

Ask HN: Classifieds VS Realtor: Whats the best way to find a home? - si2

I am looking to rent and I just want to know if anyone has some input on whether I should go through classifieds or hire a realtor. The home will be the base of a startup out of Jersey if that factors in.
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SwellJoe
I will never use a realtor again.

My girlfriend at the time and I dealt with two different realtors when looking
for a home in Austin, and both of them encouraged really bad decisions. The
first was pretty new to the job, and was a bit heavy-handed in his tactics and
advice, and I saw right through it. The latter was much more subtle and good
at it (she'd been a realtor for 30 years; we didn't stand a chance). We ended
up in the wrong part of town, much farther out than we intended to be (we
weren't familiar with the area, and were driving 3 hours each way, on days off
from work, for our excursions to look at houses, so we didn't know enough to
know; we were also in a bit of a rush because our apartment lease was up
soon), and in a neighborhood and house that was not at all appropriate for us,
and not at all what we'd asked for.

I've since read quite a few books about the sales process, and influencing
peoples decisions, and I've realized that our realtor had used just about
every single trick in the book to convince us to buy quickly, and from a
seller that was associated with the same real estate company. There are very
few people on this earth that I have strong dislike for, but that realtor is
one of them. She was an extremely good sales person, but a pretty horrible
person.

The incentives are _way_ wrong in that business, and the kind of folks, in
general, it attracts are not who you want to trust.

I'm sure there's an honest realtor out there somewhere (maybe even two or
three), but I've never met one. I consider it a very expensive lesson learned,
and one I'll never forget.

When we sold that abysmal house, we sold it ourselves, and we were completely
honest about everything that was wrong with it (and in the time we'd been
there we had fixed almost everything that the realtor-recommended inspector
had conveniently failed to notice when we bought the place). It sold to the
first person that looked at it, and for a fair market price for the
neighborhood and size. And, I rented a place out here in the valley from an
individual with no realtor involved. Found it on craigslist, it was a good
deal in exactly the location I wanted, the landlord is a nice guy, and he
likes my dog. No complaints at all.

Anyway, I can't say enough bad things about realtors, in general. I just don't
see how there is any good reason to use one in a world with craigslist.

~~~
Shooter
I see where you're coming from, and I also agree that most real estate agents
suck. One of the few bright points in this economy is that many of the most
corrupt agents have left the industry since it is no longer "easy money." Of
course, there are still plenty of crooks left to go around, and some are more
desperate than ever to make payroll. I also agree that the incentives in the
industry are massively misaligned, and I'm definitely not here to defend the
industry. As I said in another post, I'm actually trying to change the
industry from the inside.

One thing that many people don't realize is that if they don't have an agent
representing their interests as a buyer of an MLS-listed property, it usually
just means the listing agent gets a double commission. The fact that there is
not a buyer's agent doesn't lower the price for the buyer at all. The listing
agent just does a "notice of no agency" and pockets both commissions. FSBOs
(and some REO properties) are pretty much the only exceptions, because they
don't go through the MLS, which has its own arcane rules. So, if you're going
to pay the money anyway, you should try to get representation. Just educate
yourself about the process, stand strong about what you want, and try to find
one of those two or three honest agents ;-) Or pay for a RE attorney.

FSBOs are usually overpriced, especially during market corrections like we're
in now. I admire your honesty in listing YOUR property but, unfortunately, not
all sellers are as honest. Agents have more accountability, legally speaking,
than a random dude on CraigsList. You have more avenues open to you if an
agent screws you over than if a private seller screws you over. In fact, you
should report your bad agents to your state licensing agency. Many state
agencies use 'mystery shoppers' to check out agents when they've been reported
a few times. The fewer bad agents out there, the better for everyone.

~~~
SwellJoe
_One thing that many people don't realize is that if they don't have an agent
representing their interests as a buyer of an MLS-listed property, it usually
just means the listing agent gets a double commission. The fact that there is
not a buyer's agent doesn't lower the price for the buyer at all._

Which I view as merely another good argument for buying or renting directly
from the home owner. Leave the sellers agent out of the picture, as well. MLS
is a 20th century idea. While many houses sold are still listed that way,
there is no reason other than inertia for it to remain that way.

When we sold our house, we explicitly stated in the craigslist ad, "We will
not be responsible for buyers agent fees. If you have a real estate agent,
that's your problem, not ours." Our buyer was working with a friend who was an
agent, and was able to work out a deal they were both happy with which I
wasn't privy to the details of (and given that the buyer found the house
himself with no help from the agent, who had showed him lots of houses that
weren't right for him, I'd say the agent got more than they deserved, whatever
the amount was). But, the buyer _did_ get a better deal on the house, because
we didn't give any percentage to a realtor. So, we could sell the house
cheaper than a realtor listed house _and_ walk away with more money than the
seller.

Anyway, as you may note, my own personal experience with realtors has been so
bad that pretty much nothing will convince me to use a realtor again. This
could be a case of two bad apples. But, the one that took me for a ride was a
30 year veteran, and had won awards and such. The industry rewards those most
effective at screwing people.

