Exactly. One of the sleaziest tricks used by Realtors (most Realtors are not lawyers) is getting clients to sign their forms: their terms usually have the word "percent" hard-coded into the contract. Rather than opening the door to hourly or fixed dollar amounts, they insist that their forms are the "standard". I heard one recently say in a public forum that banks "require" these specific forms that only Realtors have... this is a total lie, and anybody that tells you that you can't negotiate to create your own contract for a deal should be prosecuted for coercion.

I've been trying for a long time to alter the common perception that Realtors add value; they don't. They take value out of transactions -- equity that's taken literal years to build up -- gone in one (fell) swoop. People need to be way more aggressive in their negotiations with real estate salespeople, and it all starts with the contract.

This is still a small, WIP, side project (free, open-source contract templates); however, you can get the idea: http://ecosteader.com/docs

When I first purchased a home my credit history was.. interesting. The value the realtor provided was putting me in touch with the right grants, forms, etc and ways to build and fix my credit. They helped me not get scammed with a high interest or ARM loan. Their knowledge helped me. Also she steered me away from a couple houses due to inspection concerns that would have cost me time.

Fast forward to now my credit is awesome, the homes I can afford are in a far different category and my last home purchase was fairly routine, so my realtor didn't do as much but I still value their knowledge and experience because you won't need it until you need it.

I bought a home recently and work in the mortgage industry. My opinion: the buyer's agent should be a flat negotiated fee, maybe an hourly rate. There is very little that most do that the buyer can't do themselves. If the buyer doesn't want to do it themselves, then that's a choice they make to pay, and for items like inspection reviewing and negotiating, I'm not sure I see why it's significantly different if I'm buying a $200k house vs an $800k house. I don't agree with their fees being a percentage of the home prices.

Seller's agents on the other hand...those guys are salesmen. I can see way more value in incentivizing that person to get maximum value for me.

For example let's say a selling agent is getting 6% on a house listed at $500k. If it sells at $500k he gets $30k, if it sells at $520k he gets $31k. If he were to get a $500k offer it probably isn't worth his time to put in a lot of extra effort to try to get that extra $1k, but to you that extra $19k is a lot of money. You might want to do another open house but the agent will convince you to just take the offer in hand. I think this is one of the reasons that agents use all these short deadlines and pressure tactics, it's not just to get the buyers locked in, they want to be in and out of each deal as quickly as possible so they can move on to the next deal.

Not sure how to fix that, but it is an issue to be aware of.

That agent was very helpful in a lot of ways, but didn't get me a particularly good price -- another, nearly identical unit in the same condo complex sold around the same time for about $30k more.

I think the next time, I will stick to my guns on the terms. That probably means I'll have to find an independent agent. This is not necessarily a bad thing; I think the agent who sold that other unit in my complex was independent.

Lots of things like that. And then both parties having to pay 5.1k for his 'service'.

It really pisses me off that in this day and age they think they can be "gatekeepers" of the information.

And they provide an extremely shitty service, they don't even take the care to take good photos of the property.

They've long lobbied for more regulation in my country and are extremely angry that most people are not using their services (I wonder why... :) ).

They did manage to make their services mandatory for state-owned mortgages :( .

A fee sounds good, an hourly rate seems to incentivize the wrong behavior (as does a percentage of the sale price).

I fully believe that there are realtors out there who make their clients money. There is, however, no reliable way for me to differentiate them from the lazy scumbags.

When realtors' business model gets disrupted, sellers will not end up getting the same prices for their houses as they do currently, or get to keep the 6% that now goes to agents - that money will simply drop out of the cost of buying homes (except for the new, smaller, cost that will be captured by the new business model).

It's not clear to me that that is true. All economics tells us is that in the current system, sales clear, which means that buyers are fine buying at the current prices and sellers are fine selling at the current prices less commission.

If the commission were to suddenly disappear, it is not clear if the buyer, the seller, or some mix would retain that money. You're suggesting that the buyer would retain all the money without evidence, whereas basic logic would suggest that the seller has more economic power (because housing prices generally appreciate faster than inflation), particularly in hot real estate markets.

But I think it might be partly true, too. As you said, currently "sellers are fine selling at the current prices less commission". When those commissions disappear, sellers who were previously content to get Price - 6%, should still be content to get Price*0.94, since those are the same, and at least in buyer's markets, competing sellers have an incentive to undercut one another in the effort to get their house sold. It seems probable that those would lead to houses moving to a new normal pricing structure 6 percentage points lower than the old normal (less whatever amount the new model is capturing).

