been discounts offered and negotiation, but the real issue is the systemic collusion that is often what aims to be disrupted. This MLS class action lawsuit is a perfect example of some of the alleged shady practices that are unwritten laws of the old school RE biz.
Again, look at Carvana, the consumer is no longer at the mercy of a Stealership that will ROB THEM BLIND. Sky-high APR, dealer/doc/undercoating/pinstriping/paint/seat/tire/wheel protection etc. etc. Carvana is totally transparent with what you get and what you pay; a true out the door price. Much of the same junk applies to buying/selling a home; title search/insurance and all those processing fees for one example. All Zillow needs to do is lobby the powers that be to get a title co. license and start using block-chain to disrupt that whole space too; bye-bye thousands of dollars in archaic fees.
Spencer Rascoff, Zillow founder and former CEO said something like "I want to make selling your house a three click process". So, I think the take-away is these companies definitely have loftier ambitions than some folks believe.
- Real Estate Broker · Bay Area · Member since 2018 · 1k+ posts · 3k+ votes7y
I think what this does really separates the elite agents from the mediocre crappy ones even more. The ones that suck and can't add value to their clients will get pinched bc these discount brokers will add the same value with perks. The top agents will keep the high commission bc of what they provide. Can't replace experience, speed, and flat out getting it done.
There will always be a market for buyers thinking the agent doesn't do much doesn't add value and goes with these discount brokers. Those are not the clients of the elite agents and they don't care for them. I think with agents there is a perception that they don't do much and don't earn their commission. Which I understand. Would you go with a discount lawyer? Discount accountant? Discount surgeon? I know I want the best in whatever field I need help at. Like the old saying goes you get what you pay for.
- 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
Originally posted by @Frank Wong:
I think what this does really separates the elite agents from the mediocre crappy ones even more. The ones that suck and can't add value to their clients will get pinched bc these discount brokers will add the same value with perks. The top agents will keep the high commission bc of what they provide. Can't replace experience, speed, and flat out getting it done.
There will always be a market for buyers thinking the agent doesn't do much doesn't add value and goes with these discount brokers. Those are not the clients of the elite agents and they don't care for them. I think with agents there is a perception that they don't do much and don't earn their commission. Which I understand. Would you go with a discount lawyer? Discount accountant? Discount surgeon? I know I want the best in whatever field I need help at. Like the old saying goes you get what you pay for.
I think you hit it on the head. All these changes may shrink the broker/agent market and force agents to either become elite or go fishing. I for one didn't want a discount broker selling my last house so I sought and found a top agent.
- Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes7y
Comparing the services of the 90% of agents that only had to pass an easy test and dont even own their own home to the expert service a quality accountant, lawyer or surgeon provides? Ok then.
I will continue to aid and support all the DIY-esque/FSBOs I can. Most are clueless and in la la land with pricing but I respect their choice to try to buck the collusive system agency is for the most part. Another tiny hill Steve tries to fight on in the mountain range of titan real estate.
I'm just glad there are disruptors out there worth discussing. Having the same back slapping revenue model as existed back when the MLS was an actual book in a brokers office? Somethings gotta give.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Greg K.:
Originally posted by @Frank Wong:
I think what this does really separates the elite agents from the mediocre crappy ones even more. The ones that suck and can't add value to their clients will get pinched bc these discount brokers will add the same value with perks. The top agents will keep the high commission bc of what they provide. Can't replace experience, speed, and flat out getting it done.
There will always be a market for buyers thinking the agent doesn't do much doesn't add value and goes with these discount brokers. Those are not the clients of the elite agents and they don't care for them. I think with agents there is a perception that they don't do much and don't earn their commission. Which I understand. Would you go with a discount lawyer? Discount accountant? Discount surgeon? I know I want the best in whatever field I need help at. Like the old saying goes you get what you pay for.
I think you hit it on the head. All these changes may shrink the broker/agent market and force agents to either become elite or go fishing. I for one didn't want a discount broker selling my last house so I sought and found a top agent.
Keep in mind on the West coast at least the industry is dominated by female agents.. and many do it part time and their hubby is still the main bread winner.. so numbers may not go down like you think.. It can if its a person Male or Female sole income
- Las Vegas, NV · Member since 2018 · 403 posts · 474 votes7y
LOL. Commissions and fees have always always always been negotiable and there have always been discount brokers. There is no collusion - that’s a ridiculous statement by people who just don’t understand all the work agents do to get a transaction done correctly and think it’s nothing more than filling out a few forms and calling it a day. Some folks want to demonize the industry because they don’t like paying for professional service. Much like the folks who try to get their medical advice from Google U or Jenny McCarthy instead of paying the actual trained professionals. Having access to “free” real estate data doesn’t equate to understanding how real estate actually works.
