For around 6 years, I’ve made my living off the back of real estate commissions. In HCOL areas like San Francisco and New York - the costs of hiring a traditional real estate broker run rampant. We’re talking 6-7% of the total selling price of the home. Just to manage the sale of it.
There are plenty of instances where real estate agents have gone above and beyond the call of duty: saving babies from burning buildings, turning water to wine, saving cats from trees, the list goes on.
But at the end of the day, being a (good) listing or buyer agent is knowledge work, that I think should be compensated the same as any other knowledge work. Billed by the hour or project.
Can you think of any other industry besides real estate that gets compensated this way? I cannot think of one.
The idea of that easy money has clearly attracted a ton of people to the industry looking to get rich quick. I can’t tell you how many young people I talk to with that plan. "Dude, if I just sell three houses a year I'm into 6 figures"
Now, my beef isn’t with real estate agents, at all. I like real estate agents. I am a real estate agent. My beef is with the system that has somehow convinced every homeowner to give up major equity in their homes every time they want to sell it. This drives up housing prices across the country, and creates a bad dynamic within the client/agent relationship.
People who are intimidated of real estate transactions and need their hand held through everything are usually first time buyers or sellers. More often than not, people who have bought/sold multiple properties are confident enough to negotiate on commission, and in rare instances even forego representation entirely.
Do I think there will ever be a time where people can sell real estate directly to a buyer and never have any buffer between the two parties? Emphatically, no. I do think, however, that the platform that will win real estate will be one that's super lightweight, with higher touch options available à la carte. Think TurboTax, for real estate.
Look at Stanford, California - where more homes are sold off the MLS than on. And according to this study on Stanford's historical pricing data, people who sell their own homes in Stanford get a higher sale price than when they list with an agent.
The average single family house in Millbrae, California sold for $2.2M last month. Which means that the average homeowner that sold their house in Millbrae last month spent an average of $120,000-$140,000 in realtor fees. That’s a year’s salary for an entry level software engineer. And we’re talking about one house.
The only alternative to this is getting your house sold out from under you from a company like Opendoor or Offerpad, that will buy your home usually around a 15-30% discount. Sort of like a payday loan for your house. Lovely.
So, what happens if you want maximum value and exposure, but don't want to get killed in closing costs? Funny you should ask...
My new company, Sovereignty, aims to empower people to put their own homes on the market the traditional way, manage vendors, get open houses hosted for them, collect and counter offers, close on time and get maximum value–without the traditional costs associated with it. We charge a low flat fee, and a service charge for the vendors that we connect you to. There's high touch options available throughout the transaction that the user pays for à la carte.
It is more tiresome than using an iBuyer. It does require more input than giving your keys and 6% equity in your house to a traditional agent. But it does net you more than our competitors. We’ve soft-launched our MVP earlier this month and have two listings that we’re helping homeowners prep for sale in the SF Peninsula right now.
If you're interested in selling your Bay Area home without losing equity, DM me.
:)
ZB
[link] [comments]
source https://www.reddit.com/r/RealEstate/comments/17hi14c/why_ill_never_charge_and_you_shouldnt_pay_for/
Comments
Post a Comment