On the Future of Real Estate Agents
In last Sunday’s NYT Magazine devoted entirely to real estate, the authors of Freakonomics argued for the inevitable extinction of real estate agents: The Internet is a natural repository for the sort of data that drive the real-estate market. New sites like zillow.com let anyone try to figure out (if imperfectly) what his home is…
In last Sunday’s NYT Magazine devoted entirely to real estate, the authors of Freakonomics argued for the inevitable extinction of real estate agents:
The Internet is a natural repository for the sort of data that drive the real-estate market. New sites like zillow.com let anyone try to figure out (if imperfectly) what his home is worth; sites like craigslist.org allow buyers and sellers to easily find each other. As those services and ones like them become more popular, it is hard to imagine that the market will allow Realtors to maintain their hefty commissions.
Trulia CEO Pete Flint couldn’t disagree more:
At the end of the day, we still need a professional to help us make sense of all the information available to us both off and online and to carry out all the duties necessary when buying or selling a home. Ask yourself this, do you really have time to learn an entirely new profession on top of your own life responsibilities to buy or sell one house? How much is your time worth? I have looked at the data and crunched the numbers. At the end of the day, the real estate agent is worth every penny.
Let the debate begin.
Freakonomics in Real Estate [John Cook’s Venture Blog]
Endangered Species [NYT Magazine]
Sure. Are you aware of how often buyers will move forward on two accepted offers? Or how about this one: A buyer I dealt with recently came out on top in a bidding war. It took a while to get the contract over to his attorney. The day the contract landed on his attorney’s desk, the buyer lowers his offer by $30,000. His bidding war competition was long gone.
Nice. Do you know how many bald-faced lies I’ve seen on co-op applications?
Sure, there are some scum bag real estate agents out there. Most of the people I’ve worked with in this industry are honest and hard working. It’s my opinion that people are hugely insecure about real estate transactions (it’s the most expensive thing most people will ever own); naturally and understandably, people freak out about real estate deals. Everyone’s convinced they either bought too high, or sold too low. Who’s fault is it? The real estate agent, of course…
anon 5:58,
Do you have ANY examples of when buyers were less ethical than real estate agents?
Most of the people who try real estate brokerage last about 6 months. And most real estate agents aren’t backing up the Brinks truck. This is a tough, TOUGH job. I don’t hear anyone complaining about 26-year-olds making $500,000 bonuses on Wall St. Real estate agents are lucky if they make $60,000 a year. The ones that make over $100,000 a year? It ain’t luck. Skills, baby. And the worst, least-ethical behavior I’ve seen on this job? Buyers. Buyers are liars.
If you sell your place on your own,I suggest offering a flat commission to buyers’ agents of 2%.
That way you don’t miss out on potential customers who don’t surf the web (or NY Times) themselves.
Of course, if you get two offers, one with broker and the other without, if the prices are equal, you can pick the no broker option and pay no commission.
What bull. 6% is an outrageous sum for adding a boring-looking, usually incomplete listing on a broker website and setting up some ads on Craigslists and the NYTimes. I could do that much myself (“learn a whole new profession?? my friend became a broker and got a couple fat commissions on high-six-figure sales within four months! the only thing to “learn” is how to network to get listings), and anything else could be handled by an appraiser and a real estate lawyer, both of which will be necessary anyway and both of which can be hired for a nominal (FIXED) fee. even more so than lawyers, real estate agents really are “walking transaction costs,” making the market less efficient – as well as artificially inflating prices due to the nature of the commission. We need to pas legislation to free up the information that brokers have, so that others may introduce some competition into the market, and the broker can go the way of the Dodo.
The Freakonomics argument is idiotic. They completely disregard the fact that any broker worth their price is more focused on repeat business (and therefore getting the best deal for their client) than on selling a house at any price. And if people can’t find a good broker, that’s their own problem…. not an inherent problem with brokers.
I sold a building for a guy who tried (and failed) to sell it on his own. I got him more money then he’d hoped for AND my commission! Yee-ha. That’s the way it’s supposed to work…
I sold my last building for $65,000 more than the brokers were telling me it was worth using Craigslist. And I didn’t have to pay a commission!
11:17: I do indeed know what the site looks like, just not what their business plan looks like. I’m in VC so when I meant “look it up”, I meant do a little digging. Trust me, that takes longer than writing a few sentences. – anon 10:50