Furthermore, people are inundated with “data” and don’t know what much of it means. The amount of hand holding an agent does with most buyers and sellers is insane, in part BECAUSE of all that “data” flying around. The constant flood of “data” is more like confusion and not empowerment. This is why ibuyers are able to pay 20% less than market value for homes while making it look like they’re paying at or possibly above market value - data confusion and “convenience”.
Institutional discount buyers have always been around. Ibuyers aren’t putting professional real estate agents out of business. Ibuyers are using licensed agents themselves.
The biggest "disruptor" in the real estate industry is NAR, bringing in way too many agents to increase dues revenue. Years ago, almost all agents were full time, dedicated agents. Now every "investor" thinks it's a good idea to get licensed to "save money" and the industry is full of part timers paying NAR dues. The average agent does 2-3 transactions a year - because 85% of agents are part timers or "investors" with a license. And don't get me started on those idiotic ads where they say realtor .com is the official website of the NAR, when NAR sold that site years ago. 🙄🙄
When the next RE downturn happens, lots of those part timers will go away because they won't be able to keep paying the fees etc. The full timers who actually work as agents will still be around, and then when the downtown becomes another upswing, taxi drivers, IT guys, SAHMs, nightclub hosts, strippers, and "investors" will get licensed and pay NAR again. Just like always.
- 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
@Casey Powers
Great points, especially about NAR. I didn't know that!
As far as data, consumer won’t have to know everything or even make a decision on their own. The trend has simply been for these tech companies to create an easy button for everything. Not sure what that looks like, or if it means Zillow actually employing their own agents to quarterback the transaction. Just interesting to think about.
I 100% agree that agents should be compensated well for guiding clients and absorbing a great deal of stress during the transactions. But you're saying there hasn't been any systematic price fixing as alleged in the MLS class action; I'm not sure about that. I also don't think you can make the blanket statement of putting onus on consumers to negotiate fees from the broker to the title company etc. That's like saying consumers should know all the tricks and ways an Auto Stealership intends to extort maximum profit from the ill informed. These are the reasons industries become disrupted; companies like Carvana, Amazon, Redfin, and Zillow seek to simplify the user experience, capture the transaction, and consumers vote with their feet (or in this case, fingers).
- Real Estate Agent · Philadelphia, PA · Member since 2018 · 416 posts · 396 votes7y
I think EVENTUALLY the job of an agent (as we know it) will be obsolete. I don’t think Zillow or Redfin will be the downfall though. My thoughts are that automation is what will kill agency. Not discount brokerages.
- Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes7y
@Greg K. are you seriously using Carvana as an example? I am looking to trade in my car and they offered me $1000 less than I could get on the spot from a local dealer. I am not even talking trade in from the dealer, literally they would write me the check regardless of if I buy from them or not. Carvana is a rip off for sales prices too. You are skipping the dealership, but not saving money. So I guess the perception is that it is a good deal, but it isn't in reality.
That is no different than what is going on with Zillow. They will give you near nothing for your property. So you avoid the 6% commission, but they undervalue it by 20% or more. Maybe some consumers are dumb enough to fall for it. Maybe younger people who would rather use an app than talk to another human, haha.
The reason realtors are needed is because buyers and sellers are emotional and irresponsible. Here is an example. I purchased a house last month. Looked good when we made the offer, but lots of toys laying all over the place. We went for the walk through after the house was empty and the carpet is stained all over the place. Every room and over 20 stains, red and brown and yellow! They covered up the stains with toys. Our agent ended up negotiating with theirs. I am pretty sure had I talked directly to the seller, that the deal would have just been cancelled. How do I have a rational discussion with someone who believes 20+ red and brown stains on carpet is acceptable? I have lived in properties 25 years and never even had one stain, let alone that many. Their agent set them straight and mine kept it logical. He just kept saying, it is only about money, nothing to be mad about. Let's give them the number and they take it or leave it.
Here is the bottom line. An app just wont cut it. You need humans in the middle and eyes on the property. Who is going to want buyers walking through their house un-escorted? What buyer wants the seller there following them around? A house purchase is way more money than a $10 a month Netflix subscription. It is way more than a $22 Uber ride. I am not saying there won't be changes in fee structures as technology automates more. I am just saying the idea that the agent will be replaced by an algorithm is not possible for a transaction this emotional and high dollar value.
As far as the MLS lawsuit, it is a money grab simple as that.
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes7y
Originally posted by @Joe Splitrock:
The reason realtors are needed is because buyers and sellers are emotional and irresponsible.
I am pretty sure had I talked directly to the seller, that the deal would have just been cancelled.
