Zillow ‘humbled’ by real estate industry

[FormerOwner]

Looking back, our realtor WAS incompetent (although the person was a great talker in the beginning). I actually found a number of mistakes/omissions in various forms the realtor generated and had to tell the REALTOR to fix them. It was pretty bad. I wasn’t even sure that the buyer was seeing all of the stuff I was signing – I had to insist on a signed copy (by buyer and seller) of everything. I don’t think I would have ever gotten these copies if I hadn’t asked. Also, some of the info the broker and realtor told me, I later found out, was factually incorrect. Fortunately, I didn’t believe them and sought other advice. This person actually caused the whole process to be dragged out and caused my wife and I a lot of undue stress. We could have easily done a better job on our own. However, I see your point that a realtor who really knew what they were doing would add value, no doubt.

[PerryChase]

I’d love to see ZipRealty and Zillow merge. All the information could be integrated into a single report. For example if a buyer knew that a seller was underwater and the house’s been sitting for 180 days, he could make a better educated guess on what to offer. Also, if a person could see all the listings as well as all the sales in a neighborhood, that person could better determine the value of a home.

I understand that this information is available now, but an inexperience lay person may not know how to access it all. A single source of info would be great for the consumer.

[sdrealtor]

That single source of information already exists.

BTW, I dont think its brain surgery, just wanted to see if I could get anyone to jump on that one 😉

[an]

I never said it was easy, I’m just saying it’s doable. Just like developing such a system would not be easy technologically speaking, but it’s doable. What if a real estate company such as prudential had a deal w/ Yahoo & Zillow, to create a site that has all the info ZipRealty and Zillow have, as well as other more in depth information about the area you’re interested in at a click of a mouse. People will be able to do their own research in the area they want in the middle of the nite or when ever they feel comfortable. Knowing all the data a real estate agent have is right in front of you with out anyone there to bother you. Then when you’re ready to buy/sell, you can contact that prudential agent, and they’ll just handle all the process for a flat fee. Like many said, an a la cart type of service. So you’re not skipping any step that you’re not comfortable doing yourself.

Most great sites and products were not easy to create or maintain. But it’s definitely doable if you really want to. So yes, sdrealtor, I agree that there are many things that make this not an easy task to do. However, it’s inevitable that the internet revolution will take over the real estate industry just like other. You can either embrace it or die trying to fight it like the RIAA.

[sdrealtor]

AN
I have no reason to fight it. I do what I do because I enjoy it and it allows me to help people with something very important in their lives. I have plenty of other skills and could do alot of other things if I wanted to.

What you just described is very similar to whats already available just a little more robust data. I don’t believe its on the scale of the the disintermediation that you previously referenced. The problem with what you propose is money. There isn’t enough of it in RE transaction fees to pay everyone you are adding to the mix especially when you are proposing to dramatically reduce the size of the pie. I’ve said it before and i’ll say it again, the general public’s perception of the profitability of RE is brokerage is DRAMATICALLY higher than it really is.

[SD Realtor]

The post was to juicy… don’t mean to piss other realtors off but….

I don’t want to generalize here but I have found my dealings with other Realtors fascinating. I have only been licensed a little over two years and the business I own is run by me as a second profession. It does okay and if I put more time into it I could probably live on it. I am sure that most brokers/agents would call me a discount brokerage because of the listing fee I charge which is WAY below the industry norm. The same holds true for buyers sides, my buyers enjoy large rebates from me.

I come from an engineering background and dealing with engineers all of my adult life has left me with expectations that peers in my professions are well educated. This is not the case in real estate. Frequently I am very frustrated with the lack of professionalism with other realtors in my field.

I feel that the main problem that people have with realtors is the justification of thier salaries. Now the bottom line here is that the vast majority of realtors make nowhere near what most people think they make. Your listing agent doesn’t get 3% of your homesale. He gets a fraction of that and there are many other fingers in that pie. However, we have all agreed that the cost of housing has gone up at least 100% in a short timeframe. So that implies that realtors are taking home 100% more then they used to.

Are they working harder now then they did a few years ago? If they are does it justify that salary increase?

I think not.

In engineering there have been YEARs where I averaged 50-60 hours a week. I feel that if you break down the hourly wage for a Realtor you would see that it is quite lucrative.

