All Forum Posts by: Steve K.

In my (non lawyer) experience John is correct here. It’s considered an act of god if a strong wind blows down a healthy tree that nobody expected to fall, but if a dead tree has been looking like it’s about to fall for awhile and the owner has been notified of the hazard it causes, then their inaction can cause them to be negligent in addressing the hazard, and they may be found to be liable. A certified letter is good because they sign for it, acknowledging receipt, any other forms of written communication you can get to document that they were notified of the hazard probably also helps. 

However if it’s a really big hazard and they fail to take care of it quickly, I might just take care of it myself rather than taking any legal action, personally. You can say it had to be cut urgently and try to get them to reimburse you after (may not be successful but at least the danger to your tenant will be gone and you won’t be sued by the tenant). These laws are state specific so check yours. 

Right, I mean people use the companies with IDX feeds off the MLS now to schedule showings easily when they don't want to bug their agent, but then have their agent actually write the contract and handle the transaction. They don't trust the door-opener agent to handle the transaction because they aren't experienced agents, they usually just got their license recently or are part-timers without experience and closing skills. Funny how people will say agents are going the way of travel agents/the dodo because all of the listings are available online. Where do people think those online listings come from? Agents upload them.

 The equivalent tools to Priceline have been in place for the transition you describe to have occurred 20 years ago. People have been saying what you're saying for at least 20 years, probably longer also. Many people in tech with tons of smarts and funding have also tried to do what you are trying to do. 

Yet there are now more actively licensed real estate agents than ever before. Top real estate agents are still some of the highest paid sales professionals in the world. Why? My take as an insider is that it's because it's actually a much harder job than many might realize, and a consultative/ interpersonal/ hands on one that simply cannot be replaced easily with technology. 

For example at a typical showing, buyers like to have an expert with them who can help really evaluate a property, not just a door-opener as you seem to think will work. This may be what a small percentage of experienced investors or introverts want, but it is not what most buyers want and it is certainly not in the best interest of the public. The majority of buyers appreciate the expertise that a good agent provides (local market knowledge that can only be gained by being active in the market buying and selling all the time, looking at most of the new listings in person or at least online daily, a background in or at least understanding of building construction, relationships within the network of professionals in the industry doing deals, vendor referrals, legal protection through E&O insurance and keeping up with constant changes in approved contracts and required disclosures and forms, negotiating skills (the average person is terrible at negotiating directly and has no desire to, I find Americans are uniquely averse to negotiating and prefer to outsource it but I digress), etc.). No app or website or discount brokerage or whatever can replace the value that a good, experienced agent brings to the table for the average consumer home buyer. It's a lot more complicated than booking a flight, a hotel and a rental car for a vacation, and the stakes are so much higher.

You can spend many millions on building yet another discount brokerage to compete with all the others under the impression that real estate is the same as the travel industry if you want, or just take our word for it now that it's not. Honestly it sounds like you're trying to reinvent the round wheel with a square wheel here.

I think if you work in the field for a bit you'll have a better understanding. You'll need your broker's license prior to starting a brokerage anyway, so perhaps just focus on working towards that for now, and gain knowledge from that experience.  

Oh boy. First day on the job? They don’t steal in front of you, they come back later and steal. Security systems are easily outsmarted, that’s the point of the initial visit, to case the joint. Or they run a scam where they pretend to be the landlord and steal prospective tenants security deposits. Or any number of other scams. Asking for ID for a showing is a pro move. You should be doing this IMO. There’s no risk and all reward because if somebody can’t provide ID, they’re not going to be able to rent from me anyway. 

 1. It is not accurate to say that US real estate commishes are 3x higher than any other rich country. In most other developed countries it is 3-5% total with various splits to buyer/seller (similar to expensive markets here where average is 4-5% total), plus they have 15-20% VAT in these other countries that gets absorbed into the deal. Check this out for reference: https://tranio.com/articles/real_estate_agents_commissions_i... also in a lot of these countries agents are not full service and attorneys (or "solicitors", "barristers" etc. varying names in different places) handle the contracting/paperwork which agents handle here, so those folks also need to be paid. In my experience in foreign countries, there is often less consumer protections/ no central MLS or licensing/ greater risk to the principals, much more red tape, and overall higher transactions costs than here so it's important to look at the whole picture not just the commish %. It's obviously a lot more complicated to compare the different business models, making the blanket statement "Us commishes are 3x higher" extremely flawed logic. I also agree with James about the legal component, our culture is more litigious than others but there's also less risk that a "lawyer" will run off with all the money here which I have experienced in other "rich" countries.

