The main reason why real-estate agents are a thing is because of logistics.

a) The buyers want to look at multiple properties as quickly as possible; b) The sellers don't want to or don't have the time to be manage all of the requests for viewings. c) If there is no viewing opportunity, then the buyer might miss a good property that matches their needs or the seller might miss a buyer.

The real-estate agents have a pool of properties that they manage and they can provide quick access to the properties. They meet the needs of both the buyer and the seller and increase the probability of a transaction.

Of course, if you can find a way to do that without a real-estate agent, you got a breakthrough innovation. However, it's fairly difficult to crack this problem since the transaction inherently tilts towards human interactions. This is why nobody has figured out an effective way to get rid of the real-estate agents yet.

Everyone can't just collectively move away from the MLS database. I'm sure redfin is trying to figure it out.

I like to say that the reason you need two agents to sell a house is because you need one agent to convince the seller to sign that contract and another agent to push the buyer.

In an ideal world the seller would hire someone to show the house to potential buyers (e.g. redfin pays a fixed hourly rate to its agents who show the house) and then both seller and buyer hire real estate attorney to close the deal. 3K usd max. This nice plan falls apart when sellers and buyers can't agree where houses will be listed for sale (don't offer craiglist).

We need you know.. Tinder for houses.

> Snipping off 3% of the house sale price is a ridiculous fee for . What's stopping Redfin/Zillow or SV tech scene to disrupt this arcane industry?

There have been lots of attempts. Perhaps agents do more than “shuffle some documents around and pretend to be acting in their principal’s interest.” (Certainly the agent we’ve worked with through two sales—one a short-sale—and a purchase has.)

From my experience a buyer doesn't pay if there's already a seller's agent. The standard contract is usually something like 6% is set aside for agents and is split among the buyer and seller's agent if each exist (you don't want the seller's agent representing your interests). Sure, if you and the buyer were comfortable and experienced enough you could go without (you may want a property lawyer instead to look over things). I've never met the other party when buying/selling. I think agents are very good at helping the deal close. Buyers and sellers can get very hung up on minor details--I had a seller bump the price $5k for no reason after we agreed on a price. Negotiating repairs is over 100s of dollars in a multi-hundred-thousand dollar transaction.

While they don't usually pass along properties for sale (since it's faster to research yourself) I have found them helpful when talking about the local area (history, schools, etc). They often negotiate tours before properties go on the market. They'll get the keys and follow your schedule. They've been very helpful in scheduling and coordinating things like inspections in repairs--often being the one on site and letting me stay at work.

I don't trust they have 100% of my interest in mind (they want to close and get their cut), but they have an answer for inspections, repairs, mortgage company, etc. I'll usually go with their people to close and change insurance or refinance later when time to close isn't an issue.

Surprising to read: 6% and two agents is obscene. In UK it is different, I don't like it but it seems leaner. A single agent handles everything, hired by the seller, and charges about 1.5% of sale fee + VAT (once haggled down). Expect higher fees on smaller transactions or with 'prime' agents, meaning those with free coffee and gaudy suits. Legals usually cost £1500 all in. Add survey and mortgage costs if needed.

From Poland, situation may be different elsewhere: plenty of offers go through real-estate agent adding 3% or sometimes 5% fee.

But it is also possible to buy directly from owners who just post their offers.

> discovering homes

Done via websites. Some with paid access for contact detail, but price minuscule compared to a real estate cost or fee taken by a real estate agent.

Websites are also funded by paying for positioning of ad by seller.

> securing loans

Can be done via going to a bank (and in Poland real-estate agent is usually not doing it anyway).

> touring the place, inspection, sending offers

Done by seller and buyer

> closing and signing the deed

Done at notary, also would be done at notary in case of a real-estate agent

In Norway it is possible to buy and sell houses without involving any real estate agents.

Here is a page in Norwegian with a checklist for selling a house in Norway without a real estate agent: https://www.forbrukerradet.no/forside/bolig/kjop-og-salg-av-...

The page I link to is written by Forbrukerrådet. They are an independent interest organization that helps consumers.

The pricing structure especially baffles me. My house is worth about 300. Why should I pay th anything if they sell it for 250? On the other hand if they can get 350 for it I'd happily turn over 10% of that extra 50...

All the ones I've dealt with just wanna push trough whatever offer comes first because 3% of whatever figure with zero work is better than 3% of a much better figure...

""a ridiculous fee for shuffling some documents around""

Wait til you buy a house an realize the title company handles all that.

I'm a long time Redfin investor and user. They are slowing chipping away at things, but old habits die hard.

The legacy Real Estate industry has a pretty good stranglehold on the status quo. From the MLS (Multiple Listing Service), to laws against rebates, to NAR (National Association of Realators), etc. etc. its hard for these new player to do what they want.

Redfin still needs Realtors to do its thing, so you will never see a FAANGM style hyper-growth quarter. They have said recently that they could capture a larger share of the market, but they are hamstrung by hiring realtors. They don't want to hire too many and end up in a 2006-08 era where they have to then fire a bunch of them.

