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Ask HN: How to make the home buying/selling process suck less?

by mavsman on 5/6/22, 1:33 PM with 25 comments

• by Jemaclus on 5/6/22, 2:49 PM

  I think percentage commissions aren't a great idea for buyers and sellers. An agent helping you buy a $2M house gets a 2.5% commission of $50,000, but they aren't really doing $40,000 more work than helping buy a $400K house. The value of their services may change a bit, because dotting all the Is and crossing the Ts on an expensive house might save more money in the long run, but still.. a 40K difference in commission for basically the same amount of work seems absurd.

  Honestly, I think that's the biggest disruption one could make in the real estate industry. Flat fees rather than percentages.

  The technological answer is figuring out how to automate all the paperwork. Make a TurboTax-style interface where it prompts you for every document you might need, then validates everything for you, assesses the chances of something going wrong, maybe even handles finding a mortgage for you. The seller would interact on the other side on their end for their paperwork. Waivers can be applied or required, the offers could be managed transparently. I could see a lot of wins here to eliminate/automate most of the role of a mediocre agent, or the kind that farms out the work to more junior agents. (Note: Great agents provide a lot of value, but there are far more mediocre ones out there.)

• by frankbreetz on 5/6/22, 3:55 PM

  Idk, why real estate agents can't be completely automated away. Lockbox with a changeable code and an app where people can anonymously schedule tours. Make an off though another app and get the documents signed off by a notary.

  If you need an inspection or appraisal that can all be handle either by an app or by the buyer, or hire a real estate agent if you want.

  It seem ridiculous that you have to have a two real estate agents to complete a transaction. Along with that almost all real estate agents have this hustle mentality where you can make a lot of money if you work hard. I agree it all feels like a scam

• by skt5 on 5/6/22, 3:43 PM

  I know this is slightly off-topic but I figure I'd share an approach to picking a solid buyer's or seller's agent that someone told me about that might interest folks reading this thread.

  Define a geographical bounding box for the area of the home you wish to buy or the area of the home you are selling that your potential buyer's might be looking in. This could be a circle with a 0.5 mi radius in very dense cities or several miles for not-as-dense locations.

  Then, search on Redfin or Zillow for all closed sales in the last N months for properties in your bounding box that meet your general criteria. Note you may have to adjust the value of N, what "general criteria" means, and your bounding box definition to get a good number of closed sales.

  Finally, go through each closed sale and tally the number of sales & purchases each agent has. Anecdotally in dense areas, you should see the same few agents buying and selling homes. Interview the top X and pick an agent.

  If your agent is going to get paid a lot - at least make sure they have a ton of local knowledge.

• by drzoltar on 5/6/22, 2:25 PM

  We used Redfin to buy a home in a relatively competitive market in 2017. We tried using it again recently but found the (same) agents to be considerably less invested than those from other firms (we ended up using an awesome agent from Coldwell). As I understand it, Redfin pays fixed salaries to agents with some kind of bonus structure on top, but otherwise it seems like agents were managing dozens of serious clients simultaneously. At one point, our Redfin agent was sending in substitute agents for showings.

  Maybe I’m just old school but I firmly believe in the value of a good real estate agent. From knowing the area, to having solid intuition about how to strategize a bid.

  With that being said, it would be interesting to see a one-stop-shop for real estate. An entity like Redfin that provides everything for home buying, from loan to agent. No marketplaces, just one click to get a loan at a competitive rate. The entity would shop around itself for competitive rates absolving the buyer from all this loan bs.

• by jppope on 5/6/22, 5:32 PM

  100% agree the whole process sucks... but the industry built a moat by requiring credentials through legislation. Y/C actually has some companies trying to solve it. Here's a couple of my tricks though:

  You can cut down on fees by finding the home on your own (zillow/redfin/etc) and using the sellers realtor (unless they have a conflict of interest) tell them you'll give them 1% or a flat fee instead of the other half of the deal (saving you ~1.5%). There are also flat fee realtors which will do it for like $1K - $3K depending. They just end up doing the paperwork for it.

  You can also go "off market" (sounds like thats not what you're talking about though) - theres actually a separate wholesale market you can look into (e.g. https://lafixers.com/) and of course auction. You can reach out to property managers as well who will often know of properties that large landlords may be turning soon.

