Best of luck. I’m a commercial real estate professional who has spent time as a broker, lender, and private equity investor.
Residential definitely is a lot More of a ridiculous market. But ultimately as an agent, you get hired to work with mostly irrational actors (sellers and buyers).
As someone who is very interested in AI and taught myself how to code (I don’t know any other real estate people who know anything about code), I think it’s going to be incredible hard to uproot the brokerage industry.
It’s challenging to get buy in from many different types of old school, fragmented actors in the space. I’d love to see someone prove this can be done, but I think it’s a challenge, so best of luck. Curious to follow along.
I think proptech needs real professionals who have been in the trenches to be involved because there’s just too much nuance in the industry outsiders have no idea about.
The ludicrous 6% fee is whats going to drive adoption by end users and in turn by brokers.
Move that fee to 1% for buyer agent and you have a massive market.
The fee is already 1% in a lot of places after the NAR ruling earlier this year so that arbitrage is mostly gone.
It's a corrupt market imo, like car dealerships - they work to legislate their continued existence.
Any market structured where you have some people doing many transactions and some doing few ends up skewed to benefit the person doing many while screwing the person doing few.
It's true with realtors, IPOs with investment banks, car dealerships, funeral homes etc. and it's a hard problem to fix.
How else would a car manufacturer put staff and inventory in every town across the country? They would either build dealerships themselves or franchise it out. Their cost structures don't cover this brick and mortar presence currently so costs would rise across the board.
Car dealerships are mostly middlemen between customer, manufacturer, and state government for registration and tax collection.
I just can't see how you eliminate the need to have locations to store and move around 5000lb metal objects without them.
Tesla does all of this and they do it without dealerships. The problem with dealerships is they’re independent franchised businesses that extract but do not create value, not that they are buildings full of cars.
I think you missed the part about "towns across the country". For almost 20k towns and cities in the US there are 245 Tesla storefronts.
The idea that you have to go to a dealership is what’s being challenged.
If you have faith in the brand, is it that much more absurd to buy via transfer?
If there was a serious opportunity to arbitrage under the 6% fee, you bet that someone would have done it already — and well before the AI era.
To be fair, NAR goes to great lengths to maintain their monopoly and lock out anyone who tries to buy or sell a house without using them....specifically because they know they're priced insanely high for the services they provide and are in real danger of being undercut.
Ever since Zillow/Redfin came out, there hasn’t been a need to use a real estate agent. All buyers are getting push notifications 24/7.
If you want to save on commission, then get the pics taken yourself, and pay a listing service a few hundred dollars for your property to show up on Zillow/Redfin.
> NAR goes to great lengths to maintain their monopoly
Went to great lengths, considering they've lost a few major court cases and are now prohibited from their prior shenanigans.
https://en.m.wikipedia.org/wiki/National_Association_of_Real...
You can buy, for example, literally millions of dollars of corporate bonds for “The smaller of $250 or 1% of Trade Value” at IB.
https://www.interactivebrokers.com/en/pricing/commissions-bo...
The real estate market is still largely price fixed and quite inefficient.
> When the National Association of Realtors signed a landmark $418 million settlement in March, economists and academics predicted that the deal — which included an agreement to upend key practices concerning how real estate agents are paid — would create the most significant shift to the industry in a century.
[1] https://www.nytimes.com/2024/08/16/realestate/realtor-commis...
We are already seeing the shift in practice. The changes went into effect just over a month ago (August 17th).
What exactly are we seeing?
Prior to the changes which only went into place in August, agents were colluding to keep fees artificially high. Buyers' agents would actually hide listings that promised less than what they wanted and all of that information was hidden from buyers until the buy/sell agreement. It is way too early to say exactly what the impact will be, but as an anecdote my agent accepted 2% on the home I just closed on. My prediction is fees will decrease significantly, because it just doesn't make financial sense to pay agents as much as people have been. Also, agents wouldn't have been colluding to the extent they had been if they believed a free market was good for their bottom lines.
Some fees will drop, there will definitely be an H&R Block version of agents.
Other agents will have such demand, their fees will remain high.
It’s not clear to me as a potential buyer that I want to go with the commodity, especially in quirky areas like TICs in San Francisco. We’re in for an interesting ride, best of luck to this team!
>agents were colluding to keep fees artificially high
Sitzer-Burnett involved a very narrow definition of collusion... essentially one Kansas City MLS had a mandatory input field for a seller-paid buyer commission. Realizing the risk of copycat lawsuits, the NAR got involved and decided to settle. Both Sitzer and Burnett should have gone after their own agents rather than turning this into a national issue.
>My prediction is fees will decrease significantly
And my prediction as an agent is somewhere between "business as usual" and "buyers are going to pay more out of pocket and will find it harder to buy homes." Further - many buyers will opt to not use an agent and I'm already making popcorn waiting to see what a clusterfuck that will be as buyers and sellers sue each other into oblivion.
The mandatory "Buyer Broker Commission Rule" was in the NAR Handbook, which was binding for MLSs. Moehrl vs NAR went after twenty offending MLSs and the four largest national real estate broker franchisors in America. They got caught red handed price fixing they had no choice but to settle.
Realtor services are valuable, but they aren't worth 6% of a person's largest investment. On the median home that's $24k, which is considerably more than other professional services related to buying a home.
Yes that's what Redfin does actually. And I'm sure a bunch of others.
Redfin only charges 1% if you both buy and sell with them within a window of time (365 days if I recall from our Redfin broker). I've used them exactly once on both the buy side and sell side, and I was not impressed. I would not use them again, even with the 1% vs a more traditional 5% broker fee.
They're a bit sneaky on this one too. You pay full when you buy, but then they only charge 1% when you sell. So you only save on the sell, pay full price for the buy.
Things changed with the NAR settlement, it's 1.5% to buy and 1.5% to sell in most markets now
This is the thing, the NAR settlement didn’t really change anything, the fee was always negotiable and there always were agents who would offer under 6%. They were typically scummy agents who didn’t last long (they popped up when real estate was hot then disappeared after they burned enough clients and/or the market cooled off).
As in all things you will get what you pay for. I’m not interested in fighting with anyone about what a realtor is worth but I will say:
* All agents are not created equal
* A good agent is absolutely worth it
* 6% is only high if you don’t value your time and/or if you are ok getting a worse deal because you don’t know what you are doing
* All agents are not created equal
* A good agent is absolutely worth it
People aren't really arguing against these things. I don't get it, if the settlement didn't really change anything, why is everyone making such a fuss about it?
My other question is, is there a linear correlation between effort to sell a home and its price? Is a 3 million dollar home 3x the effort to sell over a 1 million dollar home? Because I pay 3x the money to sell it...or am I paying for the "connections"?
I was asked to put together a listing presentation on multiple properties that when combined together represented approximately $18MM in luxury real estate. At that level, it's connections but also the cost of marketing. I estimated I needed a minimum of $100K marketing budget - and ironically the sellers representatives laughed at me and then struggled to sell the properties for years because they couldn't market them effectively.
$3MM anymore may not be a particularly luxury property anymore in many markets. That said - it can cost $$$$ / month for staging and $$$$ for drone work, video and photo work, all the social media and other marketing. Even that $300K house someone else in the thread mentioned, I am in it easily $1000 in my marketing costs before the sign even goes up.
That may be a bad example - I'd imagine once you're into the multi-millions, connections actually do matter in a way they don't if you're trying to sell a $400k house.
I doubt it's much harder to sell a 600k house than a 300k house, but it could be quite a bit harder to sell a 4m house than a 2m house just because there's so many less buyers in the pool and they're likely to be a lot more particular than just wanting a roof over their head.
>I doubt it's much harder to sell a 600k house than a 300k house
It's not about the price per se, it's about the house. If median income in an area is such that the $600k house is "luxury" then it is going to be a lot harder sell. Or for example, I've got a property right now at $559K that is extremely unique and needs probably $150K+ worth of work - so there it sits. Meanwhile, sometimes those $300K houses are super hard to sell if they need a new roof, new HVAC, etc but no one in the area has the $15K it is going to take to actually do the updates because they have just barely enough cash to make the down payment.
I feel like I need to comment here that just because $600K is the cost of a shoebox in a place like Silicon Valley doesn't mean that it isn't a lot of money in many other markets. There are many places in this country where $10K or so in needed repairs to a home might truly be a breaking point for some people.
This logic justifies any amount of fees. They can be excellent brokers and still not deserve $6000 (selling a $1M house) for maybe 40 hours of work as a very generous estimate.
It would be $60,000, not $6,000 but they don’t make $60K. They spit the commission, $30K and then there are other people (broker) that get paid out of that amount, call it $20K to the agent in that case, sometimes less if they gave their client a discount (again this happened all the time before the settlement, I know agents that offered .5% off for repeat clients or friends and family and that came wholly out of their cut, so call it $15K in that case).