Until laws and social norms (pay nothing a head of time, realtor does all the work, FSBO = the devil, etc. ) around home selling change I expect the new real estate companies to simply chip around the edges.

I had someone tell me my architect’s fee was too expensive at 7% they said that thier previous architect had charged 3%. I need to remember to prempt this in my sales patter by working into the conversation what estate agents charge for taking some photos and showing a few people around.

Agents act for the seller, not the buyer. It's the agent's job to manage a pool of prospective buyers and to negotiate the price up. The ideal is a bidding war between two keen buyers.

The last property I sold went for around 15% more than I would have asked for. The agent more than earned their fee there. (He then tried to pad the agreed fee, but that's another story.)

Agents do not act for buyers and they are not interested in selling to you at the lowest possible price. They are interested in selling to you, but obviously they qualify buyers based on market segment and keenness. If you're sort-of-thinking-about-moving you'll get less attention than someone who slaps a huge pile of cash on their desk and says they need something by the end of the day.

So I do agree with you from a certain point of view, but from another point of view, 3% seems too low.

Consider that this is a very large transaction for an asset that changes in price over time, and no two homes are the same. Even buying cars usually involves a lot of negotiation. I got 15% off after negotiating my car price and a house is 10 to 20x what I paid for the car. The idea of ensuring you get your best price is worth introducing an expert. Sure, ML might solve home pricing eventually, but you still have to communicate, justify and sell it at that price, which is going to be something you want an expert to do. All of this doesn't even touch on the game theory aspect of auctions and bidding. It's a big mess.

SV is disrupting the market. Opendoor, Zillow offers etc.. will buy your home and give you 90 days to close on a new one. So they are assuming the risk. You can even work within their system. A lot of new home manufacturers are employing the same model.

If you have a higher risk tolerance you can list your home at a higher price and wait it out.

In NYC, there are multiple options for buyers and sellers that want to save on realtor fees. I just bought a condo and worked with Yoreevo who gave me back 2% of the purchase price at closing (meaning they only kept 1% for themselves). They provide all the same services, but make it up in scale

Redfin at least takes a smaller cut than 3%...well they kick some of it back (to the buyer they represent, the seller pays the commission, I think they do something similar when they represent the sell side).

It’s common to dislike everything about the industry when you’ve never done a transaction, and when you’ve done ten transactions. In between, you find you pretty much have to play ball with these people.

> Why can't we get rid of Real-estate agents all together?

You can. Buy a home from the owner. If everyone did that, the real-estate agents will actually provide value when they exist.

Agents split the commission. It's not 3% of the house sale price but 6%. There's a complicated answer as to why the multi-billion dollar legacy real estate industry persists today.

Until you have a good real estate agent you don’t know their value. The barrier for entry for becoming a real estate agent is low so there’s a lot of crappy ones out there.

YOU DO NOT HAVE TO use a real estate agent. Legally you are not prohibited from NOT using one in the USA. But it's riskier not to, but sure, for simple real estate sales, it's quite possibly moot and unnecessary.

But the threshold for "simple" is far lower than you realize. Say you merely buy a plot of land. What if the land is land-locked - is there an easement for access? You probably didn't think of that first but a real estate agent will.

The reason why agents exist for ANYTHING is to save time, money and reduce risk due to lack of knowledge of the law, lack of knowledge of construction or lack of knowledge of financial matters. Humans have finite memory and skills - even if you have an IQ of 200. You can't know or learn everything. And you wouldn't have time even if you could. Enter the concept of "agency" - a proxy person or organization that represents your interests and has more knowledge and time that you do.

I'm guessing you are young and because you have plenty of time, you don't see the value of any type of "agent" relationship. I understand - when I was young I was the same way. And I was 100% wrong in thinking that way.

Today, I see enormous value in using "agents" for just about everything because I have plenty of money but little time and I KNOW what I do not know.

So I keep a lawyer on retainer now (an agent for legal issues) who helps with selecting lawyers for IP, business, real estate, family law, etc.)

I also use doctors (an agent for medical/health issues). I also use a tax lawyer/accountant (an agent for financial issues).

And often people will hire engineers and programmers as "agents" to accomplish things that people with money use as their agents to invest in companies of people who can make things work. These agents are called Angel Investors and VCs. And you as a technical person are an agent of creating technology value that ultimate "uses" the investor's money to best use despite the fact the investors know LITTLE about technology but see creating it as a good investment.

The reason such agents make more money on homes they own is pretty obvious:

1. They know all the details of maximizing selling price ranging from Staging to Negotiation techniques. They have practice at it. The 3% they take is necessary and reasonable because why the hell would they work for free. Would YOU work for free?

2. They have incentives to use every trick and skill because of their experience at the job - a real estate agent knows that Staging can raise the selling price by 10%-20% despite costing $5K-$20K - in many markets that is a trivial positive ROI (my ex wife is both a real estate agent and stager in the SF Bay Area, for instance).