And I don't know where you are located but I've always known the standard commission to be 6% (3 to buyer and 3 to seller agents). But everything is negotiable, I got mine done at 5%. She knocked 1% of the seller agent fee to be my buyer agent on the next transaction when her fee wouldn't come out of my pocket. She got me a second great deal, could I have gotten the same? Maybe, but knowing that negotiation isn't my strong suit, probably not.

But then again, most people buy houses so infrequently that one or two experiences either good or bad is going to color your whole outlook on the industry. I've been lucky enough that my few experiences look like net wins from my perspective.

My friend has also worked with my sister, so all told he's helped myself or someone close to me with buying and/or selling 6 homes and maybe a 7th.

I've heard this before, but when we bought a house, our realtor added a ton of value.

She went out and found houses that we wouldn't have found; sure, most of them came from MLS, but there were a few she found just by driving by or by asking fellow agents. She even triaged a couple for us (by going to look at them without us once she had gotten a sense for what our common feedback patterns were, and only making us come along when she thought it was worthwhile).

She pointed out things we would have never noticed, like windows that had condensation around the edges, which indicated the seals were bad and that when the seals on one window were going out, it was likely they were all on their way out. She'd point out cracks that we didn't notice or water stains (acknowledging she's not an inspector, but it certainly gave us things to ask the inspector about). She noticed when parts of the yard looked worrisome in how it was eroded or angled toward the house. And she could usually estimate for us off the top of her head what things would cost to fix, replace, remodel, or update (or she had someone she could call to ask for an estimate if she didn't know).

EDIT: She also put pressure on the lender when they were delaying the mortgage approval, did all the negotiation on our part with the selling agent, followed up with the sellers to make sure they did all the fixes our inspector found and were put into our contingencies. She also figured out what to do when she reviewed the contractor receipts and found out they had lied about fixing one of the things in the contingencies on the morning of the closing to make sure the deal didn't fall through, as well as how to resolve the issue that the sellers had left a giant moving pod blocking the driveway/garage and went on vacation the day we took possession of the house.

I suppose I could imagine buying a house without her if you had the experience, but there's no way we even came close to matching her years of experience.

Of course, most of the people I talk to have said their experience was nothing like ours. But it makes me think that the problem isn't that realtors bring no value to the table, but rather that maybe there just aren't very many good realtors.

I don't begrudge anyone who wants to pay someone else to take a task off their hands, I do it all the time with various things like my lawn service, housekeeper, etc. But was the time they saved you worth the commission they made? When you're making 7% of the selling price, the answer to that seems likely to be no in many cases. There's a price point where it's no longer worth it to outsource the work, and I suspect many home buyers run over it without realizing it or considering they have a choice.

For a $100k home, it's fairly easy for the value added to surpass the amount paid. For a $500k home, the value added needs to be much higher. Then again, if you think of it as less value added and more like insurance (although unfortunately without a specific set of coverage), then what you're paying for is their ability to identify and prevent problems before they happen. Having a realtor notice items before calling in an inspector is useful. Having a realtor apply their knowledge of the market, and what people are generally looking for on both the buying and selling end when making suggestions for how to change the deal (such as requesting fixes prior to sale, or money back for the fixes) is useful. Does that usefulness surpass the cost they get in their fees? It probably depends on the specific deal, the cost of the houses being looked at, and the experience of the realtor. I doubt it's as black and white as being useless though.

And no, an inspector's fees aren't over $30k (of course I imagine this varies by state, but where I'm at, if your buying agent's fees were over $30k, that would mean the house you bought was over $1mil, since their fee is half of 6% of the selling price of the house, i.e. 3%). The inspectors we talked to were between $500 and $2,000 per inspection, depending on the level of inspection you wanted, if I'm remembering correctly.

And we looked at around 35 houses (which apparently is on the high side by about 10x based on discussions with our friends who have bought houses). So for us, if we called an inspector every time (assuming we could find an inspector whose schedule matched the appointment availability every time), it would have been around $17,500 on the low end to do that for every house, which is more than the buying agent's percentage.

Of course, we could just hire an inspector on the ones we liked, and it'd be much cheaper, but that means we'd have to look at it, then call an inspector and schedule a visit, which would add an additional several-day-waiting step to the process, which could lead to us missing out on the house, since it's not uncommon to lose a house to someone else getting an offer accepted first (that happened to us for two out of four houses we liked).