Even at $60K there are things an agent can do to swing the value of a house that much or more. Maybe you, the seller, will do some/all of those things, maybe you won’t.
Agents are effectively on-call 24/7 (your agent wasn’t? Sorry, see above: not all agents are created equal) and they often work in the off-hours for every other profession (aka nights and weekends).
Here is the thing, /most/ people buying or selling a $1M+ houses are not nickel and dimming. I sure HN has an outsized group of people who disagree, cool, I’ve seen it first hand.
I find it ironic that on a technology forum people are so quick to jump to “agents aren’t worth it” with so many people think the same thing about software developers and/or their quotes for building software.
> I find it ironic that on a technology forum people are so quick to jump to “agents aren’t worth it” with so many people think the same thing about software developers and/or their quotes for building software.
This isn't exactly an honest comparison. The vast majority of software engineers do not make a percentage of the earnings of the product they're developing. If I work for a company making 150k/year, I don't suddenly start making 300k/year if the company sells my software for twice as much. Likewise, I can't charge twice as much for consulting just because the company I'm consulting for makes twice as much money.
An agent makes a commission based only on the value of the house, which incentivizes them to sell more expensive houses. When I purchased my house, I did most of the work (found the house, hired a home inspector, found my own mortgage, used my own lawyer) - the agent existed because it was basically required, and made 11k for roughly 15 hours of work. If I was wealthier, and could have afforded a more expensive house, they could have made 20k for 15 hours of work. In both cases, they did the exact same amount of work (minimal); why did they make more in the second scenario?
Now that I know how the system works, I will be avoiding agents if at all possible when I sell my current house and buy my next. They're about as useful as used car salesmen, but somehow have convinced the entire continent that the housing market will fall apart without them.
They don't deserve $6,000, or $60,000 which is 6%!
6% of $1M = $60,000
The 6% fee was paid by the sellers, not the buyers. Buyers didn't pay anything to the agents.
But even then, the buyer's agents would "refund" the buyer ~2% of the fee as a cashback incentive to use a specific agent.
but recently, the rule changed so the sellers are only required to pay the 3% fee to the seller's agent and buyers need to negotiate their own deal with the buyer's agent.
Currently, there are many brokerages competing on buyer's fees, dropping the fee to 1% or offering a flat-rate fee.
I'm very skeptical that a 1% buyer's agent fee (matching the existing players) would move the needle much.
The 6% fee (more normally 5% around these parts, western US) is paid by the sellers, but with the buyer's money. Usually. However, it's important to note that there was never a requirement for anyone to pay anything; it was simply what was commonly put into contracts. The settlement didn't change anything about that in particular.
I just sold a house a couple weeks ago. I agreed to pay my seller's agent 2.5% out of the sale price. I also, in the contract, offered to pay 2.5% to the buyer's agent. In the event that my seller's agent was also the buyer's agent, that 2.5% would be refunded to me. What actually ended up happening was that in the offer that we ended up accepting, the buyer asked us to pay 3% instead of 2.5% to their agent. We agreed.
The primary driving factor on all these rates is the net take home for the seller. The reason why the total fee of 6% in a 3/3 split is because if this is done, then the seller will net about 10% higher than if they used no realtor. Similarly, for the buy agent half, they will get multiple extra % of home price above that 2.5%.
The structure of the MLS / commission system incentivizes sellers to take out these large fees because they will be rewarded for doing so. Only when the system is upgraded to allow sellers and buyers to find each other and pay market rates will the fees go down (we want to provide our own MLS in the longer term future)
>then the seller will net about 10% higher than if they used no realtor
See this is the bit where a good Realtor makes their money... on nearly every deal I do, I am saving or making more money for my buyers and sellers over what they could either do on their own or what they would get from another Realtor. Why? Because I have a strong analytical approach to the market and I actually do my job. The typical agent waits for offers to come in and makes no effort to negotiate a better outcome for their seller. Likewise, many agents are lazy and have no idea how to advise their buyers on what to offer or how to create an overall compelling offer, IE: what are the possible levers we can use to create a competitive offer apart from cash on the barrel? It makes me cry when I see agents who don't even know what acting in their client's best interest means - but I don't blame them, I blame the public that makes no effort to interview or get to know their agent. Way easier to pick the person from your church or who you went to high school with than to actually interview and ask questions. I often wonder - does the public also act ignorantly when picking a lawyer, an accountant, a doctor, or other professionals?
"Our own MLS" already exists in multiple forms; getting everyone to agree to use the same one is the problem, and AI isn't going to solve that.
> The 6% fee was paid by the sellers, not the buyers. Buyers didn't pay anything to the agents.
Buyers are the ones paying everything.
At 6%, that means the seller is willing to accept 94% of the sale price for the deal. So with a lower fee or simply less middle men feasting on low information transacters, a buyer with 94-100% could purchase that house and both parties would be happier.
No. Buyers never consent for "their" money to go to the buyer's agent or sellers agent. The selling agent's contract with the seller (not the buyer) is the seller will pay the 3% fee to seller's agent and offer a 3% fee to the buyer's agent.
Buyers historically have never negotiated the fee paid to their agent, other than choosing an agent that would refund part of their fee.
You can switch the words “buyer” and “seller” in your statement and it still works. If you want to consider it being paid by the buyer, you can, or you can say the seller pays it. It is all factored into the deal either way.
I would argue, though, that it is more accurate to say it is paid by the seller, though, since they are the ones who agree to the percentage with the agent, and who signs the contract to pay the agent.
>The 6% fee was paid by the sellers
The buyer is the only source of money. The rest of it is just a shell game.
Well, the buyer’s employer is actually the one paying the buyer the money that goes to the mortgage, are we going to start saying the employer is the one buying the house? No, because that is just how the economy works, money changes hands constantly.
We say the person who makes the choice for the purchase is the one who paid for something… the seller signs the contract with the agent, so they are the ones paying.
When you selling any kind of product or service the price you gonna charge will take into account expenses that you have to sell or make this product, e.g. if you sell app in appstore and Apple and other taxes will eat 45% of your app price and you know you will break even at $1 per app profit then definitely you will ask user for $2.
This doesn’t apply to most people selling a house. Sellers are not setting the price for their house, buyers bidding for it do.
Anyone selling a house using an agent isn’t someone who manufactures houses. They are mostly people selling their own home because they are moving to a different home.
They are going to put their house up for sale, buyers will make offers, and the seller will choose the best offer. The buyers are making offers based on what they are willing and able to pay; they don’t care whether 100% of that sale price goes to the seller or if only 94% does. They are making the same offer no matter what.
And sellers aren’t going to take 6% less if they don’t have an agent. They are going to take the same offer whether they get 94% of it or 100%; they are taking the best offer made.
Even your app example isn’t how it works. There is no “break even” price for a digital good that doesn’t have a COG (cost of good). App manufacturing has a fixed price, and then every unit sold costs them zero dollars.
They are going to set the price to be what maximizes the value of “cost per unit * units sold”. That equation is going to be the same no matter what the App Store percentage is. The only thing the percentage does will be to change the amount of money the company makes and change the equation on whether it is worth making the app at all; once the app is created, the only thing that will determine the price is the equation above, not the cost per sale.
So many people seem to have this idea that prices for things are based on some “cost per good + profit margin = price”, but that isn’t how any good is priced. Many goods end up being priced in a way that is close to that, but that is only because of robust competition. Prices are set by the seller trying to figure out which price will generate them the most profit; the cost to make the good only sets a price floor, where if they can’t get more than that amount, it simply isn’t even worth it to make and sell the good. It has nothing to do with the price ceiling.
> They are making the same offer no matter what
Obviously seller can decide if agree on minimum price. Otherwise I doubt if someone would sell if bidding would end at $1k for a home. If seller wanna sell apartment for $100k then they expect that someone bids with $105k to covert agent fee.
> And sellers aren’t going to take 6% less if they don’t have an agent.
Why not? I many times did a deal with AirBnB host after few weeks of renting by talking with them directly and asking for the same rent minus AirBnB fees. They had no problems with that because they would earn the same amount and only cutting the middle man.
> the cost to make the good only sets a price floor,
Fee based on percent like 6% doesn't have any floor. You really believe that if we now change this fee to 66% this wouldn't have any impact on buyer and buyer would be fine because this 66% fee is paid buy seller?
AirBnB is very different. They are taking that deal because it is easy, and they don't have an easy way to find other renters without airbnb... airbnb is providing a match making service between renters and rentees. When you are selling the house, it is a one time sale for a large amount of money. In this market, you will get a LOT of offers for your house; you will obviously accept the highest offer, whether you have an agent or not. Why would a seller choose to make less money? Your airbnb example wasnt the person taking less money, they were getting the same money; the house example would actually be taking less money. They would never do that.