Joe that right there is literally the only reason agents exist. And our current culture of information overload, and consumers wanting absolutely what they want, when they want.....is making transactions much more difficult, and reinforcing the current system. Buyers and sellers simply can not act rationally or speak to one another rationally. Every month that goes buy, the general public becomes less and less rational about the home buying/selling process. The cultural shifts taking place are moving the industry in the opposite direction as has been predicted, and it makes sense why when you think about it. Small bits of information give people the illusion they are experts, and then they dig into the position that they hold. Its why 90% of attempted FSBOs dont end up consummating the deal. I constantly see some of the smartest, most rational people who would blow up multimillion dollar deals over $200 problems if they didnt have someone to talk them down.
District Invest Group545 Reviews - Las Vegas, NV · Member since 2018 · 403 posts · 474 votes7y
No idea why you’re conflating title fees with real estate agents.
There is no “easy button” for a real estate transaction. You cannot automate that. Trying to do so, or even making it sound like that’s possible, is a giant disservice to consumers. It takes a human to help with the negotiations, read an offer and explain the different ways it can be good or bad for the seller or buyer. There is much more to an offer than the price. The content of the offer can make a big difference to the bottom line. The content can also make a big difference in whether it’s even worthwhile for a seller, even at what appears to be a higher price.
The fact that agency commissions and fees are negotiable has never been a secret. The MLS class action lawsuit is pure bs. Again, some folks like to demonize the industry - that doesn't mean the industry is doing anything wrong. Even a judgment for plaintiff doesn't actually mean the industry was doing anything wrong. Judges are fallible and make stupid calls with regularity, as evidenced by the idiotic judgment that corporations are people for political purposes. Lol
I was at an event just yesterday about ibuyers and an Open Door agent was a featured speaker. I wrote a detailed post about what was said at that event on the Open Door / Offerpad thread. It was eye opening and confirmed that ibuyers are definitely paying way below market value for homes while making it look like, on paper, that they are paying near or possibly above market value. When people sell to them without even consulting an agent, they are making a decision without being informed. The ibuyers are taking advantage of the fact that people don’t understand how real estate works, just like mortgage lenders did several years ago, and we all know how that turned out. It seems like an ok deal on the surface - just take a bit less money for the convenience of selling to a cash buyer and no showings etc.
What people don’t see, is they are using a nice offer price to keep comp values up, then using high service fees (6-12% quoted from Open Door’s agent) and high “repair credits” charged to seller to get their actual price well below market value. It’s brilliant, really.
The average consumer does not seem to understand that even with paying a realtor’s “customary” fee, they can still pocket far more than they do by selling to an ibuyer. It just costs them a bit more time.
Agents aren’t just “concierges”. An experienced agent knows their market and knows how to negotiate a deal, and how to best protect their client from potential predators on the other side of the transaction, costly mistakes, lawsuits etc. This is valuable, whether consumers realize it or not. The problem is consumers don’t realize it, and everyone wants to think there should be an easy button.
Sorry - any so-called easy button in real estate will be expensive.
- 7yGreg K.Rental Property Investor · Tampa, FL · Member since 2015 · 38 posts · 31 votesOP
Originally posted by @Joe Splitrock:
@Greg K. are you seriously using Carvana as an example? I am looking to trade in my car and they offered me $1000 less than I could get on the spot from a local dealer. I am not even talking trade in from the dealer, literally they would write me the check regardless of if I buy from them or not. Carvana is a rip off for sales prices too. You are skipping the dealership, but not saving money. So I guess the perception is that it is a good deal, but it isn't in reality.
That is no different than what is going on with Zillow. They will give you near nothing for your property. So you avoid the 6% commission, but they undervalue it by 20% or more. Maybe some consumers are dumb enough to fall for it. Maybe younger people who would rather use an app than talk to another human, haha.
The reason realtors are needed is because buyers and sellers are emotional and irresponsible. Here is an example. I purchased a house last month. Looked good when we made the offer, but lots of toys laying all over the place. We went for the walk through after the house was empty and the carpet is stained all over the place. Every room and over 20 stains, red and brown and yellow! They covered up the stains with toys. Our agent ended up negotiating with theirs. I am pretty sure had I talked directly to the seller, that the deal would have just been cancelled. How do I have a rational discussion with someone who believes 20+ red and brown stains on carpet is acceptable? I have lived in properties 25 years and never even had one stain, let alone that many. Their agent set them straight and mine kept it logical. He just kept saying, it is only about money, nothing to be mad about. Let's give them the number and they take it or leave it.
Here is the bottom line. An app just wont cut it. You need humans in the middle and eyes on the property. Who is going to want buyers walking through their house un-escorted? What buyer wants the seller there following them around? A house purchase is way more money than a $10 a month Netflix subscription. It is way more than a $22 Uber ride. I am not saying there won't be changes in fee structures as technology automates more. I am just saying the idea that the agent will be replaced by an algorithm is not possible for a transaction this emotional and high dollar value.
