REAL ESTATE Disrupting the MLS

[steelandchrome]

With all the news on lawsuits against agent fees and the MLS I figured that it would only be a matter of time before someone truly tried to disrupt real estate listings. Read this today and sounds like a pretty cool way to try and do this with the high end stuff at least. Curious how they plan to monetize it and if they will have negotiable fees etc..

The Pocket Listing Service

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[Sauce]

I think this will work for certain types of sales. Unfortunately, the best way to reach the widest market is via MLS.

The bigger disruption is (potentially) on this lawsuit.

What The Bombshell Buyer-Side Lawsuit Means For Realtors

 

[Red]

The 'landmark' lawsuit mentioned above doesn't seem to have a fundamental understanding of some very basic terms... but whatever, if it helps change the industry, great, I'm all for it.

The biggest complaint in the way things currently work is that the sellers have to pay for the buyer's agent to do their job (for the most part) -it's tradition, no other reason at this point. I completely understand this complaint.

Until we get autonomous buyer representation, paid for by the buyer themselves, this industry for the most part won't change.

Also, all these agents crying about Zillow selling their leads back to them? Grow the f*ck up. You create a website with a search platform that beats the Realtor.com site (it's not hard, Redfin's already done it). Zillow did the work, they have the market notoriety, they built that platform & you did not so they reap the benefit. You can opt out of syndicating your listings to them, and in my opinion, doing so hurts your sellers for the sake of your ego. They are not selling anything that was "yours" back to you.

I believe the way of the future will be real estate agents earning 1% on each side which will be paid accordingly by each party. That's my best guess, time will tell.

Edit: I may be a little cranky because coyotes woke me up at 4:30am. :/

 

[Suzanne Bazemore]

@steelandchrome and @Sauce, thank you both for posting these articles. It's interesting that the newly developed PLS is an effort to keep agents relevant and bypass the impact of large sites like Zillow, Realtor, and Trulia. Between PLS and the lawsuit, I think both articles could point to a potential paradigm shift in how real estate sales are conducted.

 

[Valhalla]

I believe the way of the future will be real estate agents earning 1% on each side which will be paid accordingly by each party.

This is how it is in Hong Kong. I lived there for years and I wouldn't recommend it as a solution/disruption. Finding even a decent agent is incredibly difficult, and they are very transient. I suppose it's good because you don't pay much, but you definitely don't get much. I think long term, especially on this side of the world this would create a situation where only massive firms can compete to crank out the sort of quantity needed to get by on 1% which, again, won't help matters overall.

I believe the solution lies in something we have yet to consider which could be created indirectly by a change in contract law or by a lawsuit or by national protest or by a huge change in lending requirements or.......

 

[Silverfox148]

Realtors, MLS ,etc. one of the biggest inefficient ripoffs in the current U.S. It's an area that desperately needs to be disrupted just like healthcare, flat fees could have an impact in this market.

 

[Sauce]

Hoping /USER] , @JScott and @SteveO will chime in here

Love hearing @Red s thoughts as well.

 

[SteveO]

I believe that a good agent is worth their weight in gold. But a less than stellar agent can cause a lot of problems. If the buyer and seller are more involved, most deals would not go through. Good agents work through the emotions and issues.

 

[JScott]

Hoping /USER] , @JScott and @SteveO will chime in here

Love hearing @Red s thoughts as well.

Not sure I can add a whole lot, though over the past several years, I've been approached by probably a dozen companies who are looking to innovate/disrupt in this space. So, there is clearly a problem that is looking for a solution. Unfortunately, I haven't been thrilled with most of the technology-based solutions that's I've heard proposed.

The issue is three-fold in my opinion:

1. NAR has a stranglehold on the industry;
2. The barrier to entry for brokers/agents is very low (most of them are horrible);
3. Incentives for broker/agent performance are not aligned with their customers.

Each of these problems needs to be addressed, and I've found that most solutions address at most one of these. The problem is, the solutions I've seen addressed any one of these issues tends to exacerbate one or both of the other two.