> The 6% fee was paid by the sellers, not the buyers. Buyers didn't pay anything to the agents.
It’s the buyer’s money, which becomes the seller’s money, which gets paid to the agents. Realtors need to stop lying about who pays the fees.
The seller is the one who signs the contract with the agent and determines what percentage of the purchase price goes to the agent. It doesn’t matter that the buyer was the source of the money, the seller is who decided what to do with it.
If the seller uses 10% of the sale price to buy a boat, are you going to say that the house buyer bought the boat?
That’s a transaction that occurs after the sale. The paying of agents is something that happens as part of the sale, so yes the buyer is very much paying the agent fees.
It's coming out of the seller's cut, though.
Houses aren't sold at a fixed price. Buyers all put in bids and the seller chooses the best one.
The amount paid for the house isn't going to be less if there were no agent fees. The buyer is paying the specific price because there are other buyers who would pay slightly less. It isn't like buyers are adding money to their offer because of agent fees, and sellers aren't going to sell the house for less if they didn't have agent fees. The price point is market equilibrium, which means the agent fees come out of the seller's total.
Now, you might try to argue that more sellers would enter the market if sellers made 6% more on selling their house, which would increase supply and decrease price, but that's a big stretch... sellers are usually selling their house for reasons besides making 6 percent more.
Is this the rate in the USA? In the uk it’s a standard 1% for the seller.
It actually varies a bit in the UK (always for the seller as you say) with a possibly surprising relationship with property value: properties at the top end typically pay a higher % than those in the middle or at the bottom.
IF they can deliver a product that actually works, yes.
>I don’t know any other real estate people who know anything about code
CRE professional here (about a decade in the industry) who was a coder first. I think there's plenty that can be disrupted in real estate, and specially commercial real estate, where there are a lot of old problems that are ripe for solutions. It's like you said though - those who experience the problems and actually know how to write software to solve them are rare. We are in a good position for opportunity.
I think that brokers can (and should) be replaced by something more efficient, but the real problem for disrupters is regulation, IMO. A program/app/SAAS cannot hold a real estate license, and therefore cannot do things like quote rates, terms, or manage transactions. As of right now, it's illegal in most states.
As for the website that OP created, I think it was a nice attempt, but it seems very half-baked and the case for its value is not clear at all. There's some pretty design and not a lot of substance there.
> A program/app/SAAS cannot hold a real estate license, and therefore cannot do things like quote rates, terms, or manage transactions. As of right now, it's illegal in most states.
I wonder if the app could use the same "legal workaround" that political SMS spammers use. The app queues the messages, but an intern mashes the spacebar 100 times to spam 100 different people, therefore a human sent the message, therefore the spam is legal.
Now hire someone with a real estate license to mash the spacebar for your realtor app. Does it suddenly become legal?
> But ultimately as an agent, you get hired to work with mostly irrational actors (sellers and buyers).
I don’t think you’re making the argument you think you are. If an agent is there to be the rational for the irrational, then an AI listing agent talking to an AI buying agent are two rational beings getting more done than ever before, on behalf of sellers and buyers who are free to be themselves.
I’ve bought 4 and sold 3 houses over the years, and TBH the whole brokerage model seems like a two sided market scam but I’m not sure who is winning or being scammed. I’ve used brokers and not, so I’ve seen both sides.
I have family that are brokers are frankly they aren’t very smart but they know how to hustle, so they do decently well. They offer a service and do that but the costs for what they do are really weird in the margins.
It seems like the most perfect example of a bullshit job but somehow it benefits both sides enough that it persists because home ownership is such a (reasonably but problematically) aggressively promoted thing.
Very confusing tbh.
Appreciate the support. We aren't necessarily trying to uproot the industry, just want to deliver a better buying experience. People deserve agents who go out and do a lot of the work for them. Our goal is to do everything we think a real estate agent should do. Lots of value to be provided.
Aaah, but can it show you into a room with a toilet, sink, shower and bath in it and tell you "This is the bathroom"?
If not, you'll never unseat the seasoned professionals of the UK real estate sector ;)
Neither can an AI.
The whole point of real estate agents is that as a seller I don't trust my house being open to any random buyer.
I can attest to this likely being true.
We are working on morfi.com, trying to build better software for mortgage professionals, and it's challenging.
You can see it in reporting from firms like MeridianLink, mortgage (and probably real estate) lag behind their peers in the adoption of technology.
https://s28.q4cdn.com/477693378/files/doc_financials/2023/q4...
> you get hired to work with mostly irrational actors (sellers and buyers).
which could maybe turn out better in the short term as tools for human agents, but still
I wouldn't say our clients are irrational, but I agree that buying a house can be stressful. The goal is to anticipate and address all of our clients' questions, including those they might not even know to ask. From our experience, this significantly reduces the frustration that typical homebuyers often feel during their purchase journey.
TLDR: Oftentimes the agent not being proactive is the cause of the buyer's behavior.
> As someone who is very interested in AI and taught myself how to code (I don’t know any other real estate people who know anything about code), I think it’s going to be incredible hard to uproot the brokerage industry.
Has learning to code generated any benefit to you? What areas do you think have space for code to help buyers?
I think there are many, and - 'AI' or not - a clever tool can generate real value for buyers. Things like mis-zoned units, unreported square footage, signs of buyer motivation, estimates of homeowner equity, etc. can be estimated by good buyers agents but could be made available to everyone for a small subscription.
There is 0.5 mb of data per home in the US. Too much for a person to sift through, typically. We use LLMs to break that down into actionables for families via text message. The goal is to keep things digestable. People can understand if their unit is mis-zoned if you use it in this simple phrasing, but not what a "RM-3 District" is (common type of zoning in SF). The LLM + search abilities can explain a lot - this is how most people learn things about real estate, this process of googling phrases they don't know
I am actually your target market. We are looking to buy a house early next year. But, one thing that put me off is that you don’t list what fees you charge, is it flat rate or a percentage, ..etc.
In the FAQ I see this but no mention of the standard terms of the buyers agreement:
> Do I need to sign a buyer agreement?
> We will let you know if you need to sign a buyer agreement. You will for sure need to sign a buyer agreement when you submit an offer through us, but otherwise we can work out a timeline.
I know you just launched so not assuming any bad intent but it would be good to share pricing information for the services you offer. I have had to deal with lots of “Call us for pricing” in my day job. So, for stuff like this I just move on if I don’t see at least a price range listed somewhere upfront.
Other relators do not put their fee pricing on their websites so we decided to follow suit. We have the same pricing model - negotiable. But we provide better service.
This says to me, "we are just like other realtors" and makes me less inclined to use your services.
Transparency is a killer feature for realtors that would set them apart from the masses. AI is a nice to have feature.
> We have the same pricing model - negotiable
Nobody wants to start off with an adversarial discussion with the person they are trying to hire to help them.
Also, I'll point out that on your front page, you say:
> We are more responsive (24/7), provide better service, and offer better prices.
But here you are saying you offer the same prices.
True, I'll update the website to reflect our updated pricing model
FWIW services like Redfin list their fees right upfront.
Fwiw redfin is also tiny with 0.78% market share and slim or negative profits
Some realtors do in fact list their commissions and fee structure:
Some examples from the market we are looking in.
1. Flat fixed fee and refunds extra: https://arrivva.com/
2. Minimum 1.25-1.5% but refunds 50% of any commission paid above: https://www.walawrealty.com/buy
Minimum for me to work with a company is transparent pricing. Even a range based on levels of service is cool. But, I am not going to waste time on a phone call with no clue as to fee structure.
The whole agent commission business is already fully shady and at least one class action brought that to light[1]. Both buyer and seller agents benefit from higher home prices and from percentage based commission despite the work being the same regardless of home price. The customers are always the victim.
https://realestate.usnews.com/real-estate/articles/what-the-...
I've been very pleased to use an attorney on a simple hourly fee who did not have such gross conflicts of interest.
We are not participating in the race to the bottom. There are a lot of 0% fee realtors out there! Try https://www.turbohome.com/, I've seen them on social media
...So being up-front with your pricing, even if that's a "our fees are negotiable but tend to be (flat rate or percentage) around the X range" is a "race to the bottom"?
Frankly your responses on this page have convinced me to stay clear of this product.
Sorry, I guess.
Thanks for feedback. Our priority is on good service
I was so excited when I saw this and now I'm disappointed. This kind of statement "quit on trying to win clients that are trying to get the best price" creates a false dichotomy of those who are trying to pay nothing and those willing pay whatever. There are tons of customers in the middle who are happy to pay for important services but think 30K (3% in high COL areas) is too much for the services rendered.
That being said, I think as long as you are honest that "better pricing" isn't your goal then fair enough. It isn't the service for me, but I'm sure some folks will certainly be excited about it.
I don't know a single home buyer who likes that though. You have an opportunity to differentiate by moving away from the obnoxious dynamic that exists today.