  To cut through the mortgage shopping you can use a person that shops for you. It's usually fixed price for a couple hundred bucks but will save you tens to hundreds of thousands of dollars (e.g. we used - https://danthemanformortgages.com/). Personally I found it to be super helpful because they can consult with you about the deal and teach you the process since mortgage brokers are sales people the same way realtors are.

  Good Luck

• by sharemywin on 5/6/22, 1:54 PM

  First ask if they do lender paid comp or borrower paid comp(are they being paid by them or you) If it's lender paid then the broker and the lender have already decided how much the broker is getting paid. If borrower paid then you and the broker set up a contract to determine the pay. The brokers get paid over the whole sale rate which is way lower than if you went to the lender directly. your rate can vary until you lock the loan, but the loan lock costs points(money). there's all kind of other bumps in rate for all kinds of other things.

  If your going through an actual lender you can't really tell how much the loan officer is making.

  Here's an article on the window for shipping for a mortgage: https://www.mortgagematchmakers.com/what-is-the-mortgage-cre...

  In lender comp Lender Credits is the line item that shows how much the broker is getting paid by the lender.(it shows as a negative number, but it's actually amount of money the lender is pay the broker to give you a loan with a higher rate) https://msiloans.biz/Seller%20Guide/RESPA/Understanding%20th...

• by incomingpain on 5/6/22, 2:42 PM

  >This whole process is sucky for seemingly no reason. We found our own home we want and put a single offer and it got accepted and yet our realtor is taking a 2.5% cut.

  Industry collusion in a free market can be countered by entering the market to compete. Offer 0.5% and people should flock to you right?

  >Our mortgage officer only seems knowledgeable because they uses terms I can't understand but it seems like most of their work is just plugging my numbers into a calculator to tell me my options (and not really giving me much advice). Seems like I could do this myself but I'm scared my info will get sold to a million more people.

  Precisely what it is. To give investing advice they require a fair amount of paperwork which they havent done. So they cant give you advice or risk being liable.

  >These things are just the beginning and I'd imagine there are some tools or approaches that could reduce the pain, even just a little bit.

  Here's the thing. Many of the western countries have switched to a service economy. 90% of Canadian GDP is derived from services. https://en.wikipedia.org/wiki/Service_(economics)#Service_ty...

  A very high percentage of these jobs are bullshit jobs. You could basically just stop doing anything of any usefulness and nobody will ever fire you. When you break down where does the actual GDP really come from? It's Finance, Insurance, and Real estate.

  So basically Canada's GDP exists in that for you to buy a house you need to artificially connect to these and give a slice of the pie. The incentive to a government or politician is literally the opposite. Any attempt to fix this broken system will mean an economic depression.

  If anything happens, they will find a way to make more people involved. You can see that in Canada. You'll soon have the right to a home inspection. So now home inspectors are going to be a booming industry and yet another hand in the pie. In about 5 years they'll be proposing another hand.

  Imagine as well, could the government come along and tax these entities? Canadian banks are world renown for their power. Do you think we could tax the banks or the others? No way. All taxes are going to target entities which actually do something. Oil industry, lumber, farming. The taxes can't target FIRE at all. Any amount of downward pressure on this unholy arrangement will be a disaster.

  So the process isn't going to suck less. It's only going to suck more.

• by andrewmcwatters on 5/6/22, 3:12 PM

  I generally care a lot less about these sorts of things compared to finding a good property to buy in the first place.

• by brudgers on 5/6/22, 4:02 PM

  All those things you complain about are part of the infrastructure that makes it possible.

  I mean it's easy to avoid the spam calls, just pay cash.

  And it's easy to avoid the broker's fee, just buy directly from the property owner...

  ...Or better yet, have your lawyer do it.

  To put it another way, you are on the ad-supported tier without any in-app purchases.

  Real estate is the domain of wealth and home sales are check cashing not banking.

  Good luck.

• by baremetal on 5/6/22, 8:34 PM

  > These things are just the beginning and I'd imagine there are some tools or approaches that could reduce the pain, even just a little bit.

  Build your own house. Has the added benefit of being able to expand it as you need to.

• by DantesKite on 5/7/22, 4:04 AM

  Have you tried OpenDoor? That's like their whole company thesis. They'll look through your house and make you an offer within 24 hours from what I understand.