Hey I entered the biz because of many reasons, one of them being if I spent half the time in real estate as I do on my engineering projects I could make as much if not more money. Which so far has held true.

sdrealtor is correct in the statement that the profitability perception is DRAMATICALLY higher then it really is. I agree. HOWEVER, I contend that a well educated person can offer consumers VERY EFFECTIVE service in the real estate industry at a much lower commission IF that person can keep the overhead down. Understanding the rules, providing customer service, and being able to interpret the real estate market are part of the essentials here.

I owned a Help U Sell as my first foray into the market. It was successful but as a second business it was TO BUSY for me. So I scaled down and run my own little business and do just fine. My clients save a ton on commissions and are very thankful for my services and professionalism.

I have gone to MANY a listing appointment where the client asks if they would save money doing a FSBO. The answer is ABSOLUTELY YES! However do it right! Get an attorney who is familiar with California RE law and make sure you follow the process to the letter of the law. You will find that this will cost you approximately 1% of the sales price. Get an ad in the paper, call Jeff Karchin to put you on the MLS for 500 bucks and there you go.

Again, I agree with some of sdrealtors points, especially about if you were doing a FSBO and he bought the home off of you, that he could “sue the pants off of you”. Well yeah he probably could. However, again, I entered the industry for this because my analysis showed that there was alot of room for competition. Rather then fight against the traditionalists and do a Help U Sell or I Pay 1, I choose to lay low and fly under the radar…

BTW my sister in law works for Coldwell Banker. She like many other realtors holds Help U Sells and I Pay ones in contempt of the profession. There is this …bitterness that I hear from other realtors about these companies. I have no such angst. I think that if they are successful and provide quality of service then so be it. I have dealt with smart Realtors and idiot Realtors from full service and discount brokerages.

Again, I just have such a distaste with these sorts of terms. Where is the HARD DATA that shows open houses and brokers tours provide x percent of sales. They may, they may not. Where is the HARD DATA that shows an advertisement in the San Diego Union Homes section provides x percent of sales? When sales agents make the pitches at listing appointments that these two tools effectively justify the commission they should receive as opposed to a “discount” commission, all I ask is to show me the hard data.

I would advise that all sellers do the same.

I am not trying to disrespect Realtors. Really I am not. Being in the industry I ABSOLUTELY know the overhead costs and such. I also know the misconceptions the public has.

Still… I think that there is room to run a business in this industry, charge less in commissions and still be successful.

[bob007]

What service did Zillow offer ? Estimating the worth of a house is always tricky. You can list prices of similar homes that have been sold in the neighborhood. Taking county records of sales and putting it with Google Maps is not difficult. I do not know how much it costs to update the records. Google, Yahoo and Microsoft have the financial heft to pursue such a venture.

From a layman’s perspective Brain surgery is hard for an average or smart person (who is not a brain surgeon) because it requires practice and a lot is at stake. Most brain surgeons are above average individuals. From a doctor’s perspective it is harder to diagnose illnesses than it is to perform surgery.

Putting all the houses on sale on a single database and making it query-able on the basis of neighborhood, zip code, asking range and other factors is feasible from the technical standpoint. Look no further than EBAY.

Let us break down real estate transactions. I find the whole deal with real estate loans like points, closing costs stupid. I hope the govt puts a ban on such features. When was the last time you had closing costs on a car loan ? If you qualify for a loan the bank ought to loan you the money. The bank can charge a higher interest rate to offset all the silly fees.

Houses on the beach in Southern California sell because of location. House in middle of Kansas is hard to move because of location. Real estate agents have nothing to do with value. I frankly think real estate agents are a product of over-ligitious society and over-reliance on our homes as financial assets. When Americans have to duke it out China, India and other Asian powers for their livelihoods look for real estate agents to get slaughtered as a profession.

What is the level of skill required for an average real estate agent ? Basic Mathematics, good communication skills, good business skills. A high school graduate can take the realty license exams and pass it. The hours are primarily 8-5. Any reason why realtors have to be highly compensated ??

Hope I am not offending any real estate agent.

[PerryChase]

I agree with you bob007. Let’s get rid of all the fees. The lender should pay all the fees and the consumer just sees 1 number and 1 interest rate.

Likewise doctor should tell patients in advance how much the charge will be. I hate getting a bill after the fact (even though insurance pays for most of it).

[SD Realtor]

bob007 no offense taken at all!

Essentially I do agree with you. I would say however that many industries in our country exist as a product of our society.

If our tax roll was more simplistic I could do my own taxes and would not have to hire a CPA.

I also agree with your statement about the level of skill required for a real estate agent. Sometimes I feel like a broken record because I am consistently complaining about peer in my industry.