So, now that it's an industry that serves no real purpose other than injecting
themselves in between buyers and sellers in large transactions (marketing real
estate for sale and finding real estate to buy can now be done on the
Internet; legal stuff has always been handled by the title companies and the
lenders, anyway, and realtors just stake a claim to providing guidance in
navigating the process...but if you call a title company, they will happily
provide all the guidance you need), I simply have no use for the industry.
Realtors are selling wagon wheels, and I don't have or want a wagon.

I think you, as a technically savvy individual, probably well above the
average intelligence of realtors, would be well-served to think long and hard
about whether the industry will change or die...and get yourself at the head
of that curve, whatever it is.

~~~
Shooter
A really detailed response would be a book, and I'm not sure this is HN-worthy
material...so I'll try to be somewhat brief. I realize that your mind is made
up, and since I'm (finally) starting to learn how hard it is to change a
mindset, I'm not even going to try to change yours. I actually agree with much
of what you're saying, and we can agree to disagree on the few other parts.

As I said before, I invested in this industry because I hated it and because I
thought the incentives were misaligned. I definitely have a different
background than any other agents or brokers I know, which puts me at odds with
most of them. That being said, I think there IS a role for a (much smaller
number) of good, honest real estate agents if the incentives are realigned and
consumers can be made to understand more of the process and what they're
actually paying for. As with any industry, SOME intermediaries do create
value. To think that no intermediaries create value is, in many ways, just as
ignorant as trusting agents too much and paying the 6% "like everyone else
does." I just want consumers to be able to separate those that do create value
from those that don't, and to pay a fair price for the value they receive.
Those seemingly small goals will probably not happen industry-wide in my
lifetime the way things are going, but I'm slowly working on it...

I initially tried a more revolutionary attack on the real estate industry (and
MLS), and was severely beaten by the experience just like so many that came
before me. One of the main obstacles is the entrenched players in the industry
and their power over the regulations, etc. Even more powerful and disturbing,
for me anyway, is that most consumers simply don't care if the industry
changes because they don't even understand financial basics. Most alternatives
to the status quo fail because of consumer inertia, not competitors.

I think the industry WILL change, but not die. I've looked at where I think
the industry is going, and right now I'm satisfied to educate consumers and to
save them a substantial amount of money. A website can't replace an agent in
all cases, on either the buy-side or the sell-side. Of course, in some cases,
it can. I believe my company is doing better work by operating in the
customer's interest on the leading edge of the industry, versus working on an
idealized version of where we or others might WANT it to go. This is probably
the least lucrative company I'm involved with, but it is very satisfying when
some people do get it and we can help them out.

------
brk
Use a realtor. They can go through listings for you to find what you are
looking for. Make sure you get a buyers agent to represent you (it generally
costs nothing or maybe 1%, depending on how the deal is structured with the
listing agent).

The other benefit is when it comes time to negotiate. A good buyers agent can
help guide you (but recognize that in the end you're on your own). The other
big benefit is that they are a proxy for you. You won't talk directly with the
sellers or sellers agent when negotiating. This has the benefit of them not
knowing how excited you are about a particular property, and prevents them
from getting a good "feel" for exactly what you can afford.

Also, just as an FYI, if you look at foreclosure properties (which are
tempting in this market) be aware of all the fine print. These generally take
a longer period of time to close and are much riskier overall. If I were
buying another property in this market (I'm 1/2 looking)... Find a good buyers
agent, get pre-qualified, know your limits and tell the buyers agent that if
they happen to "hear" (all realtors in a market talk to each other) of a
listing where the sellers are on the verge of foreclosure and would take a
quick deal at a big discount that you would be interested...

~~~
cpr
Just remember that the realtor works for himself, not for you. His job is to
maximize his commission, which is usually shared with the selling realtor.

We found that out when we bought our first house back in the 80's in
Connecticut. A very nice older lady was our realtor, and she really didn't
serve us well. (Lots of house issues swept under the rug, so to speak, until
it was too late.)

~~~
Shooter
"Just remember that the realtor works for himself, not for you."

That is great advice, no matter what kind of transaction you're entering into.
I actually got involved with the real estate industry because I hated how it
worked. It is ridiculous that incentives are so misaligned in this industry. I
thought I could change some things in my small corner of the world, but I was
too naive, and it will take much longer than I thought for me to have any
impact. Unfortunately, most consumers simply don't care enough about their
money to educate themselves. Sad and irrational, but true.

I will not work with anyone who stands to make more money simply by getting me
to pay more. There is NO WAY they can represent my interests if that is the
case. In my real estate brokerage, buyers pay for the actual services they
use. They know the cost up-front, and there are no incentives for me to try to
get them to buy a specific property or a more expensive property, because I'm
not paid based on an (arbitrary) percentage of the property price. In 99% of
cases, the money they spend on me will be spent whether I help them or not, so
my fees aren't even an extra expense. Yet I still have to spend (relatively)
much more time than my competitors to educate them about how and why I can
help them, just because I am different. It's like the entrepreneurial cliches
about the stupidity of introducing a completely new product (pioneers get
arrows in their backs, right? It's easier to move to territory that has
already been settled.)

There are real estate companies with good business models and good
agents...they're just very rare :-(