So 3% and even lower touch service, oh yea “the seller pays for it” right? Buyer Agents are already grossly overpaid for the amount of actual work involved IMO, you so much as pointed that out in your stated value prop except found a way to keep the greedy commissions and not actually improve anything for the buyer.
There’s flat fee agents that will do exactly this without AI and at a cost of $500-1000 where I live. You should do that and go for volume. Edit: Oh and their offer doc includes a clause that effectively negates the 3% buyer commission and nets seller the same amount without letting their agent keep the full 6%
If you could normalize this, you will have truly disrupted the industry. As is, your an ai substitution for status quo
I’m curious about the “market charges X so I’ll charge X too but with a better service.” I’ve seen this elsewhere, too.
Isn’t the point of replacing a human agent with software that your margins are better and can charge less to the end user?
Realtors do in fact list their fees. More and more of them are, especially after the August 2024 changes
Struggling realtors list their fees as a feature. Look through any of the top realtors in the bay area from last year: https://www.theleading100.com/honorees/theleading1002024/, you'll notice none of them list their fees. Here's the websites of the top 2 realtors in the bay area from last year, to save you some clicks: https://www.kerinicholas.com/, https://go2marin.com/
Aren’t you trying to be better than them though? People need to know that they are saving money with your new and unproven service that could go awry in so many ways.
People buying consumer products typically believe in price signaling. We've actually had clients believe in our services much more at full price than when we were discount a couple months ago.
The default question when we charged a discount price was - "but what am I missing out on if I choose you?" - and even when we said "Nothing!" clients bought into the discount pricing signal already and could not be swayed. This question is never asked at full price
> But we provide better service.
How would a prospective customer know that?
We let you drive your own process and interpret real estate data with AI. We target customers who are looking for these in their Realtor
> interpret real estate data with AI
What does this actually mean though?
The texting service we provide works similarly to texting a regular realtor. You can text it "Is a $1200 HOA fee per month high for san francisco?" and it will do the searches and compare the local properties to tell you an answer
So do you actually do real estate agent things: make contracts, review contracts, communicate with your client, negotiate on behalf of your client?
Or are you an information service specializing in real estate information?
I'm a licensed agent in CA and am particularly interested in the answer to this question.
There's very strict regulation around unlicensed individuals performing activities requiring a license (negotiating, showing property, etc). Thus I would be surprised if they have AI doing this for a client!
That doesn't in any way address the question the other commenter was asking?
Perhaps he meant better user experience.
There are good realtors and bad realtors. I could imagine an AI chat bot that was better than some of the mouth breathers out there. But I wouldn't use those people anyway. But there are good people in the real estate business. if you want someone that can negotiate a good deal, and answer complex questions specific to the local laws, who knows the local neighborhood, and the local realtors, who can handle last minute changes and help you buy that house when your approved loan suddenly falls through ... you want someone on your side in those cases. Not some damn chatbot. ( my wife is a realtor)
Now ... an AI powered tool to helped realtors and buyers communicate, schedule, track progress, .... that would be a great application.
Is your wife looking to join a startup?
I think many parts of being a realtor are already automated by realtors. They are already trying to automate themselves.
They use scripts to get first clients and negotiate. They use automated email campaigns to advertise their market and local expertise. They use automatic mailers for algorithmically selected properties. They use APIs & software services to determine similar property suggestions.
So these pieces are already automated by softwares that realtors use.
Our difference is we'll wrap everything up with a bow and just fully acknowledge that we are an automated solution.
It's funny you say that, because we are actually working on this exact tool right now. I'd love to chat if you'd like to discuss?
I share your general concern, but tbf these people aren’t doing the obvious and basic “let a chatbot do it” thing, they’re more making a platform that involves a few specialized language models for making the expert-gated stuff accessible to all. Like, they’re not writing contracts or negotiating using an LLM.
I understand your wife is in the industry, but that’s honestly a huge bias in this discussion IMO, not a help. No offense intended, of course; I well understand and totally relate to the sinking feeling of changes coming to your industry! But I think it’s just objectively provable that home realtors and car dealerships are two US industries that have been allowed to fall behind the times for a while, now.
I think there's a balance of some crowd who will love an automated solution and some who will never get there.
Some people still don't want to even shop online! Those people probably won't be convinced to use an AI based service
Imagine how easy it would be to influence the AI to redline.
Slumlords, racists, and other CHUDs are salivating over this
A) this is a buyer’s agent, not a seller’s agent.
B) I don’t think you tell the agent your race, and traditional bias protections (namely doing the whole process without meeting in person) would still be in place AFAIU.
A) Correct.
B) Yes, I think the AI agent actually can more easily ignore your race / age / gender because it is not programmed to go look up those things and people don't text their agent what they are - hard for the LLM to know these things and start to bias
> I think the AI agent actually can more easily ignore your race / age / gender
I challenge you to support that idea in any way.
> because it is not programmed to go look up those things
The concern is what it's trained on. How have you curated your data to avoid introducing biases based on race/gender/etc?
> people don't text their agent what they are - hard for the LLM to know these things and start to bias
The exact opposite. The way people communicate, especially via text, is heavily dependent on their background and is full of social signals. LLMs are trained on data sets that are often annotated with that kind of information.
How would you affirmatively prove that your LLM model wasn't making inferences about those categories that influence it's output?
Agents are there for the edge cases. We had a contract dispute that required negotiations and even a brief discussion with a lawyer. At one point, our agent was calling title companies in the area to find the _other_ escrow account.
How are you planning on handling cases that abruptly require complexity? At first glance, it looks like using a service like what you are describing would have been an unmitigated disaster and would have cost us a ton of money, and we wouldn't have known that at the start of the process either.
Raffi, my cofounder, is an attorney himself along with having a Realtor license.
Most Realtors are not attorneys. You said you needed to talk to an attorney but what if your realtor.... was an attorney?
So we have more ability to handle edge cases, not less!
>Most Realtors are not attorneys. You said you needed to talk to an attorney but what if your realtor.... was an attorney?
You are kinda leaning into an observation I've made as a Realtor... whether I should go get a law degree. In many states, the real estate agent really is just a marketing person, and once it's time for a contract the lawyer gets involved. In those cases, the challenge I see is that lawyers are not real estate people - it has been my experience that they know nothing of zoning, land use, water rights, fencing, schools, soils, construction, and the myriad of things I'm expected to know about or find resources for my clients about.
on the other hand, when I look at the risks to my business and the ever-increasing regulatory environment, it sure looks to me like the future belongs to lawyers. Better to get a law degree and then become an expert in real estate than be a real estate expert beholden to whatever the lawyers are making us do now.
I mean the premise of your product appears to be that I'd be interacting with an AI. If I were to use it, I would not be hiring Raffi---would I?
I was in a situation where the seller of the house, after signing our contract, halfway through closing, decided to try to accept another offer that would close faster. The seller attempted to get out of our contract when we wanted to enforce it and close.
An AI wouldn't be calling escrow companies for us. An AI may have a recommendation about whether lis pendens is necessary but it wouldn't be personally taking it to the courthouse before close of day on a Friday. An AI would not be able to watch the property in case the other buyers showed up.
Obviously with a smooth transaction none of this is necessary. Most transactions are smooth, and that's great. But ALL the value of a real estate agent is in the edge cases. I'm asking what would happen to me if I would've used a tool like this instead? When abruptly this sort of work becomes necessary but I've never spoken to a person. In such a time, I don't just want advice, I want an actual agent to help me make a real decision, quickly, and then act on my behalf.
Is that Raffi? How many people is Raffi helping? Is this just Raffi's fancy tech driven real estate office that will be slightly larger than the usual due to leveraging tech?
The vast majority of agents communication is over text and email. It is quite rare that it is required that a realtor must make an in person appearance somewhere, usually that's just for first meetings.
But yes, when stuff like this happens, we'll have a person do the required representation.
Put it like this: if 90% of realtor time is spent on communication that is done over text an email, then each realtor will be able to serve 10x the clients. But that still leaves time for them to show up at a courthouse on a Friday, as you mention
How many residential houses have you personally bought or served as a realtor for? In my experience everything other than rote paperwork and sending over information is done via chat or in person. No realtor is going to walk a first-time buyer through an inspection report via text message or email.
When I bought my house as a first time buyer in sf, my agent walked me through my disclosures over email..
> It is quite rare that it is required that a realtor must make an in person appearance somewhere
This might be true in urban markets - I have seen agents with a good book of business who are able to work remotely - but it isn't at all true in rural markets where the culture is entirely hands-on. I still do far too many deals with ink and paper in someone's living room or on the back fender of a pickup truck.
Raffi doesn't scale. Are you going to hire more Raffis?
There is only one Raffi.
-Raffi
Edit: AI is currently being coded up to mimic my behavior/tone/advice/etc.