So, nothing wrong with calling an inspector directly, it's just a different job than what the realtor does.

Even if you disagree (and the answer would be different for everyone I imagine), it still doesn't indicate that the realtor brought _no_ value to the table, which was the statement I was responding to.

EDIT: Also, I should clarify, where I'm at it's 6% _total_, split 3% each between the buying and selling agent. So, on the other hand, was it worth it to the sellers to pay 3% to their selling agent, who screwed up pretty much every part of the process and didn't seem to do much from what we saw? Probably not.

EDIT 2: I'd probably realistically downgrade my "absolutely it was worth it" answer to, "eh, it was definitely worth something". If I had to put a value on what they brought to the table, it'd be hard to say, but maybe they were overpaid by ~30-50%. Again though, saying they didn't add _any_ value certainly wasn't the case for us.

First there is an inspection for the potential buyer, paid for by the buyer and thus owned by the potential buyer. This tells you if the house itself has problems like cracks and rot.

Second there is an appraisal to establish the home's value. Strangely, this person might not even enter the home. (they mostly look at sale prices of similar homes) To avoid corruption, the government randomly selects an appraiser. The appraisal is paid for by the potential buyer, then given to both the buyer and the intended loan provider.

Third, there is an actual survey. This measures the land and maps out the positions of buildings and fences and pavement and pools. I think the seller pays for this. I first heard of it as a buyer when I got a copy as I signed the final paperwork, which is pretty terrible actually.

If the sale is cancelled, the inspection and appraisal become worthless. The seller doesn't own them and isn't supposed to have a copy due to copyright. The next potential buyer will probably start with nothing.

In a perfect world, some wealthy doctor could just pick someone to invest in and do so, but in reality it's generally a network of 3-6 investors all putting a portion of they money into a deal, and the borrower has done this multiple times over the years as well. Coordinating that takes experience and contacts.

That being said when I sell, I definitely do not plan on using a realtor. As you said, it's super easy to sell online and I agree. I even found the house I bought without the realtor, we literally just said "we want to see this house." What she did provide was insight into the market, the area, she showed us comparable houses, explained the history of the builder, etc. This is where she brought value.

In selling a house, the only value they bring is customers. That usually (car sales, medical sales, etc.) is a percentage of sale type of transaction. So, to me it appears fair to give them a percentage. If you choose not to use them, you can!

Unfortunately, I believe in the state I am moving to I am required to pay for the buyers realtor (although I am not 100% sure). That's typically 6%, but technically, I don't have to sell to them. Sooooo I can negotiate and work with them to get say 3%.

Basically, the realtor provided a barrier between the builder and my wife who super loved the property. The realtor also had a relationship with the builder, so when I asked the builder to do X, I got a response super quick at 11:30 at night.

Don't underestimate the value of having connections. FYI my house appraised at like 10% higher than I purchased it, so we did get a deal.

This is literally the second most breathtakingly naive comment I've ever read on the internet.

If I am willing to pay Y for an item, regardless of who is involved in the transaction then it doesn't matter if a percentage is taken. i.e. if Y = Y x 0.97 + Y x 0.03, who cares? Now you might say I could have negotiated that 3% off, and I'd argue that's probably not true.

I seriously lowballed the builder on the sale, the only reason I think I got it was the relationship the builder had with the realtor. The builder has incentive to give a discount to a realtor, as he has 50 other houses he has to sell. She also has an incentive because the quicker she can get me to buy a house, the less she has to show, i.e. the more she makes per hour.

All of this isn't exactly explicit, but in my case, the realtor and I discussed this. It was actually quite refreshing and definitely worked in my benefit as I picked up my house for around 10%+ less than the people around me. The realtor was similarly happy because I only took around a day of her time, and the builder was happy because he was in serious need of cash flow.

You can't imagine a world where that was more important to him accepting your offer than the realtor bringing the offer to him?

> The realtor was similarly happy because I only took around a day of her time

So, for a single day you paid maybe 6-15k or so (guessing 200-500k house * 3%). Don't you think maybe that's a bit much?

Because you're the buyer, you pay for everything. You're the only one who brought money to the deal.

It was a bit of work getting everything right, but it was well worth it.

https://www.homie.com

(Am an investor)

I don't know anything about the law so I hire a lawyer I trust. I don't know anything about buying a house so I hire a realtor I trust.

Heck, programming is literally done by schoolchildren for entertainment, myself included, yet people are quite happy to hire us because they understand the value of delegation.

To a first approximation, 0% of real estate people are trustworthy.