EDIT:

So one thing agents do is handle HUMAN issues. My ex, for example, uses what we in B2B sales call "consultative selling" where you do NOT lead with taking customers out to see homes. Instead you spend time upfront and preselect only the homes that fit what the customer really values and what they can afford. Honestly I don't see a computer program duplicating that kind of thing any time soon. Certainly not in real estate and not in B2B sales. There is far too much nuance, psychology and hand-holding to ever expect a computer to duplicate - and it's all 100% "real time".

It's completely delusional to imagine Redfin achieving that any time in the next 100-200 years even with exponential improvements in technology (which are not going to happen as most people predict - my B2B is selling into semiconductor markets and we know what that's going to look like in 10-20 years because of "continuity").

Note also: Singularity and Transhumanism is not real nor based on any Science. It's a cult based on anti-scientific faith-based assumptions that are trivially proven to be untrue.

I recently bought a home with an agent. The agent was able to negotiate the home price down by close to 9% (the original price was out of my budget). I had no idea that the seller was willing to go that low - but the agent guessed it, and explained his logic to me.

While looking at other properties, the agent was very helpful in guesstimating how expensive and how long various problems with the homes we saw would be to fix.

The homes we saw were distributed over several neighborhoods. The agent was helpful in explaining that in certain neighborhoods, almost everyone engages in certain not-quite-legal but socially harmless things, while in another, very demographically-uniform neighborhood, your neighbors may report you for it.

TL;DR - a good agent brings up to date domain expertise which you are unlikely to have, and which a general-purpose algorithm might not be able to provide without generating outrage.

nothing, except for momentum and that real estate transactions don't happen enough for people to investigate an app to do it.

The person who invents a way to save 3% of the house sale price will make 1.5% of the house sale with their automation, while screwing a bunch of people out of an income.

and I don't even like real estate agents.

Downvote all you want, that just means I hit a nerve.

> It would make much more sense to have a laddered commission, for example: $5k plus 10% of the amount over Threshold1 and an additional 20% of the amount over Threshold2

Anything stopping this where you live? I've done this. When they quote a price they will get say sure and your commission halves under this. They have themself cornered as they already told you the price they can sell it (which they generally inflate) so it very hard for them to say 'no' without you countering why would it matter if that is the price that can get.

You have the upper hand pre-contract. Agents really want the contract at the beginning + they actually have 2 jobs according to a agent grind if mine; the first is getting a buyer and the second is lowering the sellers expectation to except offers as if often the case. This reduces the second.

The problem is that we don't know what the thresholds should be in advance. With manufactured goods, it's easy to compare. Salesperson A sold 10 Toyota Prius Base models for $18,000 and Salesperson B sold 10 Toyota Prius Base models for $19,000. Houses can't be directly compared.

If the seller is in charge of the thresholds, they can just set them unreasonably high. I can look at my house which would be reasonably valued at $500,000 and say that Threshold1 should be $750,000 and Threshold2 should be $800,000. The agent will never be able to meet those thresholds.

If the thresholds are with respect to the listing price, it's easy to just list high and then accept a lower offer. If Threshold1 is 5% above listing and Threshold2 is 10% above listing, people will just list their houses higher.

With cars, I believe most places do laddered commissions. However, it's easy to know the value of a bunch of manufactured goods that are all comparable. With housing, you can't go by square footage. Some places are nicer than others. Even within a neighborhood, some areas are more desirable and even different sides of the street might get better light.

The incentives are definitely misaligned, but I think it's hard to align them given that they're selling a good where we don't actually know what the value is and where each sale is pretty unique.

Yes you can get better price if you can wait longer and look for best opportunity but for a real estate agent, each sale happening increases probability of future sales, so it's in their best interest to make market as lively as possible to increase sellers and buyers trust and to prevent backlog.

Plus, relying too much on one sale is not a good business, for some people whole point of getting into business is to reduce their dependence on one particular customer.

> whereas the homeowner wants to maximize sale price

I suspect that most homeowners don't understand the time value of money. Selling it quicker for a lower price may be better for the homeowner, as he can then invest the proceeds.

Holding out for a better price means you continue to pay property tax, homeowners insurance, maintenance, repairs, and your money tied up in the house is not making money for you.

When I've sold my house, I would slightly underprice it in order for a quick sale, which worked pretty good. That also worked when the buyer would come back with a bunch of inspection complaints, and I'd reply with "it's underpriced, sale is as is", and it'd sell.

For those who did not notice, both Freakonomics and the study being discussed in the linked article are based on the same research, with the same author Steven Levitt.

Agents tend to not have time issues, and so can wait for the best price possible.

Sellers usually have some time limit they want to sell by.

>I'd feel much more confident doing at least the bargaining part myself.

In general you do. The agent can make recommendations but at the end of the day it's your call as the buyer or seller.