> AI is currently being coded up
Said every failed half baked AI startup the past year. Show the results when done. Saying that you are working on AI is barely a step beyond saying you have a concept of a plan.
> Edit: AI is currently being coded up to mimic my behavior/tone/advice/etc.
You, as a licensed attorney, are training an LLM to give your clients legal advice?
So like AI Gilfoyle
What's the pricing? Do you take the entire 3% commission? If so, ouch, and do you anticipate this will be affected by the recent anti trust cases?
Is your use of AI just chatgpt API calls? How quickly could you scale given there's still humans in the loop? What are the blockers to getting humans out of the loop?
Have you used your MVP to close any real sales?
Our pricing is negotiable. What we're seeing so far is that >95% of homes are still offering full 2.4% buyer agent concessions in the bay area.
Our main service is our texting service which you would text as if it was a normal realtor and it can get you market comparisons, schedule tours by texting agents, asking about if there's offers on homes, etc.
Blockers for getting humans out of the loop is primarily just user trust. It's quite simple to pull APIs that get specific data and text people and fill forms, but real estate agents have a very high CAC problem, due to this trust issue and competition.
MVP has completed 1 escrow via text bot, we got paid 27k, another home went into escrow yesterday, 35 clients touring homes with us. We registered with our real estate brokerage in July.
> Blockers for getting humans out of the loop
Do you think that people want humans out of the loop when it comes to buying and selling real estate?
> MVP has completed 1 escrow via text bot, we got paid 27k, another home went into escrow yesterday, 35 clients touring homes with us. We registered with our real estate brokerage in July.
That's amazing traction! Congratulations!
How much manual intervention did these first couple of sales take? Are you using your own local/hosted model and fine tuning or otherwise incrementally improving it?
Disclosures analysis and text-to-tour scheduling were first to be automated, and those were available for our first close. We now have market analysis, offer drafting, full AI texting, etc.
That seems like very high-risk work. How do you manage that liability?
For the escrow transaction, were you the buyer or sellers agent?
Guys, this is so cool! I am strongly in favor of anything that cuts out rent-seeking middlemen.
Every time someone mentions real estate to me, I immediately think back with intense resentment to the thousands upon thousands of dollars I paid brokers just to unlock crappy studio apartments for me in Boston. I was just out of school and barely had any money, but I was still paying a huge premium over the cost of rent for ~nothing. So annoying.
> Guys, this is so cool! I am strongly in favor of anything that cuts out rent-seeking middlemen.
This company is another rent seeking middleman.
Same. Its why we started this.
This piques my interest, as I have worked in this space for some years, AND I've had terrible experiences purchasing homes in Bay Area and elsewhere.
Product questions:
- How is your solution better/different/cheaper for buyers who would otherwise choose a discount buyer realtor services from Zillow or Redfin?
- Who will be doing the tours?
- Are you offering a tour-only non-exclusive representation agreements?
Business questions:
- Seller agents in the Bay Area will definitely "blacklist" buyers who use this, as they've done for Redfin and Open Listings. How are you solving this?
- Why are incumbent giants not building this? Are you worried or solving for some unknown pressure that stalls tech-realty startups in general?
- Residential real estate transactions more often than not require some high-touch shenanigans due to things like liens, solar loans, inspections, contingencies, negotiations, etc... how are you solving for this?
- Zillow doesn't actually transact homes themselves, once you click that you're interested in a house, a realtor will call you who is non-zillow affiliated, they could be with any brokerage. Redfin only offers you discount services if you buy + sell through them, but most people buying in the bay area aren't simultaneously selling a home through Redfin.
- We are currently using a 3rd party showing service which has people come and literally open doors.
- Yes we are offering representation agreements to help people tour in light of the NAR suit.
- We will solve the blacklist problem when we get to that size. Not going to start running before catching the ball.
- Incumbents like Zillow have agents as their primary customer, they wouldn't put out their main customer. Redfin's model is to have the human agent at the heart of their product, it would have to be completely remade if the customer was using the interface.
- Liens are analyzed using our disclosure summary tool. Solar loans are often liens, so same applies. Inspections are a disclosure. Contingencies fall into 5 buckets which are fairly standard of inspection/mortgage/insurance/title/appraisal. Negotiations are usually done over text message or email.
Sellers, sure but I don't understand why a buyer would NOT want to use an agent? You mention better prices, but I don't believe I'm in a unique environment where the seller covers all costs and agents work on commission.
>> The founders of Modern Realty realized that since buyer agents are paid for by commission, they will encourage you to buy immediately and high. Modern Realty allows you to transparently control your transaction.
I believe this could be a flawed premise. It's no secret agents are after the quick sale, but it is far easier to convince the seller to accept an offer 20 under than talk up the buyer.
Buyer agents are not free. The buyer agent commission has historically been felt more indirectly by the buyer, sure, but sellers pay them out of proceeds. The recent NAR settlement agrees that this needs to be clear. This is also a contributor to higher transaction costs and inflated commissions that Modern Realty seems to be addressing.
I personally know Raffi, he was my roommate in college. If ever there was a CEO you wanted to back (or someone to help you buy a home), he is it. Some highlights:
-Not from a wealthy background, he got where he is due to hard work.
-Paid his share of the rent by trading stocks.
-He bought a used SUV off of Craigslist and negotiated the price down by almost 90%, afterwards the seller smiled and said something akin to "the balls on this guy!"
-Double majored in electrical engineering and economics in college.
-Worked at the US Patent Office reviewing video card patents, well before cryptocurrency, bitcoin mining, or AI.
-He built his own desk using woodworking skills.
-Studied contract law and has closed some multi-million dollar deals for other startups. He quit this high-paying, stable job to start Modern Realty.
-Has his own number of AirBnb properties.
Raffi has the very unusual combination of street smarts, book smarts and salesmanship.
:)
I think it’s a bit misguided in the pitch by too boldly trying to replace all buyer agents. A lot of what realtors offer, especially to first time buyers (~1/3), is emotional support and confidence/security for making the biggest financial decision in their lives. I don't believe an AI isn’t going to be able to do that. But if you’re a second+ time buyer, then I think it makes more sense.
I actually do believe that AI can make someone feel more comfortable with their purchase.
Let's break down the communications that realtors currently do to comfort buyers (mostly over text, which is also how we communicate):
Tell you comparably priced properties - we do this. Remind you the steps in the process - we do this. Tell you basic stats about local transactions (such as telling dejected buyers that only 1/6 home offers get accepted in the bay) - we do this. Send newsletters for market updates - we do this. Tell you what other agents are telling them - we do this.
I think if someone really needs a person putting a hand on their shoulder, then we aren't that. But we have implemented many of the typical comforting realtor actions
Fair enough, and I wish you luck because I welcome down pressure on existing fees. My take is simply that the positioning seems to unnecessarily make it a fight against all buyer agents, whereas it might be better to start by targeting the buyers who already "get it".
Currently, the description on our website says that we use AI to help you interpret real estate data and gain an edge on other buyers - nothing about fighting other agents.
I think that is injected opinion from commenters here. & yes, we are targeting buyers who already believe that they need a service like this due to their past or current experience
> we do this
Everything you've described could be achieved with a basic web app.
Not seeing what AI brings to the table here other than being a fake human that gives inaccurate advice ~5-10% of the time. Which seems risky when I am making the biggest financial decision of my life.
Is emotional support worth $60k on a $2mm house? No, it isn't. Lots of realtors are trying to justify their worth but the reality is a large number of transactions still involve the buyers/sellers doing their own research + due diligence.
> Is emotional support worth $60k on a $2mm house? No, it isn't.
There is no practical ceiling on what people will spend to feel comforted and encouraged, or to have their choices applauded.
I am not defending the realtor fees here. The free market should decide what is worth to anyone. My take is simply that an AI realtor doesn't do all that a (good) human one does.
After my first home buying experience, I can assure you that "emotional support" is actually "emotional manipulation"
I tried to automate a big chunk of property management (mostly commercial) over the past few years. The main thing I realized is that it's mostly a people business, and AI (or computers generally) are never going to stand over a vendor's shoulder and keep them honest (e.g. make sure they sweep up or don't scuff the walls), or have a difficult conversation about late rent with a tenant, or show up after hours when a pipe breaks, if only to show face with a tenant.
There are definitely workflow and process elements that can be automated. But if wealth management is any indication, there are a lot of people willing to pay a premium for having a person involved. Not sure why real estate would be different.
The wildcard in all this is the NAR court decision. If buyers have to pay for their own representation, that might make them shop around a little more.
I think people are constantly changing their comfort zones when they fall in love with different products.
People definitely would be open to real estate w/ software. Otherwise, by this logic, why do people use Zillow? Why don't they just drive to their local Relator office to ask about local listings? How could you trust an online algorithm to show homes instead of someone describing homes to your face?