Doubly true in hot markets.

I used a realtor (with a discounted fee) for my first house. Now I'm buying the second by owner, because I know how the circus operates.

Hire a flat-rate agent/broker. They'll technically be your agent, but you do all the leg work.

I just sold a condo in Minneapolis using a flat fee company -- fantastic experience and will never use a realtor again, save for maybe if looking internationally in a very unfamiliar area perhaps.

If you want an industry ripe for disruption, consumer real estate is HUGE. Got a couple start ups in my area trying to do that.

A primarily digital brokerage would be (is) a huge improvement.

The price is 6% higher than the actual value, so that the buying and selling realtors get their cut.

But if you don't have a buying realtor, any offer you make it looks 3% higher to the seller, and you can recoup most or all of that.

You can hire a lawyer for exactly the same purpose. You will still need to hire inspectors, title companies regardless.

Last time I did a buy/sell we did a deal with the real estate broker where we paid her $1000 upfront (0.5%) to sell the house for a 3% commission vs 7%. The trick was we gave her 60 days to sell the house exclusively without going on MLS, and she would credit the $1000 after 60 days if it sold on MLS (which means she gets almost nothing).

And then if it didn't sell in 60 days, she would get almost nothing, and would also have to split almost nothing with the buyer's agent?

And she agreed to that?

This particular realtor focused on building a client base and having the shortest listing time. Her average time on market was 1.2 day.

The 60 day thing was a luxury for her. It's a metric hack that allows her to get more listings and be more selective. People make all sort of wacky deals to spike metrics.

We also ended up buying another of her listings, so she did well.

As long as you can decide not to sign it, it's a negotiation. Pretty shitty and one-sided negotiation, but still negotiation.

>It would not even be possible to ascertain the original authorship of most form contracts that cross my desk.

I highly doubt this statement is true if given Documents X, Y, Z et al are given stringent, professional forensic examination for remnants of markings. Maybe not every single one, sure, but enough in a Universe A of legal examination would, I firmly believe, uncover quite a bit more than meets the eye.

My point is that what you've noted is not an "IP-free zone" it's simply an un-tapped market for "fiscal compensation by way of derivative IP torts" - once the financial motivation is strong enough and there's evidence that can be garnered to show willful infringement...IP rights don't just go away because nobody is pursuing them.

If the Prenda Law fiasco can serve as a Gutter Dweller example of IP enforcement, this is a much more clear cut, deep pocketed scenario that should give every single law firm pause. As much as I'm entertained by cannibalistic feeding frenzy behavior, Law Firm Representing Law Firm(s) vs. Law Firm(s), would, no doubt, be a basic drain on an already over-burdened legal system.

TL, DR: Never underestimate the temptation for tort cases when there's a large pile of money at stake

Don't doubt it's possible, but might be a little trickier than you suspect. My old firm, as a matter of course, installed software on our laptops that stripped all sorts of metadata from outgoing documents. It was actually really annoying since "tracked changes" in MS Word got removed too.

Some large firms in fact do require associates to sign covenants. In particular English firms seem to do this a lot. I consider it to be unethical, as it is anti-competitive and runs contrary to the interests of clients, who should remain free to select the lawyer of their choice (even a disloyal employee of their previous law firm).

This is the same world of theory in which software is not subject to copyright...

1. https://www.datalanche.com

I imagine these sorts of agreements prevent employees from developing something in the due course of their work, patenting it, then charging the company for the use of the work they were already paid for via salary. I.e., it's a simple protection against extortion.

On the other hand, it would be a headache if contracts were covered by copyright: If your competitor adds a clause to their contract, can you add the same clause if it's covered by copyright, or are you forever banned from adding this clause? Would someone file a patent on "Using contracts to limit the liability against customers", for example?

First, even if you are able to borrow functional language from a contract without infringing someone's copyright, that doesn't make it a good idea. Heroku's terms were written for them and their specific business risks, governing law, etc. Your own PaaS business may have different requirements. And copying wholesale probably is infringement.

Second, by "IP free zone," I'm talking about people's attitudes and behavior towards the materials they borrow from--that certainly doesn't express a legal conclusion about it or mean what they are doing is not infringement.

You may want to take a look at libraries that provide BLAST or Clustal/MSA Analysis capabilities, then tinker a bit. From my experience, wiring those tools to a separate visualization suite provides the best results.

Source: Not a representative of Intelligize, but I've used their product quite often at my firm.

I thought contract forms are automatically exempt from copyright.