I like the idea of a private MLS, but unless it's decoupled from the current broker/agent licensing system, it might bring costs down a bit, but it won't solve the other fundamental issues the industry faces.

The class action lawsuit mentioned above could be huge for the industry, but even if the plaintiffs win, I don't see it as a big win for home buyers/sellers moving forward. Buyers will end up paying their brokers/agents out of pocket and brokers will start doing a better job of covering up their monopolistic patterns. Unless the award is enough to put NAR, Re/Max and KW out of business, I don't see it changing the landscape of the industry. Just my $.02...

Long story short, this is a REALLY hard problem to solve, and I think the ultimate disruptor will be some company or technology that we don't see coming, but that comes along at that exact right time, in the exact right place and with a solution that is good enough to generate a rebellion against the establishment.

Is the PMLS that disruptor? Good be... But who knows...

 

[Ecom man]

I’ve seen tons of advertising for Redfin only charging 1.5% to sell your house... that is a huge discount compared to normal charges. I just sold my house about a year ago and paid 5% (almost 15k). An extra 10k off of fees would have been awesome!

 

[JScott]

I’ve seen tons of advertising for Redfin only charging 1.5% to sell your house... that is a huge discount compared to normal charges. I just sold my house about a year ago and paid 5% (almost 15k). An extra 10k off of fees would have been awesome!

The 1.5% is on the listing agent side. You still need to pay the buyer's agent side, which is likely going to be 2.5% to 3.0%.

 

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[steelandchrome]

Just fyi, I didn't mean to post this as if this was a true disruption in the MLS space... I think that this is a HUGE market that people in general would say works as-is and isn't worth messing with or trying to improve and many would look past the billions of dollars that will be created by whoever does solve the 3 problems @JScott mentions above as well as I'm sure many others.
I for one think that the 6% commission structure is one of the biggest things that should be fixed first and there should be a more performance based fee structure or it to be more "normal" to negotiate fees on the seller side. I doubt buyers paying for a buyer agent will ever be a thing but the likes of opendoor who let you tour a home by yourself and then they give you cash back if you use them to buy without an agent is more the way the market will change.

 

[Valhalla]

Just fyi, I didn't mean to post this as if this was a true disruption in the MLS space... I think that this is a HUGE market that people in general would say works as-is and isn't worth messing with or trying to improve and many would look past the billions of dollars that will be created by whoever does solve the 3 problems @JScott mentions above as well as I'm sure many others.
I for one think that the 6% commission structure is one of the biggest things that should be fixed first and there should be a more performance based fee structure or it to be more "normal" to negotiate fees on the seller side. I doubt buyers paying for a buyer agent will ever be a thing but the likes of opendoor who let you tour a home by yourself and then they give you cash back if you use them to buy without an agent is more the way the market will change.

That performance based fee structure is interesting. Spitballing here but maybe for sellers, a small percentage based on a given market or appraisal price, then a higher percentage on any selling price above that?

 

[steelandchrome]

That performance based fee structure is interesting. Spitballing here but maybe for sellers, a small percentage based on a given market or appraisal price, then a higher percentage on any selling price above that?

I would agree something like that would make sense. I have done on my last two houses an offer to the buyers agent for 4.5% commission if they got a full price offer in first 30 days of listing and both have sold right away and were well worth the extra 1.5% (Both under $300k so not a big deal)...

 

[advantagecp]

@steelandchrome and @Sauce,It's interesting that the newly developed PLS is an effort to keep agents relevant and bypass the impact of large sites like Zillow, Realtor, and Trulia.

Behind all of the bullshit in their explanation, PLS only serves to make the agents relevant. It does not benefit the seller in any way. Back in the old days, hip pocket listings were common. They allowed agents to benefit themselves at the expense of their clients.

To simplify: If you are selling your home do you want wider or narrower distribution of information about your property? Exactly. You want wider distribution and more exposure.