We are seeing that the fraction of home buyers that sign with the first buyer the meet is declining - more opportunity for us!
I tried building software in the real-estate space and its very difficult to break in and change consumer behavior. You can see what I was working on here (https://findur.io). The app is active but the business is shut down. I just leave it up to have as a portfolio project at this point. I've learned many hard lessons from doing this journey.
Lessons learned that might help you guys out: - Consumers want everything Zillow has. Until you actually build Zillow AND THEN start to innovate on top of that, people won't come. - Zillow is developing the "everything app" for home buyers. Read their quarterly reports you'll get insight to what they are doing - Consumers in this market won't pay for a service give Zillow and others are free. Market is tough - Brokers are paying other fees and don't want to buy additional software. - Realtors are not doing well in this market so this must be a huge value add or they won't come. They also require a mobile version because they are on the road a lot. - Validate that your company is not just a "feature" but truly something different. A lot of times, Zillow can just build out the feature itself. It already has a first pass at using LLMs for search
I couldn't get a tour request to work on Safari (desktop or mobile) or on Chrome. Curious how offers work - you route the web form to a lawyer who then writes the offer and routes it back to the buyer? How are you handling "interrupts"? IE: all the things that need to potentially be part of an offer that only a savvy broker would know how to address with the buyer? How are you handling things like even the seller's disclosure, inspections, etc?
> then reviewed by an attorney at no additional cost.
So how do you make money?
I am skeptical but optimistic. At the very least, this introduces another avenue to let competition drive down realtor pricing. I would like to see a realignment of incentives. Getting a cut of the sale price is just good for the agents' bottom line, but not good for the buyer or seller.
The problem is the monopoly realtors have. Regulate it better, or break it up, and the market can definitely handle the rest.
Our goal is to own the listing service that homes are listed on. There is this network effect of needing to be on the same listing service that everyone else is on.
Can you use the word realtor? I thought it was copywrite protected?
Trademark, but yeah, that was my understanding as well.
Our agents have real estate licenses and we are registered with a real estate brokerage.
Does your product produce any work that isn't examined and approved by one of those licensed agents?
lol. it's not too late to delete this. the fact that you don't have the fundamentals together does not inspire any confidence.
I don’t understand, what about this says they don’t have their fundamentals together?
Realtor is a trademarked term for members of the National Association of Realtors. You essentially can't use the term Realtor to describe anything you're doing unless you're a member. They do actively enforce this with lawyers. Google: "realtor vs real estate agent"
The youtube video is very abstract and vague TBH. The text messaging is a good feature but the response shown in the video seems like a rushed response with bad formatting. The attention span of users is really low so UX is going to be a game changer in AI. I lost interest when I saw the markup formatted text message responses.
Hey, can you send your AI agent over to this house I'm looking at and measure out the bedrooms for me? Also, there's tile in the kitchen; was it laid correctly (tile under baseboard) or was it laid badly (burying the bottom of the baseboard)?
Human buyer agents wouldn't do these things that you're asking
You are grossly underestimating the things I will do for a client. I've shown houses on holidays, measured and filmed everything under the sun, crawled through muddy bug-filled cellars; the difference between a good agent and an average agent is even higher than the difference in 10x programmers.
My buyer's agent did those things for me yesterday, and would do them again today if I asked. That's what a buyer's agent is for.
I, like many of the other people in this thread, had a buyer agent that did nothing. If you need someone who can do these things, looks like you've found that person!
So the value prop is that you’ve built a service that does the same job as a lazy buyer’s agent? If I’m paying someone to help me buy a house, they better be Johnny on the spot handling my requests, which include measuring a room or advising if something was installed properly or not. If they can’t do basic things like that they are useless to me.
I don't see anyone asking the question that to me is the elephant in the room:
How are you preventing hallucinations and plainly false information being sent to buyers engaging in what's likely to be one of the largest financial decisions of their life? Beyond just leading to a bad UX, what's your legal exposure there?
You mention providing comps, there's a LOT of local knowledge that goes into that. How are you automating that? Other solutions I've seen like Zillow are pretty laughable. In some neighborhoods a 2 car garage is worth six-figures despite not contributing to square footage, because pulling permits for a new one is basically impossible, just as one local example.
Our goal is not to rewrite every property description, but rather just link you the properties that we think you would like. If a property is mis-listed on Zillow, then that would be the same issue if a Realtor would send you that property as a recommendation
> How are you preventing hallucinations and plainly false information being sent to buyers
You must have missed this part of the question.
Seems pretty important.
Looking through the demo I think almost all of the experience is being powered by the zillow API, and a minor amount of summarization may be getting handled by an OpenAI API. I think the AI claims are largely but not entirely hype related. It's still not very clear to me what advantages this is giving me as a buyer vs a traditional agent or even being unrepresented and just using zillow's product offerings. Maybe I'm missing the point though.
It is important for some company to make home buying better. Even outside of the pain of unaffordability, it is an utterly broken process. Advent of LLMs do give hope that this process can be imporoved signifiantly.
Fun fact: I met Raymond and Raffi a long time ago and discouraged from going into this area. But now, I am glad they did. Their conviction is inspiring.
If Turbo tax can make it possible for a person to file taxes, I am pretty sure a home can be bought online.
Best of luck to modern realty! .. and we should hang again sometime :)
> If Turbo tax can make it possible for a person to file taxes
Which is a 40 year old piece of software.
And during these decades we've had with NLP and basic rule engines the ability to answer questions about the buying process. So not sure what innovations LLMs are bringing to the table here.
Thanks for the support a_d :)
congrats on the launch! .. I am loving this entire thread.
Who is your target market? I've certainly always wanted a product that lets me cut the realtor out of the loop. When I bought my house, it seemed if anything the realtor just got in the way. I had picked out the house on Zillow, and really just needed to see it once and put in an offer.
Then of course the realtor wants you to look at houses they represent (as a comp), and also introduce you to their inspector/mortgage/lawyer friends. It seems like the incentives just aren't aligned at all.
I imagine a lot of people in the tech scene feel the same. i.e. would love a "buy now" button that skips all the people steps. But I wonder how much that sentiment is shared by the broader real estate market.
The target market is the personality of buyer who wants to do self service. Someone who finds houses on Zillow and just gets a realtor at the end.
Realtors are paid on commission which means that they want to transact high and immediately. Poor alignment with intent for buyers.
We have an offer drafting service on our website where all you need to provide is your email, phone, property, and price and we can go from there.
>> Realtors are paid on commission which means that they want to transact high and immediately
This is either naive or disingenuous. Do the math; realtors want to close fast but don't really care about the price the way the buyers and sellers do. The commission difference on a significant gap is not worth losing the deal.
>The commission difference on a significant gap is not worth losing the deal.
You get it better than the parent commenter... just this morning on a deal the other agent and I each agreed to chip in a bit to keep the deal together, even though the actual commission we will each receive is borderline not worth the effort. Real estate is a relationship business. We take care of clients they will come back and they will refer their friends. Yes deal flow is important, but just transacting high and fast is a good way to burn out both yourself and your clients.
Also, a huge percentage of deal volume comes from referrals. Successful realtors don't become so without thinking long-term.
Realtors still spend the majority of their time working on marketing themselves as opposed to servicing clients. "Referrals" is disingenuous because realtors spend so much time reminding clients of themselves - would this referral have occurred without that?
This seems like a strangely cynical or naive perspective that just reinforces the anti-realtor messaging you think is injected by commenters. >50% of buyer agents are engaged through either referrals or repeat business. Are you not intending to use referrals as a customer acquisition channel?
The math is that if the buyer Realtor convinces their buyer to bid a higher $, then they increase the probability that the buyer will get their bid accepted quickly.
My own realtor convinced me to bid a price that the seller accepted in 30 minutes for my home - immediately == high.
I'll try anything to get rid of realtors. They're the worst form of rent seekers, and it requires no real skill or training other than a certificate that I could purchase with a highschool diploma, taking one class, and passing a multiple choice exam.
Are you speaking from experience in the real estate industry?
I'll agree that RE agents ("Realtor" is a trademarked term) are essentially unnecessary for the happy path when a property sale goes smoothly. In that case, they are overpaid secretaries.
But the reason RE agents are their own profession is because when a sale starts to wander off the happy path, there can suddenly be a LOT to know, discuss, and do. A good RE agent will be honest with you if the asking price is ridiculous in either direction. They know all the little local details and laws that are easy for a layperson to miss. They'll help you deal with a difficult buyer/seller. They know where the flood plains are. They know about zoning. They know who to call when the weirdest shit pops up. There are few other areas in life where ignoring (or not seeing) non-obvious red flags can ruin a person or family so completely.
I have had bad RE agents that were uncooperative paper-pushers who kept dropping the ball, and I have had good RE agents that were worth every single penny they earned.
