Triangle housing market is flattening out (Rolesville: custom home, salary, low cost)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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Uh.... Technology has been active in real estate for a long time.
I welcome a better common business model, if I see one. When do you expect tech to let me know how a house smells from miles away?
"Disruptors" with bottomless venture capital who can absorb losses whilst they price ruinously to take control of markets so they can create higher market fees after crushing competition?
Meh.
I don't apologize for not supporting grifting.
Citing legendary 6% commissions as "standard" is dishonest, unethical, and dangerous for a licensee, but OK for a non-licensee with a "disruption" model, vague ethics, and operating in gray legal areas.
Again, meh.
Yep. This x 100
I don't disagree that there are elements of cronyism, laziness, and sense of entitlement among some RE agents. This is incredibly clear to new agents like myself trying to start out.
I don't doubt that many of the folks who are all about "yes bring on the disruptors and let tech take over the RE transaction process" have had experiences with some of the bad apples in RE and can't blame them for feeling that way.
I definitely hesitate with and question the idea that an oligarchy of glorified flipping corporations is a better for the home sellers. I don't question the idea of it being a crappy deal for buyers at all; as that's strongly evidenced by listings from those companies sitting on the market for way longer than average.
OD offers a product that is very clearly marketable for sellers. You are paying a service fee in the form of commissions and a lower price paid to you for your home for not having to get it show ready, schedule showings, negotiations, etc. There's obviously value in that. People pay larger prices for more conveniences in service industry all the time. It's always good to have options.
The idea of that being the "Best" or "only" option and that some folks are so gung-ho about that potential future definitely raises my eyebrows. Just as it did before I was in RE.
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Quote:
Originally Posted by hey_guy
I find a good analysis here but not focused on the right problem. Sellers aren't frustrated with title issues and paperwork but the huge take given to REAs (six percent) and the pain of trying to juggle selling and buying and moving.
By making the latter easier and taking a smaller margin they do indeed stand to disrupt
I see a better equivalent to the car market and companies like car Max and carvana driving new successful models...lots of title work in a car sale...
Why would you decide to pay 6% to sell a house or seek out an agent who would charge you 6%?
Umm, maybe thats because I DIDN'T say OD can. In fact, i actually said "I don't profess to know...whether Open Door will be the new paradigm (I doubt it)".
Yes, which is all the more reason its ripe for change. Don't confuse "not yet done" for "never will be done."
And as far as travel agents, I just used that as a general example. I'm not attempting to make specific industry related comparisons.
I did not intend to insinuate "never", I just have continued reservations that it will happen anytime soon so I would not characterize it as "ripe". Again, having made very many of the same arguments for years, I don't disagree that there is an opportunity here. I just haven't seen how it may come to fruition... yet.
I find a good analysis here but not focused on the right problem. Sellers aren't frustrated with title issues and paperwork but the huge take given to REAs (six percent) and the pain of trying to juggle selling and buying and moving.
By making the latter easier and taking a smaller margin they do indeed stand to disrupt
I see a better equivalent to the car market and companies like car Max and carvana driving new successful models...lots of title work in a car sale...
You're right... by and large the system works much better for the buyer side from a cost benefits perspective. But I have to challenge the 6% as the norm. Many, many people aren't paying 6% (5.5 or 5 are fairly easy to come by even in bigger broker settings)... and that's only the tip of the seller problem. Many of us want the "full service" seller experience without the inconvenience of showings. That's the beast - if I'm paying 6% for a professional who will get me 10% higher deal closed - then FSBO, discount brokers, and online shops lose their luster - saving 4-5% on a commission to close at X lower price? How do you quantify that?
The CarMax model is a much better analogy, but still has flaws when trying to apply to RE. Until we have the "Blue Book" equivalent for housing, the full automated online model will struggle. Pop appraisals != blue book.
I think one of these companies will just be able to exist on trmenedous economies of scale and that point it's game over. If you have enough market share your evaluations are the blue book.
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43,176 posts, read 76,815,786 times
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Quote:
Originally Posted by MikeyKid
You're right... by and large the system works much better for the buyer side from a cost benefits perspective. But I have to challenge the 6% as the norm. Many, many people aren't paying 6% (5.5 or 5 are fairly easy to come by even in bigger broker settings)... and that's only the tip of the seller problem. Many of us want the "full service" seller experience without the inconvenience of showings. That's the beast - if I'm paying 6% for a professional who will get me 10% higher deal closed - then FSBO, discount brokers, and online shops lose their luster - saving 4-5% on a commission to close at X lower price? How do you quantify that?
The CarMax model is a much better analogy, but still has flaws when trying to apply to RE. Until we have the "Blue Book" equivalent for housing, the full automated online model will struggle. Pop appraisals != blue book.
When one can sell a property, with representation, for a 1% to 2.5% listing commission and full service from the agent, (recognizing the fact that the buyer picks up the commission tab anyway), the next biggest seller expenses may be transfer taxes, or even capital gains.
Clearly, once the buyer absorbs commission costs, their other largest expense is the cost of getting a loan.
So much is price vs. convenience.
I have sold my used cars myself, and I have traded them. In 2016, I made my deal at the dealership, and when signed, brought up the topic of selling my used car to him.
I think I left about $800 on the table, but ate it for convenience of walking away from it, 50 miles from home with no return trip needed. If it had been the $5,000--$35,000 I see folks willing to leave to real estate disruptors, I would probably try to take most of that off the table.
I would try to earn back my equity, rather than toss it into the wind.
I wonder about the CarMax model and applicability in housing...
When Toyota builds and sells 400,000 Camrys in a year, with limited option packages, it is pretty easy to fix a market value within a few hundred dollars, and the asset can be moved around, and even across state lines with little affect on pricing.
But, for hundreds of years, the plot of land (which truly is the only "real estate") has been considered unique in its attributes, and has a great many variables.
But land has zero portability.
That uniqueness is what prompts legal basis for a buyer to demand specific performance in a contract.
Add in improvements on the real estate, by builders who have worked for decades, and even when labelled "cookie cutters, never create 400,000 versions, and the uniqueness is magnified.
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