Redfin is already in that market and it doesn't seem to be doing very well. I'm actually fairly surprised how slow redfin is able to grow and expand their market. Their website felt second to none in terms of usability.
Redfin looks like they're trying to be a "discount agent". Here is a quote from their front page:
> We're full-service, local agents who get to know you over coffee and on home tours, and we use online tools to make you smarter and faster.
This isn't what I had in mind at all, and I'm not surprised they have trouble getting traction with that approach. If they save you 1.5% on your half, but the other agent still gets their 3%, you'd only save 25% of the thousands you spent in middle man costs. Meanwhile, all the 3% agents out there are applying pressure to see it fail.
In the ideal case where they get both sides, Redfin is only saving you 50%. There is no reason home sale paperwork should cost thousands of dollars to process. Someone like Amazon could eliminate agents altogether.
Here is another analogy - imagine TurboTax charged you a percentage of your yearly income instead of a hundred dollars for the "Deluxe" version. That would be insane.
> There is no reason home sale paperwork should cost thousands of dollars to process. Someone like Amazon could eliminate agents altogether.
It’s a mistake to think that the real estate commission is primarily for paperwork or executing transactions that would have happened anyway.
I brought my house to our agent and pushed the sale through. That’s probably a rarity when I think about all the time friends of mine have spent with agents “house hunting”. That time costs money and to a great extent, the fat commissions are paying for a lot of “no commissions”.
People seeking to disrupt the “fill out the final transactional paperwork” part of real estate need to figure out how to disrupt the whole value chain, not just the part that looks outrageously overpriced.
I've bought 3 homes now and sold 2. There was no "house hunting" process. I went online, looked at photos, and made an offer - same as you.
On my second home, I told the realtor exactly what I wanted and where. She failed to find it in her search (she did a zip code search instead of looking at the map), so I showed her the listing I wanted to see. There was no extra value to justify 3% of a sale for hundreds of thousands of dollars.
As for the seller's agent? They put the listing on MLS and have a token "open house" for a couple hours on one day. If you're lucky, they get a professional photographer and print a few brochures for the walk throughs.
> People seeking to disrupt the “fill out the final transactional paperwork” part of real estate need to figure out how to disrupt the whole value chain, not just the part that looks outrageously overpriced.
Why is that? Why not focus on fixing the worst part of the problem?
Because the transactional paperwork can already be filled out, even by real estate lawyers, for a couple grand today. No one is paying 5% for that, even though would-be disrupters talk about it that way. Think about what it would take to transfer your house to a family member, assuming it was paid off. That paperwork would be ~$500 per lawyer involved. Anything more that you're paying for an arms-length sale transaction isn't related to the paperwork processing part of it, IMO.
What's really being paid for is access to MLS, advertising, labor to drive people around, maintaining the brokers office, people on both sides who talk crazy people off the ledge and keep deals together when someone is flipping out over a $1000 repair one way or the other.
Even when you "went online", I bet you found the house via a paid insertion into MLS (most likely) or a real estate advertising site. Why did you go there? Because that's where the houses for sale are. Why do people pay so much to put their house in MLS? Because that's where the buyers go to search to come up with their short-list of houses to go visit. Why should MLS listings be so expensive? Because they've built the marketplace. Same as why Amazon or Ebay can charge so much.
Access to MLS? Driving people around? You think any of that should cost the $25,000 the buyer and I paid agents for the house I sold last year? We could've bought a new car for those commissions! Are you an agent, or related to one? I can't see any other way you could defend that nonsense.
Someday one of the big companies is going to figure out how to put the parasites out of business. Amazon could pull it off, so could Google.
I'm not involved in real estate and agree that the services are over-priced relative to the value. (I have a friend who's an agent; he and I pretty regularly get into it.)
I don't think it's defending the nonsense, but rather explaining that there is some value there and it's not predominantly in filling out paperwork. It's a sales job, selling people the most expensive and leveraged thing they'll ever purchase and the place they're going to live/raise a family, with all the good and bad that comes along with that.
In Sweden agents that help with house hunting basically don't exist outside the very very top end of the market. Everybody finds their own houses via ads, book their own viewings with the sellers agent and handles the bidding process themselves. When it comes to paper work the buyer and seller "shares" the same agent who has a fiduciary duty to both parties (even though they're paid by the sellers). With the internet being what it is people should be able to "hunt" their own houses and set up their own viewings.
Not everyone is internet savvy. Not everyone knows what they want. Not everyone knows what they can afford. Not everyone comes from a history of property ownership. Some people need assistance on things that others can self-serve.
Real estate agents, even the so-called "buyer's agent," are the house equivalent of "used car salesman."
Just like you shouldn't trust a used car salesman to tell you what car would fit your needs and you can afford, you shouldn't trust a real estate agent to tell you what house would fit your needs and you can afford.
FlyHomes is doing something interesting by actually buying and selling houses, not just facilitating transactions. It takes a lot of the risk and uncertainty out of the process. I hope they can succeed at scale.
What rate do they charge? It looks like they provide a cash offer and then find financing so you can buy it from them. I didn't see anything about how this eliminates middle-men and egregious fees.
I'm not sure though, because I got a "Oops, something went wrong" popup when I tried to use their site.
> Flyhomes makes money through the commission paid by the home’s seller.
This is the same lie all realtors love to throw out. "You don't pay - the seller does!". Never mind the buyer is the only person who brings money to the transaction.
Unless that commission is much smaller than a traditional realtor, I hope they fail.
There are more ways to innovate than just offer the same thing for less money. You can offer more things for the same money, which is what FlyHomes is doing. That is actually the more common and more financially viable form of innovation.
You're right, of course. However in this case, I'd like to see someone fix the problem instead of just making it more palatable. To me FlyHomes looks like just another realtor who screws you for too much money, but they give you flowers before they start and candy when they're done.