If you want to be mad at something, I suggest looking into the National Association of Realtors. It is essentially the union that all RE agents are a part of, whether they want to be or not. NAR essentially owns the bulk of property listings in the US and heavily gatekeep access to it.
Yes, if every deal went according to plan, you could just use half an hour of attorney time.
For our value add compared to the regular realtor when things go wrong. Our thesis is that because 65% of home buyers use the first realtor they meet, most individuals are getting this "uncooperative paper-pusher who keeps dropping the ball". We can outcompete this average realtor on the quality front.
Our end-game plan is to own our own MLS.
Thanks for the reminder, I did get surprised by several local laws despite having a realtor familiar with the area. I speak from experience as a buyer who did all the work and indirectly paid a parasite a lot of money to cost me even more money. I need to emphasis that the issue is that I don't have a choice in the matter. In cases where I don't need them, it doesn't matter if they're good or not, they're purely parasitic.
I don't want them. They've inserted themselves in the process against my will.
My realtor was invaluable when I bought a house. He had a lot of valuable guidance on what to look for and what to avoid, as well as advice on how to make our offer stand out in a seller's market. I'm not saying that there aren't realtors who are just parasites, but some do earn their pay. Mine was one such.
Prior to the Aug 17 settlement, Keller Williams said ~65% of home buyers in the US used the first buyer agent that they met.
The quality bar is very low to become a realtor (3 months of online coursework).
Realtor reviews are cooked and completely fake online.
So it is not a big jump to say that the average realtor experience is poor as they are usually driven by a single advertisement or a single Zillow link for most people.
We try to mimic the behavior of the best performing top 1% of realtors and give that experience to all.
My realtor was worthless. I picked the house, picked the inspector, and then just had to find a realtor in the area who wouldn't bumblefuck it up too badly. He still managed to somehow cost a lot of extra money by moving extremely slowly. I don't need or want a realtor but the system is set up to ensure they continue to exist regardless of if they have any value.
The issue is that we don't really have a choice in the matter. In a properly functioning market, you could still have your realtor if you wanted, and I could pretend they don't exist instead of having to help support their lifestyle.
Once we can do buy and sell side then we can be the full marketplace and cut out the realtors
Some are valuable, some do a good job at making themselves seem valuable to you. Our goal is to take what the valuable agents do and make it even better. There are so many places where an agent can add value (search, credits, getting you the best interest rate, doing all the research for you, etc.).
Yes! rm the middleman
The biggest contribution my realtor made was good negotiation, but even that cannot be confirmed. Why? Because I never spoke to the sellers directly. For all I know, I was their only offer and they were just holding off to see if anything else would come through.
When I sell my current home, the realtor commission would be around $20,000. That's $20,000 cash equity that is taken out of my hands. When I did this simple calculation, that's when beyond the shadow of a doubt, I knew I would not be using a relator -- I don't care how much of a headache it could be. I'm keepin' that $20K.
>the realtor commission would be around $20,000. That's $20,000 cash equity that is taken out of my hands
Not to defend the current real estate industry too much, but if the sellers were not paying $20k for a buyer's agent, the price of the home would likely just be $20k higher. That's an extra $20k that the sellers would get to keep. If they kept the price the same with or without an agent, that would seem to be some pretty irrational behavior. They'd be giving up $20,000 for no reason!
A rational seller is selling for as much as the market will bear, and are only paying transaction costs that they absolutely have to. Again not defending the current system at all- the sellers are the ones who who are paying too much in this case
This is one of the main reasons we started this company: transparency. With our service, you'll soon be able to see all communications and texts with the seller and listing agent.
I've been in your shoes (before I got my license). I always had doubts about what my agent was actually saying on my behalf, and what they were telling me about the seller's position. It often felt like the listing agent would magically respond only after I followed up. That's why we're committed to giving you direct insight into the negotiation process, so you're not left guessing about what's really happening behind the scenes.
>I'm keepin' that $20K.
Just curious, how are you going to advertise your property to real estate agents and consumers in your area?
This seems like a rhetorical question, because it's as simple as a buyer going to something like Zillow and clicking through houses. Realtors are on their way out.
What's your plan for selling? Are you going to have a lawyer handle the legal aspects instead?
Definitely. I am going to hire an attorney ($650), property inspector ($500), and title company ($1,200), and that is about it.
I've purchased two homes and I'm confident I can handle the paper work involved. I mean, most of the paper work is the attorney's and title company's anyway. The realtor is basically inserting himself in between those companies and then relaying that information to the client. In my case, my realtor was copied on all communications, but that is it. I was the one producing all the documentation, signing agreements, reading reports, following up on inspections, etc.
And I had one of the top Keller Williams agents in my state. The guy is known by everyone.
I can't make sense of paying someone $20,000 to say, "Let me know if you have any questions about the inspection report"; or to tell me, "I wouldn't buy this. There's moisture in the basement. There's a leak in the ceiling. The patio is not level." etc. I'm knowledgeable enough to see things like this, and if not, my inspector will educate me on it and identify issues.
I've heard people say realtors can point out issues like a leak in the ceiling, like you mentioned, but they're not inspectors and the good ones are quick to admit that they're just offering their untrained opinion. That's good, but I don't know if it's worth $10,000 when for $400 a bonded inspector will look at everything, crawl around in the spider zone, take pictures, and give me specific advice.
Reach out to us when you sell. Can automate some of the communications/backend work.
Looks cool, we're in the same industry, so let us know if we can help! If anyone is looking for cash-flowing investment properties, you can check us out at Coffee Clozers: http://coffeeclozers.com/
Yep! I'm already on the Coffee Clozers newsletter
So amazing! Strongly considering using this for my next purchase. Two quick questions:
a) How do offer + contingencies work (contingent on financing, home inspection etc.), will a human immediately have to get involved when any contingencies are involved?
b) Your service will text the sellers agent, and get me the lockbox number so I can tour a property myself without having to schedule with a buyers agent? Just that service alone would be amazing
a) When you draft an offer, the contingencies are fairly standard w/r/t mortgage, inspection, title, insurance, etc. Realtors use standard language here to cover these on the offer form, we use the California Association of Realtors Residential Purchase Agreement form, which is the standard offer form.
b) Yes. Technically, a licensed agent has to open the door, but ours will stand outside.
First -- congratulations on your launch!
I'm curious about b). If you are sending a licensed agent to the property, wouldn't the typical buyer want the benefit of their knowledge?
Personally, not a huge fan of the cartel. On the other hand, I have worked with agents who have saved me tons of time & money by spotting problems before inspection. If the agent is going to be present, it seems logical to have them contribute their knowledge.
An agent will still look at the property and provide a check/advice, so you wouldn't miss out on that benefit if you use our service. Regarding point b), while we send a licensed agent to the property, we understand that different buyers have different preferences. Some may want to fully leverage the agent's expertise, while others might prefer a more hands-off approach. We believe in giving clients the flexibility to choose their level of engagement.
How are you guys accessing an accurate feed of real estate listings in a given location? I was under the impression that you still needed to have a brokerage license to get access to the MLS feed for a given region, which is what Zillow does.
OP, I would replace or rework the icons on your landing page. The stroke width varies as does its color which undermines the rest of the design. Apart from that, nice job!
noted, thanks
CAR and NAR are going to have a field day with this one.
I think the DoJ is having a field day with NAR as are the many individuals currently suing them
What limitations are in place due to licensed broker and agent laws?
This is, yet again, Y-Combinator backing an AI startup that is a terrible idea, with people who don't recognize what a terrible idea it is (the responses by the poster in this thread smack of inexperience and someone who hasn't thought through the risk their building for themselves and their customers).
I thought the Y-Combinator backed company whose entire pitch was that they could use AI to forge survey results had to be rock bottom.
You have 8 comments on this thread and have not mentioned anything about having any real estate experience yourself, just contradicting everything I say with 0 evidence.
I don't have any, and indeed I've not criticized or questioned anything about real estate.
I've questioned how you'd support some of the claims you made that were overly-broad and seemed disconnected from the technology you're describing.
I've questioned your lack of transparency on pricing, and your justification for it.
I've asked a few questions about the general risk/liability of being a real estate agent and how you're managing those risks.
I think you've entered into this with a very narrow view of the technology you're using, the risk you're taking on (and creating), and the ethical considerations you need to be making.
If I'm wrong, it would probably benefit you to clearly lay out some of the considerations you've made around the above.
About 4 months ago when I launched Modern Realty, it was at discount. However, what comes with a product branded at a discount product is people aggressively questioning our quality and services all the time. Also, we would get lots of potential clients who would try and push our prices even lower. We don't have any of these problems at full price, and people have a significantly higher presumption of our services out the gate.
We have similar real estate insurance to real estate agents. Agents make mistakes describing property all the time - we make mistakes, but fewer than the an agent.