2. There are plenty of discount brokerages in the market now, you are basically copying their business model but adding more complexity and overhead expenses to what these companies are already doing. You won't be able to compete with them on pricing and will be crushed. 

3. You have to go inside the comps to understand how they compare to subject property, which is what competent agents and appraisers do. Robots can not go in the comps and compute how they compare to subject property. In addition to failing massively leading to Billion dollar losses for ibuyers, data-driven pricing tools have seriously harmed consumers and should be outlawed in my opinion. I've personally witnessed several intelligent people suffer financial harm because they trusted this info, didn't think they needed buyer representation, and overpaid by 6 figures.   

You should try working in the industry for a little while in order to better understand it before trying to recreate it! 

 1. Data-driven pricing does not work. Look at what happened to all of the ibuyers. Look at my street right now: the "zestimates" are off by hundreds of thousands on every single property. It doesn't work. Only local agents/real estate professionals who know the area house by house and can see, touch and smell the property can price a listing well, period. Literally my neighbor's house is off by $300k right now and it should be an easy one to price. 

2. If you're paying employees an hourly wage, you need to factor in payroll taxes, benefits, and overhead. Your all-in, total cost of labor is going to be around $75/hr if you are paying $50/hr. You'd probably have to provide a company car, insurance, E&O insurance, cell phone, and laptop/ tablet also. You can't expect quality licensed professionals to be willing to work for only $50/hr., especially if they're driving their own car, paying their own insurance, cell phone, continuing education/licensing costs etc. When I bill by the hour, I charge $350 in order to cover all of my expenses and make it worth my time. You'd need to be charging closer to $450/hr. and paying $350/hr. in order to have a viable business model IMO, which probably isn't much different than charging the typical commission rates. It's going to be impossible to staff this business with competent people if you pay them less than a liveable wage.

3. Dual agency is illegal in my market, and I'm glad it is. Sellers always want to get the most for their property, buyers always want to get the best price. The agents are there to keep seller or buyer from screwing each other. Dual agency residential is the most litigated type of transaction in all of real estate. 

M&M actually mostly does single agency transactions actually, although it is probably more common for commercial agents to act as dual agents where allowed by law. But commercial is totally different because it is not someone's personal residence. If there is an undisclosed mold problem in a closet, the buyer probably won't even notice. Their wife won't complain, their kid won't get sick. In resi, somebody is going to sue and everybody involved is getting named in the suit, which is why E&O insurance doesn't like dual agency. Dual agency combined with limited services, combined with bottom-feeder employees, means you will get wiped out by lawsuits.

 Hiring and turnover/ staffing issues will make it very difficult to scale and sustain this business, and a nightmare to manage IMO. Every state has their own real estate laws of course, so legal compliance will also be challenging. Yes national brands manage it, but they typically charge 6% not 0.6% lol. You would not be covering overhead charging 0.6%. You'd be operating at a loss and the greater you scale, the more you'd lose. 

Like I said, good model if you hate making money and love being sued. Spirit Airlines is an interesting business model for you to reference considering they just filed for Chapter 11 bankruptcy. That's where you'd end up as well, so what's the point? This is a difficult business to be in. I don't see why anyone would do it if they aren't making good money. If you stay in the business a minute, you will see many discount brokerages come and go. 

 Asking for ID as a requirement to show a rental is not a fair housing violation, and there are plenty of reasons why a landlord should care who is looking at their property, theft and their own personal safety being the first 2 that spring to mind, followed closely by not wanting to waster their time. If someone isn’t willing to provide ID, they are not a serious applicant and possibly a scammer, so it’s a good screening tool to weed out the tire-kickers and sketch balls. My PM asks for ID as step #1 for these reasons.