IPayone finally made a good sale

[sdrealtor]

PC,
Do you really know that realtors were doing fine 5 years or are you full of BS? Most did not get a 100% raise and most are doing less transactions per year. 5 years ago when prices were lower, there were a lot fewer Realtors and the cost of living around here was alot lower. Get rid of half the realtors, lower the prices by 50% and the cost of living around here will still be 20 to 30% higher here than it was. 5 years ago you werent asking us to invest thousands of dollars in new technologies to save you money.

I’m not asking you to understand how brokers are not profiting. The cost of doing business has skyrocketed for every industry. Everyone and their mother has a RE license these days though most dont know what to do with them. The industry is hurting big time and it will only get worse. The big money was made by lenders not realtors during this boom.

[sdrealtor]

bgates,
There is a cost to putting all that information online and those were just a few examples. What keeps these parties from putting this information online is the expense of doing so and the liability of being wrong or not up to date. I’m sure there are lots of good books about St Andrews gold course in Scotland but if you went there to play and were spending alot of money to play there wouldnt you hire a local caddy?

[PerryChase]

I can sympathize with the fact that the real estate industry is hurting in the downturn.

Nevertheless, it’s not for the public to bail out any industry. That industry needs to sort itself out.

We live in a free society and consumers should always have the choice to select the products and services that, in their views, are the best value for their money. Let the consumers decide with their money what’s best for them.

I applaud business ventures such as ipayone, zillow, ziprealty for bringing choices and information to the real estate consumers.

[JES]

On the issue of liability:

I have heard so much about the risks associated with a home purchase, the potential for lawsuits etc., but I have yet to meet anyone who has actually been involved in a lawsuit on a home purchase. During my last sale I was curious, so I asked two realtors with 10+ years of experience each and both told me they have never been involved with a lawsuit. I realize that there are always risks, and that there are indeed lawsuits that get filed, but my feeling is that it is an overused sales tactic. Do you have any data to illustrate how frequently these lawsuits occur? Out of your last 100 transactions, or an average realtors last 100 transactions, how many end up in a lawsuit?

“5 years ago you weren’t asking us to invest thousands of dollars in new technologies to save you money.”
-The argument is not about us asking realtors to lower their fees or invest in technology, but rather how ‘mainline’ realtors will respond to the realities of the marketplace. You don’t have to invest a dime because technologies are coming online that will allow a consumer like me to bypass a realtor and do much of my research and transactions from my laptop, on my own and with the assistance of advisors and service providers who will charge a flat fee for services like research, document review, escrow, legal review etc. IMO, the argument is whether full service realtors will still have relevance in the majority of transactions that do not involve communicating with heirs to an estate or servicing rich or technologically unsavvy clients, or those who just feel they need a realtor.

I would hire that caddy, but only because he would have very specific local knowledge that I wouldn’t have, and it wouldn’t make sense to fly my own in either. In your example, that knowledge gap will never close and the cost of bringing one in will always be high. With home sales, that knowledge gap is closing fast and there are millions and millions of ‘caddys’ to choose from, but the cost of hiring one hasn’t changed.

[Peace]

this liability argument seems a bit far fetched:

QUOTE
“All expenses are his own and all liability is his. One $100,000 judgement against him that is not his fault in any way but for which he is held liable and he is wiped out.”
bySubmitted by sdrealtor

just exactly what are realtors sued for?

I’ve had a couple beefs with realtors as a buyer and a seller but never thought to sue.

[PerryChase]

Isn’t there liability insurance? My brother operates a business and he carries insurance.

[JES]

I honestly think it is a sales tactic because I have heard it from a bunch of realtors that I have encountered. I do not doubt that liability is an issue, but insurance covers the risk and unless I am proven wrong, I am sure that lawsuits against realtors for home purchases are rare.

[Anonymous]

Well, if the RE market really crashes, they won’t be so rare. When a borrower defaults on their loan, the company holding the paper will go back through all the paperwork looking for fraud. Fraud happens all the time. All you need is an loan agent and an appraiser in collusion with a borrower and you get a million dollar loan on a property worth nothing (because it was destroyed in a hurricane, earthquake, years ago). Most of the time the people in question have closed up shop and left town long ago, so you just report it to the FBI and write it off as a total loss.

There seems to have been a lot of questionable paper floating in the liquidity of the last few years. IF massive defaults happen, you will see many more law suits.

[sdappraiser]

Yeah, its a sales tactic. Are you serious? As usual, most of you have no idea what your talking about. It may be true that you have not heard of many lawsuits in the last 5 years while everything was gravy, but take a look at the past.. the past you all are predicting will repeat.

http://www.findarticles.com/p/articles/mi_m5072/is_n16_v16/ai_15418399

This is an article from 1994. Disgruntled buyers who were unhappy with their de-valuing purchases went sue crazy. You don’t think its going to happen again? Nobody takes responsibility for their actions or choices anymore.

The liability for R/E agents and appraisers is insurmountable. 1 claim against you, true or false, can result in your license being suspended while under investigation, revoked by the state or dropped by your liability carrier. Boom you are out of business. Personal assets are at risk, there is NO liability shield from incorporating or going LLC.