That sounds like solid pricing strategy, I get that. You should put that information loud and proud on your website.
Are you sure your insurance will cover work that's not done by, not validated by, and never even seen by one of your licensed agents?
Real estate agent and (mostly) former software developer here... every time real estate comes up on HN I lose about 50 status points, but here goes nothing...
Just thinking about a few transactions that come to mind...
1) We've got a feud over two trees and had to call in an arborist and a structural engineer.
2) I've got an orchard with a ROFR and a big city lawyer on the other side of the deal, on a property with a disused fuel tank and questions about former pesticide use.
3) A house where the deal only got done because the other agent and I each threw in 1% of our commission to bring the two sides together.
4) A ranch property where there are water rights that need to be cured and where the tenant is telling lies to prospective buyers and need to be evicted.
5) A neighbor who keeps suing people to stop a bridge from being replaced because he wants to force them to sell their properties and doesn't want anyone accessing their properties.
6) A lodge building zoned residential but that has been used for commercial purposes for decades that has a seasonal spring (yes water) that pops up in the basement.
7) A cute craftsman home with an oil tank buried in the backyard.
8) The seller tore out the carpet when they exited 4 days post-closing and left a giant pile of garbage in the driveway.
I'm just throwing out some example transactions here to demonstrate two points:
A) When people make comments about "normal" real estate transactions or why Realtors aren't needed, to me it signals they know jack shit about real estate. If I get one deal a year that is "easy" I consider it very lucky. I do not see how we automate away all of the crazy things that humans do to their properties.
B) At 3% my services are cheap. In the two states where I do business, I'm held to the same standard of practice as a lawyer, plus I'm a marketer, a home stager, a photo / video / drone expert, a land use and water rights expert, an economist, and half a dozen other things in order to provide a professional level of service to my clients. Only to be constantly told I'm just a useless cog who will soon be replaced. Well, good luck to y'all, have fun suing each other.
Unfortunately this doesn't solve the problem of over priced houses and property. We don't need these mansions. What is required is cheap land and affordable, maintainable houses. This market requires a complete teardown. I'm not going to be satisfied until trillions of dollars in phantom value is goes to it's ration number.
I can't wait to try to buy a house and have an AI that tells me that a 5.11% interest rate is higher than 5.9%.
I prefer not to use Google, do you offer signin for people like me?
I'll take a look at offering other sign in variants. What do you prefer? username-password?
Ideally yes, thanks.
It's interesting how many AI Real Estate agent startups and buzz I've seen and heard about recently. The other day I saw several of them in my LinkedIn feed as well. Good luck - I suspect this is going to be quite a competitive space, and it'll be interesting to see if real-estate-without-agents pans out.
It's due to the August 17th Department of Justice case caused a restructuring of how buyer agents are paid, so this spawned a variety of competitors.
Reading through the comments and I think this is the worst reception I’ve seen on HN, I seriously hope you guys consider some of this feedback. Good luck out there
My take is that greenfish comes of as sort of cocky and defensive, which is off putting. Not meant as a personal attack because I have no clue who these guys are, but the responses just don’t make me want to try out the service even though conceptually I like the idea of flipping this dusty ass industry on its ear.
Yea definitely playing a bit of persona since comments drive up the rating on HN. 3500 uniques inbound from this post, couple home tours scheduled from inbound users, I'd say I'm happy about it. I would say 75% of people I meet face to face when I say I'm making an ai realtor, it's a negative reaction. Although it does much better in the bay
I welcome this wholeheartedly. I recently sold my first home and was frankly disgusted by how large the fee is for what my realtor did. I eventually went For Sale By Owner and will never go back to using a realtor. Zillow/redfin already replace the search and comparables part of the process. What realtors currently provide is the “white glove service” which helps first time buyer/sellers feel good about one of the biggest transactions of their life. Other than that I’d say realtors are mostly rent seekers, and their time has come.
What I predict will make or break the AI realtor experience is how well the AI can emulate (maybe and even improve?) the feeling of security and assurance that one gets from using a realtor.
I’d love some responses with stories on where realtors provided some actual unique service. Because all I’ve seen are realtors as a dying parasite of a bloated system.
I've purchased two condos and one house in the Seattle area. My first condo I bought remotely and my agent toured a couple of places for me. Agent was very valuable in this case as I was in medical school trying to buy a place for residency.
Second condo I found myself and my agent merely facilitated the transaction. She hired a home inspector who missed a couple things. Not saying I would've caught them with my own inspector, but when your agent is chummy with an inspector, you can't really call them out on their mistakes.
When it came to looking for houses, I saw a few with my agent, but the one I ended up buying I found myself on Redfin. I went to an open house myself and just told my agent I wanted to make an offer.
Of note, my agent got paid the least for the first condo (because it was the cheapest), but she was most valuable in that transaction. The other two transactions just required the agent to fill out the paperwork, yet they got paid much more. There has to be some relationship between the amount of work done and the cost of the buyer's agent, not just a percentage of the sale price.
There's a reason why Guinan is still the bartender on Enterprise D, even though a perfect drink can be instantly made with a replicator.
People like people. And people want to be sold on things by other people. You won't ever replace that. AI can help massively with paperwork involved. But at the end of the day there will always be a human holding people's hands through the home buying process because that's what they want.
You can't get everybody. But, I'm sure you've bought a canned alcoholic beverage from a store before? That was made by a robot, are you ok with that?
Your bartender also may pour you a drink from a can as well - I've seen this
Sure. But the beer cost me $7. The home might cost a little more.
You are conflating products with services.
When the seller's agent tells you they have another offer, and this is a lie, will your AI be able to figure that out?
We forward a lot of the text communication from agents back to the client, so if it's said in a way that it's possible to figure out, then it can be figured out.
For most seller agents, if they will send you that one text that says there's other offers, and that's a lie, and they don't respond to other inquiries about it... is there a way to tell that this is a lie? I'm not sure this is possible even for the best buyer agent
I had this idea, it’s cool someone ran with it. I can see how “AI” can work the deal.
Really should review submitting to ycombinator in the future :) always feel my ideas aren’t good to pursue.
Speaking as a YC-backed startup founder myself, you should have more confidence in your ideas! But not for the reasons you might think.
It's not that your ideas are good or bad. Most of us have mostly bad ideas. Some of us sometimes have good ideas. But there's really no way to tell if your idea is good or bad until you try. No amount of intellectualizing will give you a trustworthy answer.
We started our business with what seemed (to me and my smart friends) like a great idea. It made tons of sense. I had this whole 48-phase plan for how we'd conquer the world. And then ... it turned out that people didn't really want the thing. The idea was actually bad.
By contrast, the business we're working on now has started to work pretty well. I have to admit, the business didn't make much sense to me at first. I could conjure a million reasons we'd struggle to compete. And then ... when we went to market, the thing started to work. Still early days, but there are lots of positive indications.
My biggest lesson in the last year-and-a-half has been that I just don't know that much :)
I would also strongly recommend talking to customers and building out your idea ASAP as a mandatory first step to determining if it's a "good idea". the YC mantra :)
Great name for your startup btw. :) Didn't even need to click on it to know what it does.
Looks great, hopefully one day I’ll be able to use your services! Has all the features I’d be looking for.
Out of curiosity, do you foresee regulatory trouble? Realtors are an extremely powerful lobby in the United States, and I wouldn’t be surprised if they were one of the first to do some serious pushback against LLM-related automation under the guise of “protecting consumers”. You mention the recent National Realtors Association changes in your YC profile, which I did not know about (https://www.cnn.com/2024/08/17/business/nar-realtor-settleme..., TLDR antitrust settlement seeking to protect buyers in particular from predatory realty practices), but inspires both hope for the future and concern that the NAR is on active defense mode.
Specifically I guess I’m asking about your use of the word “traditional agent”, since on some level you two (or just the attorney partner?) seemingly would still be considered “agents” of some kind, given that you’re looking over offers by hand, and offering personalized support to users. Is there maybe a legal dance at play there already?
On a completely separate note, if you find the time/interest: will this ever scale to sellers’ realtors as well? If you unicorn-to-the-moon-super-scale as Mr. Graham is hoping for everyone in YC, what’s the endgame market look like? My laymen intuition says you’ll always need experts involved at certain points in the process to protect buyers from lemons and sellers from signing deceptive contracts - do you agree, or with the right regulations and AI could this all be as automatic as buying anything else online?
There will likely be large regulatory movement in the space in the upcoming future. There are more pending suits beyond the August 17th DoJ one.
Legally, we are still agents.
Eventually the plan is to support sell side as well. We are tackling buyers first. The reasons: Because realtors are paid for on commission, the incentive is to transact immediately and high. This has bad alignment for the buyer, but good alignment for the seller. Sellers also require a lot more in person logistics like staging and photography.