They already have trucks and people used to moving things around. They could sell you a house and have your stuff moved in 2 days. I even have the branding figured out for the moving service: Amazon Prime Movers.
There's already lots of healthy competition in moving companies. Imagine if the movers wanted a percentage of your home price instead of few hundred for the day's work.
The problem with realtors is that they've got a lock on the bureaucratic side, and the existing realty sites (Zillow, Trulia, etc...) are aligned with them. There are upstarts in some cities, but the existing realtors in those places collude to keep the process inefficient. It'll take a behemoth to crack it open, but there'll be a lot of reward for someone big enough to pull it off.
How does the collusion work? Just curious since it seems like such an inefficient market (our realtor was a good friend of ours, he /did/ have good local market knowledge and things to say, but no way did he have to do more than 4 or 5 hours of work total for us...)
As an example, buyer's agents will not show, or disparage, homes where the agent's get less than their approx 3%. For instance, Trelora in Denver offers a discount to the seller, but they'll offer full rate to the buyer's agent because they know they'll get more traffic that way. You can kind of read that between the lines in their FAQ:
Even if the buyer finds one of these homes on their own, all the buyer's agent needs to say is something scary like, "I've seen deals like this fall apart, and I wouldn't risk tying up your money if you're not dealing with a responsible realtor".
Then they'll say something like, "besides, the seller pays the closing costs!" ... which is a huge lie if you consider that the buyer is the only person bringing any money to closing.
I thought about this a lot during our home buying process. Our agent, too, wasn't asked to do much... because we found the house we wanted online, and had our financing, so the agent didn't have to show us any houses or help us along in any way. She just submitted our offer and that was that.
I have heard that realtors, like for instance car dealers, simply have a vested interest in middleman-ing the inventory by way of commission and there are powerful lobbies that protect that interest. I've heard that there is cartel-like control over the MLS listing service, which requires you to be a member of the Realtors Association for access, and is a shared venture between all the major real estate companies -- which, if you aren't a part of, basically means you can't even know what house is for sale. I don't know if any of that's true.
In this day in age, it's hard for me to fully trust a process like buying property that is just so opaque. Purely for conversation purposes, an anecdote of mine: we bought a house and we were willing to pay a certain amount over, no more, because we had a hard budget. So we told our agent, we want this house for list price. The agent says, we can do that, but "the seller is expecting multiple offers and they are reviewing them tomorrow". Okay, fine, whatever. So we put in our offer, with an escalation clause going up another $15k to our theoretical max. Lo and behold, we have two offers on the table that beat ours. "But they really liked your letter, so is there any way you could make your offer better? Borrow money from your family? Take an employer loan from your 401k?" So I say no, absolutely not, I won't be doing that. We'll just wait til next year when we have more money and do this again. Thanks.
So a week later, we get a phone call. Oops! Guess what? The top offer bailed unexpectedly, and the 2nd best offer wants time to reconsider. "If you resubmit your offer tonight, I'm sure the seller will accept". Okay, fine, resubmit it. Thirty minutes later, the offer was accepted and we closed in about 20 days from then. It was a crazy ride! And we are definitely happy with the house we got for the price we paid. But at the same time, I'm left to wonder... how do I know those other offers existed? How do I know they weren't just trying to get more money out of us? I suppose I could ask for proof, but even those types of documents have been faked before. I trusted our people and the process seemed above board, but it's one of those things that is so convoluted and human that I felt weird about it then, and I still do to some extent. Perhaps I'm just cynical. It really doesn't keep me up at night, though. Like I said, I'm happy with the place.
But the reality was clear: in that industry, it seems so clear that collusion COULD easily exist... and if that's the reality, I'm sure it does exist in at least some instances.
I'm hesitant to concur with you on the home inspection. The home inspector I've used several times has discovered termites, and other massive problems that would have cost me upwards of $40,000 on one specific house I was interested in buying. I paid a few hundred bucks to save myself from that headache.... The realtor on the other hand did almost zero
In Arizona, every stick-and-stucco house has (or will have) termites. The inspector already knows the answer before he shows up. You pay for "treatment" each time the places changes owners.
When I sold my first house, The buyer's inspector "discovered" termites which would need treatment. However, I had preemptively paid a professional to do treatment just two weeks earlier. When I told the new inspector this, he called the previous inspector. After talking on the phone for 2 minutes, they agreed that I was termite free!
As long as someone got paid for treatment, they were happy. I doubt the buyer knew it went down that way.
Offering without an agent doesn't necessarily save money. It depends on the details of the seller's listing agreement. It could require dual agency or even without dual agency the listing agent could retain the full commission if there isn't an agent representing the buyer. The commission amount and split details are set in that agreement and the laws vary per state.
If the seller had a real estate agent then the seller already signed a contract to pay a fixed commission to the buyer's agent when the house is listed. Depending on the contract the seller signed, if there's no buyer's agent, usually the seller's agent's gets both the buyers agent's commission and the seller's agent's commission.
So you don't usually save money by not having a buyer's agent.
The buyer doesn't pay the agent, both agents' commission comes from the seller. Also, the agent we ended up with was a direct recommendation from the selling agent, and we figured this would give us a little extra "boost" with her by using her friend.
> the agent we ended up with was a direct recommendation from the selling agent, and we figured this would give us a little extra "boost" with her by using her friend
Huh what? So what incentive does your agent have to negotiate a good deal on your behalf if she’s earning a price commission, and she’s friends with the selling agent?
> So what incentive does your agent have to negotiate a good deal on your behalf if she’s earning a price commission
That's a great question, but it's not unique to my situation... it's standard that agents split the commission. You could say that any agent or salesperson is never incentivized to give any buyer a deal on anything as long as they collect commission.
Secondly, we paid what we thought the house was worth. We're in a competetive market and had a hard budget. The house price came in below budget. As far as I'm concerned, we got a fine deal.
Well, yeah, sure. Money goes from me, into the "middle of the table", and then everyone takes their share. It's important to say, though, that with or without my agent my buying price was going to be the same regardless... however, the seller may receive slightly less. I think in practice you'll find it difficult to approach the process with a mindset of "if I don't use an agent, the owner will give me a 3% discount".
Really, it's just part of the scam. Most people actually believe the seller is paying the realtors. It's how the buyer's agent can say, "Don't worry about my rate, the seller pays it!", as though you're sticking it to the seller. I've already seen three people repeat/believe that lie in this thread.
If what the realtors said was true, there would be a conflict of interest. However, there isn't really a conflict here because the buyer and seller are both splitting the loss. One is paying too much, and the other isn't getting paid enough.
The real conflict comes because both agents want you to compromise your price for an easy sale. If you sell your $500k house for $20k less than it could, they only lose a few hundred dollars. That agent will play various tricks to try and talk you into losing $20k so they can get a quick sale and be done with you. Similarly, they don't care if your loan is a bit larger when you're buying. They're not looking out for your best interests.
If the middlemen/parasites were out of the loop, the buyer could pay 3% less, the seller would get 3% more, and some reasonable agency could get a fixed fee for doing the paperwork. Hell, the title agency could do the work trivially, but I'm guessing they don't want to risk rocking the boat. Maybe the current system was reasonable when all you had was newspaper listings and for sale signs, but it's corrupt now.