[sdrealtor]

Legal issues are not as rare as you believe. When they do occur they are very very expensive. This is one small piece of the puzzle. there are many, many more. Believing that you understand this industry and how it will change is very naive. I wouldnt pretend to understand the inner workings of your industry, it’s funny that you think you’ve got mine all figured out. I sure don’t!

When you make investments do you try to match the market returns or do you try to do better than the market? My clients consistently do better than the market because of my local knowledge and experience. You could buy any home. You can hire a housewife that works P/T for ZipRealty, I know several. Personally, when I make major investments, I look for the best counsel I can find. When you buy your next home will you be satisfied with any home or do you want to get the best one you can get for your money and one that will beat the market returns?

[sdrealtor]

JES and Perry

I’m just curious. How many real estate transactions and when have you been personally involved with that would make you an expert on them? I’ve been involved in about 100 the last several years (personally and professionally) and I dont know close to what you claim.

[JES]

I fully understand the risk of lawsuits and appreciate the impact they can have on agents. However, I stand by my earlier statement. On a number of occasions I have asked agents why I have to pay such a high commission and every single time the answer has been that they face a huge the risk of lawsuits. Do all agents use this as a sales tactic? No. Do many use it to try to use it to justify what most people consider sky high commission fees? Yes.

IMO, the risk of such a lawsuit is mitigated by insurance that I assume all agents and brokers maintain. And I assume that the ‘risk of a lawsuit’ is not solid enough justification for me paying 6% fees on the sale of my home. If I were to pay $15,000 in fees on a home sale, how much of that is actually going to pay for insurance or into a fund to help pay for the fees associated with a lawsuit?

I’m open to changing my mind here. Again, how many lawsuits have you been involved in during your past 100 sales? And of the fees realtors charge, what percent of that fee goes to lawsuit insurance?

[PerryChase]

I’ve been involved in many transactions, including 1031 exchanges and commercial properties. I’ve never had any problems. Maybe because I always used a Realtor/broker. 🙂

I always selected my own escrow and I find that it works much better than when the agents choose the escrow company. I also select my own title insurance.

I have nothing against Realtors. There’s a place for them. However, there should be room for discount brokers as well. For example if somone is looking to buy a relatively new house or a condo downtown, he might as well use ziprealty. I never used ziprealty before because they weren’t available; but I plan to eventually give them a try.

I just don’t think we should just say that because RE is complicated we should support a rigid, high cost system. We need REAL consumer choices.

[sdrebear]

I have to say good riddance to IPayOne. I have been defiant and refused to call the Sports Arena the “I Pay One” center. Mainly because I knew they wouldn’t last. I’m not at all against other business models in real estate and believe as a whole, they make the whole system better and stronger. However, IPayOne.com was founded by a bunch of crooks and thumbed their noses at a lot of good people along the way.

I’ve been doing online marketing for the real estate industry for several years now and can confidently say that most people don’t truly understand how the whole real estate universe is put together (I’m quite positive that I don’t). It is ridiculously complex with an unbelievable number of quite large and influential players involved. All of them have a piece of the puzzle and will fight to the death to maintain control of that piece. That makes inroads by technology very tough, expensive, and often fruitless. There is a TON of back slapping and hand shaking and laws in place to protect it all (or protect FROM it all as the title insurance guys found out last year).

Heck, most people still think the “MLS” is just one huge system that covers the whole country and includes every home on the market (I also guess they believe it’s controlled by NAR or something). That is all false.

There are hundreds of “MLS’s” all ferociously protecting their “territories”. The homes are only allowed on the MLS by the brokers “ok” and is called broker reciprocity. We are often able to access the “MLS” data for any given area due to a completely secondary system called IDX which is usually provided by a 3rd party provider (such as Superlative, LLC). Some MLS’s provide their own IDX service. This is how we get our data (which is not the same as what agents can have access to). Same data, just not as complete.

However… there is great demand on the consumer side for greater transparency in the real estate industry and they are looking to the internet for it. I don’t believe real estate agents will ever be completely eliminated from the process for the large majority of transactions, for many of the reasons sdrealtor mentioned. Each property is just too different and the transaction too large to make sight unseen (for most people). There are large liabilities involve as well. Yes, most of the time it gets covered over in the good times and gets horrible in the bad.

The internet will continue to play a huge part in real estate going forward, but there are many, many challenges facing a complete phase out of the real estate agent profession. Most of the change will come from the inside-out I believe. RE/MAX has very recently linked together all of its brokers (getting permission from every, or nearly every MLS in the country) to put together one of the very first complete MLS directories ever. If you thought Realtor.com was it… you were wrong.

[bgates]

Perry, I understand your reluctance to think we’re both on the same side of an issue, but I’m with you on this one. Sarcasm doesn’t always take online – my point was that actually people have managed to figure out how to sell books and vacation packages online, and despite sdrealtor’s efforts I don’t see how real estate is different, at least to the point that this absurd 6% figure should continue. sdrealtor, I would want a good caddie at St Andrew’s – but not for 6% of the cost of the whole trip. If you want to argue that putting information online is too expensive, you should take a look at wikipedia.

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