[gshx]

If Zillow can solve the "problem" of putting all the docs (disclosures, inspections, offer docs, title docs later on, etc) up with the listing along with making a network of handymen (to help out with prettifying a house for sale), most buyers and sellers will be happy to pay them 0.5-1% instead of the seller having to pay the agents 4-5%. There's generally not a whole lot of work in buying or selling a house including agents doing events like open houses and helping with "discovery" and the buyer-seller matching problem. The offer process itself is also quite simple and can be done online. That said, the one benefit of an open house/tour hosted by a neutral party, is that it lets potential buyers easily assess a house without having a biased seller in attendance. This can also be managed and does not really require a real estate agent. Zillow and similar services like Trulia have a fantastic market opportunity in front of them.

[codingdave]

This has been discussed ad nauseum by insiders to the industry for close to 10 years now. Nobody has yet pulled it all together, not for lack of trying, but because of the one major roadblock that you mentioned -- actually going to look at homes. Everything else can be put online, and most of it already is online in one form another, just not always through a single vendor.

I know I'm simply expanding on what you already said, but ... one way or another, you have to go look at a house that you intend to buy. And you don't want the seller there. So you need someone who is trusted by the seller to let you in.

If you can put together a service whereby someone other than real estate agents can do that task, then maybe you could gain traction on everything else.

But I have not talked to anybody who is interested in the work of automating everything else until the problem of physical access to homes is solved, because there isn't money in paperwork. The money in real estate comes from two sources - commissions and mortgages. And most marketing plans depend on reducing commissions, not just redirecting them to a new recipient. So it makes much more business sense to ignore the paperwork that agents normally do, and focus on the mortgage process than the inspection, title, closing process.

After all, that paperwork isn't a pain point for buyers or sellers - they don't do it anyway. The agents do. So the attitude becomes one of, "Who cares if an online service automates the paperwork, when you still needed that agent to open the door? Let the agent go do the paperwork, and at least do some work to earn their stupid commission."

[kanzure]

> I know I'm simply expanding on what you already said, but ... one way or another, you have to go look at a house that you intend to buy. And you don't want the seller there. So you need someone who is trusted by the seller to let you in.

So... I am not familiar with this problem. But what about drones to fly inside and snap pics?

[aggieben]

The problem is not one of physically opening doors. The issue is one of trust. Having drones opening doors instead of an agent doesn't really solve that problem - not to mention that lots of people wouldn't go for that.

[drewmeyers24]

Pretty much every startup is trying to solve trust. If you don't have trust, you ultimately don't have a business. It's a touch nut to crack/scale.

[vitd]

That doesn't tell you things like, "man it smells musty in here. I bet there's a leak somewhere!" or "when I'm downstairs and my spouse is upstairs, the noise when they walk around is unbelievable!"

[gshx]

A lot of the agents typically don't point out any of those things anyway. They're incentivized to make the deal and really paid by the Seller. If both the Buyer and Seller were paying, that might be an altogether different story and it might actually work out better. Having gone through the buying/selling process a few times, I would much rather deal with an unbiased automated system.

[w4]

This is all a great idea - but state laws wouldn't permit it (I work in the industry).

Most of the features you described, and the fee structure associated with them, would be in violation of real estate licensing laws. Hence why no one has provided a modern, competitive alternative to real estate brokers: you simply can't under the current regulatory regime. Otherwise, what you've described would almost certainly already exist.

[rgbrgb]

In most places there's no real estate licensing law against the fee structure in question as long as they registered as a brokerage [0]. As an agent you can discount your fee as much as you want. At Open Listings we're actually operating a very similar deep discount model in California -- you find the home, make an offer on our site [1], then we have a digitally-enhanced agent team for advice, negotiation, and managing the close. The premise is that all of these great listing apps make house hunting (most of the work) accessible to non-Realtors but there's still some useful expertise we can provide in closing the deal, representing our buyer's interests, and making sure all the paperwork is in order.

Update: added sources

[0]: http://www.justice.gov/atr/rebates-make-buying-home-less-exp... [1]: https://www.openlistings.com/offers/new

[w4]

Of course - you can totally offer discounts. Hence Redfin's existence. The key, however, is that you have to operate within the existing licensing law. You can't just act as a low-cost intermediary. This makes any innovation surprisingly difficult, since you incur substantial costs associated with regulatory compliance.