However even with all that said, and even though my brokerage is a second business, I do feel I provide a useful service to my clients. I also recieve gracious compliments on my service which does give me faith that what I do is helpful.

So lets dive into some of yoru suggestions. Getting a database together to provide all of the sold information and making it public would be useful. However would it include market time? Would it include cancelled, expired, and withdrawn listings as well? As a Realtor those are other factors that are important to me. When I sit down with clients I think it is important for them to know that sort of stuff. For instance, today a guy that works for a mortgage broker called me to list his house. He showed me a 6 month sales record he obtained from a title company. He wanted to use these comps to price his home. I agreed it was useful but I showed him that for the same 6 month period the sum of expired, cancelled, and withdrawns exceeded the number of sales by almost twice as much. I also showed him that the pending to active ratio was 2 to 9!

Now interpretation of these numbers is not rocket science either. It is very basic. However, it should be pointed out that just posting the solds is (in my humble opinion) not sufficient in determining pricing of your home.

Now when you broke down real estate transactions most of your argument discussed financing. To me one of the biggest problems with real estate today is the close relationship between real estate and financing. I only do real estate and I do not do loans. In fact the transactions that I have the most problems with are the ones where the broker on the other side is a mortgage guy, not a Realtor. I absolutely believe that these industries need much more seperation. However if you look at a closing statement the sellers closing statement has nothing to do with the buyers financing. Sellers fees generally include splitting escrow, purchasing title insurance for the buyer, county transfer tax, (in SD it is 1.10 per 1000 bucks), buyers home warranty, natural hazard and zone disclosure report, pest control report, transaction coordination, and any payoff fees you may have for paying off your lender. Most closing statements on the buyers side indeed are ted by financing charges but the appraisal fee, physical inspection and any other inspections will be in there as well, and dont forget title insurance for the lender.
So all the frustration that you expressed about closing costs is well understood by me, but …. these fees are going to be there even if you do a FSBO.

I ABSOLUTELY AGREE with you about compensation for realtors. I broke it down hourly and it is crazy. (See my previous long post) I will also heartily agree that the industry has made ridiculous amounts of money because of the run up in homes.

However there are those of us out there who do provide a very good service to consumers at a very low cost. You just have to look around.

Again, I was not offended by your post at all. I hear your frustration and agree with you.

[sdduuuude]

“The reality is there is a ton of venture capital floating around looking for a home.”

Have them send some my way.

[sdduuuude]

anxvariety,

I sort of agree, but mostly don’t.

I suspect most people on this forum don’t have use for a realtor. However, this is the exception, not the rule.

I don’t need one. You don’t need one, but most do so REs will be around for a long time. The HelpUSell model is not so bad. I think they will be fine, but even with them, you have a realtor working for you and they need to be good at what they do.

REs aren’t so helpful for the “do it yourselfer” type but the amount of time a realtor can save a busy professional with limited time is quite significant.

[rankandfile]

The reason things are so complicated is because there is money to be made in it. A form of job security if you will. Like the government worker that overcomplicates their once simple job functions to the point where only they can do it. Why else would we have a 40,000+ page (and growing) tax code? Yet, as complicated as our idiotic tax code is, there are still programs out there that can walk an average Joe through their taxes for about $50.

[rankandfile]

The reason things are so complicated is because there is money to be made in it. A form of job security if you will. Like the government worker that overcomplicates their once simple job functions to the point where only they can do it. Why else would we have a 40,000+ page (and growing) tax code? Yet, as complicated as our idiotic tax code is, there are still programs out there that can walk an average Joe through their taxes for about $50.

[rankandfile]

The reason things are so complicated is because there is money to be made in it. A form of job security if you will. Like the government worker that overcomplicates their once simple job functions to the point where only they can do it. Why else would we have a 40,000+ page (and growing) tax code? Yet, as complicated as our idiotic tax code is, there are still programs out there that can walk an average Joe through their taxes for about $50.

[JJGittes]

If they put the effort into it, I’d bet that craigslist could come up with a replacement for the MLS pretty quickly. That, combined with the tax records currently accessible on-line already, could change the re industry. The average person would be armed with plenty of info to strike a reasonable deal. Regarding the paperwork, lawyers for a flat fee could handle the purchase agreement and disclusore, and then the escrow company takes over. Zone disclosure reports are mandatory.

Basically its a wal-martization of the re industry. I think it is inevitable…but it could take a few more years.

[Author]

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