As far as the MLS lawsuit, it is a money grab simple as that.
I have come to the same conclusion about Carvana, but just because you and I are savvy consumers that don't mind negotiating with buyers/sellers/stealerships, that's not most people (hence Carmax's popularity!). They are growing sales 100%+ year over year; just look at these stats:
Full Year 2018
Retail Units Sold of 94,108, an increase of 113% YoY
Revenue of $1.96 Billion, an increase of 128% YoY
Total Gross Profit (incl. gift) of $196.7 Million, an increase of 189% YoY
Total gross profit per unit ex-Gift was $2,133, an increase of $594
I'm just pointing out a trend here. The same applies to Opendoor and Zillow; they are both expanding quite rapidly, especially Opendoor:"The closest is startup Opendoor, which in March said it was buying and selling close to 3,000 homes per month. Founded in 2013, Opendoor is in 23 markets and valued at $3.8 billion."
I think you guys make great points as far as the need for unemotional experts to guide people thru the journey. That probably isn't going anywhere anytime soon. I think a better title of this post would include "...as we know it", as there is change afoot.
- Las Vegas, NV · Member since 2018 · 403 posts · 474 votes7y
Carvana vs “stealerships”. LOL. I just bought a car last month and shopped Carvana, local dealers, and out of state dealers. Carvana’s price was consistently higher than the dealer prices. I ended up getting the exact car I wanted from a dealer in CA and delivered right to my door, for roughly 20% less than I would’ve paid for the SAME car with Carvana. And Carvana offered less than $500 for my 2006 Dodge Grand Caravan with only 66k miles - a car I can sell locally for $4k+ all day long. Only difference is, to enjoy these financial benefits, I have to, ***gasp*** deal with actual humans.
Yep - I equate selling your house to an ibuyer right alongside buying a car from Carvana. It may be convenient, but that convenience comes at a significant price.
There is no doubt that the trend of using apps for everything is not going away. What this stuff proves is that millennials are willing to pay more for everything in order to avoid talking to humans. To this old GenXer who grew up both without and with all this, that doesn’t seem like a good thing. It means they’ll pay more and more to large companies who will pay less and less to the humans who do the work.
- Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes7y
Good agents have been a massive part of my real estate success. I can't relate to this sentiment. Real estate sales is a high stakes, highly emotional, belly-to-belly business.
- Shawnee Mission, KS · Member since 2016 · 716 posts · 313 votes7y
Originally posted by @Joe Splitrock:
@Greg K. are you seriously using Carvana as an example? I am looking to trade in my car and they offered me $1000 less than I could get on the spot from a local dealer. I am not even talking trade in from the dealer, literally they would write me the check regardless of if I buy from them or not. Carvana is a rip off for sales prices too. You are skipping the dealership, but not saving money. So I guess the perception is that it is a good deal, but it isn't in reality.
That is no different than what is going on with Zillow. They will give you near nothing for your property. So you avoid the 6% commission, but they undervalue it by 20% or more. Maybe some consumers are dumb enough to fall for it. Maybe younger people who would rather use an app than talk to another human, haha.
The reason realtors are needed is because buyers and sellers are emotional and irresponsible. Here is an example. I purchased a house last month. Looked good when we made the offer, but lots of toys laying all over the place. We went for the walk through after the house was empty and the carpet is stained all over the place. Every room and over 20 stains, red and brown and yellow! They covered up the stains with toys. Our agent ended up negotiating with theirs. I am pretty sure had I talked directly to the seller, that the deal would have just been cancelled. How do I have a rational discussion with someone who believes 20+ red and brown stains on carpet is acceptable? I have lived in properties 25 years and never even had one stain, let alone that many. Their agent set them straight and mine kept it logical. He just kept saying, it is only about money, nothing to be mad about. Let's give them the number and they take it or leave it.
Here is the bottom line. An app just wont cut it. You need humans in the middle and eyes on the property. Who is going to want buyers walking through their house un-escorted? What buyer wants the seller there following them around? A house purchase is way more money than a $10 a month Netflix subscription. It is way more than a $22 Uber ride. I am not saying there won't be changes in fee structures as technology automates more. I am just saying the idea that the agent will be replaced by an algorithm is not possible for a transaction this emotional and high dollar value.
As far as the MLS lawsuit, it is a money grab simple as that.
They play a shell game with trades they will mark up the sale price , might give you little more then wholesale for trade in .Main thing if they car is in good shape you will get hosed on trade in . The topic of agents is a topic that will keep in the lime light they will be lees less need for them .
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