For example, the vast majority of your staff that interfaces with your customers would need real estate licenses in each state you operate in (along with the tens or hundreds of hours of state mandated education to get those licenses). This is in addition to a company brokerage license for each state.

EDIT: Just saw your edits, and that you guys are doing exactly this - good luck! The industry needs more innovation. :)

[JoshTriplett]

Depends on the local regulations, but yes, real estate has gone through quite a bit of regulatory capture. Might be possible to do an end-run via the same mechanisms that allow "for sale by owner".

[w4]

> Might be possible to do an end-run via the same mechanisms that allow "for sale by owner".

I can't speak universally for every state (there's 50 different sets of regulations, after all), but no. The carve out for FSBO is predicated on selling your own home. If you're facilitating the sale or rental of someone else's home, it triggers the licensing requirements.

[JoshTriplett]

Not what I mean. There are several services that provide materials and kits for doing such a sale; Zillow could let the owner control the sale, but provide services to the owner rather than sitting in the middle.

[w4]

Ah, gotcha. I misunderstood what you meant. You can definitely offer limited services and advertising. You just have to be very careful not to engage in any activities the state might construe as creating an agency relationship, or that are specifically reserved for licensed agents.

[codingdave]

Sure you can. I can quit claim my house over to you with no regulations impacting me at all.

There are certainly valid reasons not to do so. Not the least of which being that if the person quitting the title claims didn't actually hold a clear title, then no ownership will actually transfer. But if you think that it is illegal to bypass the processes, then you are too caught up in the processes.

[w4]

> Sure you can. I can quit claim my house over to you with no regulations impacting me at all... if you think that it is illegal to bypass the processes, then you are too caught up in the processes.

You're talking about something totally different than I am here. Selling your own home is a distinct concern from facilitating others in the sale of their home in exchange for payment. The latter cannot be done without following state licensing regulations, which is what I'm talking about above.

[jpmattia]

> This is all a great idea - but state laws wouldn't permit it (I work in the industry).

Uber, AirBnB redux. Provide a service that people want more than one built on cronyism-type relations between entrenched industry and gov't, and the change happens even with the existing law base.

It's not like it's some secret as to how the laws got there in the first place.

[w4]

> Uber, AirBnB redux. Provide a service that people want more than one built on cronyism-type relations between entrenched industry and gov't

Not trying to be a debby-downer here (I'd love to see innovation in the industry), but this would almost certainly get stomped on before it could ever reach critical mass. Uber and Airbnb were able to exploit loopholes in existing regulations, and move quicker than the disconnected, regionally focused incumbents. By the time the incumbents (taxi companies, hotels) caught on, they were left flat footed.

The real estate industry in the United States is a very different situation. The incumbent interests are tightly organized and politically active on a national level. The National Association of Realtors was the third largest spender on lobbying in the USA last year. The only groups that outspent them were the US Chamber of Commerce, and the American Medical Association: https://www.opensecrets.org/orgs/summary.php?id=D000000062

As a result, the regulatory framework in most states highly restrictive and robust. There are few, if any, loopholes to exploit, since the NAR lobbies heavily on a state-by-state basis for uniform, restrictive regulations: http://www.wsj.com/articles/SB112381069428011613

[nsxwolf]

Uber worked because you can be sneaky and give people rides without the government knowing about it. You can't be sneaky about buying and selling homes.

[Scoundreller]

But the real estate agent serves little legal function. I'm not sure if their name will appear on any government document for a real estate transaction.

I see little difference between: A) Hiring a real estate agent to sell my home; and B) Selling it myself while hiring:

1) a photographer to take/post my pictures 2) an answering service to answer a throwaway phone number I create; and 3) a tour guide that does not even know their way around

[cplease]

How are you going to find buyers and get the best price in most markets without listing and offering commission split to the buyer's broker?

The second someone unlicensed starts to regularly interface with other agents, they will get ratted out and stomped on. If you don't interface with other agents, then you are excluding most of the market.

[Scoundreller]

Mostly I was trying to highlight how Uber and Airbnb take a monetary-intermediary approach, while the entire RE industry sits out of the actual transaction itself.

This is probably why I trust the average Airbnb host/Uber driver more than the average RE.

As a buyer, I was never "found". Without representation, I would seek the listing agents directly and have them give the tour. I figure the listing agent would be very eager to earn a bonus/double commission from their selling client, perhaps to my benefit even though I have no exclusive with them.