
A Startup Shies Away from the Gig Economy - hvo
http://www.nytimes.com/2016/07/10/technology/a-start-up-shies-away-from-the-gig-economy.html?ref=business
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dforrestwilson1
Here's a dirty secret:

You don't need a real estate agent, particularly a buy-side agent. Look at the
housing markets in the UK and Australia. Buy-side agents have never existed
there, and are a particularly odd quirk of the U.S. market. When you close the
deal you typically have a banker there, and ideally a lawyer. So what does the
agent actually do? Drive you around to houses you have already previewed
online?

Being a real estate agent is no different than being an investment banker or a
consultant. Realtors are deal-driven and therefore, not a true advocate for
clients. If a client pays more for a house than they should, then the buy-side
and sell-side agents make more commission. If a house sells quickly then it is
less hassle for the sell-side agent. So to be fair, there is something of a
balancing dynamic to the market, and there are surely good and skilled agents
out there, but don't count your real estate agent in your corner. Their
interests are not necessarily aligned with yours.

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rgbrgb
You shouldn't need an agent but in the US when the listing is put on market
(on the MLS) the seller allocates 5-6 percent for the buyer's and seller's
agent to split. If you make an offer without an agent, the seller's agent is
entitled to the whole thing (though they may be less likely to take your offer
because you won't have an agent pushing along the close). That said, I've
heard of people negotiating refunds directly with the seller's agent -- it's
just less likely to work in competitive areas where they have the option to
work with another agent on the deal.

If you're looking to buy a home without the full concierge agent experience
and you want a clear savings, I'd be remiss not to plug Open Listings (YC W15)
[0] (disclaimer: I'm a cofounder). We refund half the commission back to the
buyer, write, submit, and negotiate all the contracts, and make sure the close
is smooth. While all of the contract generation is super efficient and online,
we have a superb team of (human) agents who work hard to feel out the seller
and get your offer accepted at the best terms. We coordinate showings,
inspections, and answer your questions but we won't drive you around in a
cadillac telling you what neighborhood is "safe".

[0]: [https://www.openlistings.com/](https://www.openlistings.com/)

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shostack
See, this is what I never got...if the seller pays the buying agent's fee,
isn't that agent in fact working for the seller by the very definition of how
they are getting paid? How could they ever be operating in the interest of the
buyer?

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skewart
Who exactly pays for what - whether buyer or seller - is often negotiated.
It's tied to the price of the house, but if the price ends up a little higher
to cover those costs then the buyer is paying for it. Of course, both the
buyer's and the seller's agents are once incentivised to achieve as high a
price as possible, everything else equal.

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free2rhyme214
This is a misleading title. Redfin isn't a startup, they're a 12 year old
company founded in 2004.

~~~
discardorama
I think a more accurate classification (from the popular journalism viewpoint)
would be that a startup is a tech company that hasn't gone public yet.

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eknight15
I agree, but I worked at a tech company that IPO'd in 2014, and to this day
they still get referred to as a startup. E.g. Shopify, Etsy, GrubHub,
Care.com, Zendesk, etc.

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superuser2
I'm confused. Pretty much all startups have their engineers, designers,
managers, etc. as W2 employees, no? Having employees isn't the issue, it's
having a huge employee count that needs to scale with the scale of the
business, rather than operating a huge business from a (relatively) small
staff.

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1024core
As a first-time homebuyer in the Bay Area, would the HN hivemind recommend
Redfin, or using a traditional agent?

I was at an open house a couple of weeks ago, and decided to ask the
(seller's) agent about her experience. She was young, and said that she had
'bought' only 1 house so far. It was listed at $1.6M, and her client got it
for $1.84M. And it was the only bid..... I was like huh? You encouraged him to
bid more, and he ended up paying 15% over? That's not something to be proud
of. So I'm a bit leery of agents now.

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tarr11
You are on your own. Buyers agents are worthless.

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rayiner
> Mr. Kelman argues that full-time employees allow him to offer better
> customer service. Redfin gives its agents salaries, health benefits, 401(k)
> contributions and, for the most productive ones, Redfin stock, none of which
> is standard for contractors. Redfin currently employs more than 1,000
> agents. . . . Now with his company on a stronger footing, Mr. Kelman says he
> believes his approach has been vindicated.

I love Redfin. But it's sad that the market forces Kelman to justify his
business model only on the basis of what doing right by employees does for his
own bottom line.

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pessimizer
That's what markets are for. Governments are supposed to insure ethical
relationships between their citizens. Markets are there to make sure that
those standards are met to the letter and no more, not met where there is
little risk of enforcement, and changed wherever this can be likely be
accomplished for less expenditure than the savings expected. Markets are meant
to optimize things, not humanize them.

~~~
rayiner
I agree that is one way to look at it, but I'm not sure the dichotomy works in
practice.

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tptacek
This is also something Paul Hawken touches on in "Growing a Business", along
with a suggestion (IIRC) not to pay sales staff a commission:

[https://www.amazon.com/Growing-Business-Paul-
Hawken/dp/06716...](https://www.amazon.com/Growing-Business-Paul-
Hawken/dp/0671671642)

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bkjelden
As an aside: I had a really positive experience buying with Redfin in the
Denver metro. Their agents were as helpful as any I've ever worked with, they
have good online tools, and we got roughly $5k back from the buyer's 3%
commission when we closed.

I would recommend them to anyone looking to buy a house in a metro that they
service.

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FussyZeus
I thought most realtors earned commission? Does the company keep the
commission here then instead? It's an interesting idea, I think I would trust
one of their theoretical agents more since they aren't directly incentivized
to get me to buy a more expensive property.

~~~
codemac
They say in the article around half their yearly pay is in the form of bonuses
from completed sales.

I'm sure it looks a lot like commission.

~~~
adamqureshi
Redfin agents receive bonuses for completed transactions that typically
account for more than half of their annual compensation. Its a commission even
when you don't call it that. See what happens to a sales person when she/he
don't sell for a month.

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billmalarky
Right after your quote is pretty relevant info imo:

|But a big factor in calculating the bonuses is the agent ratings provided by
Redfin customers after they buy or sell a home. Top performers get stock
options.

|“I’m not going to lie — we’re motivated to sell homes,” Ms. Goetz said. “But
it’s always in the context of the client and wanting them to have a good
experience.”

The model could reward agents who sell less but have higher ratings, since
Redfin is concerned with building a brand.

~~~
adamqureshi
Yeah. I read that too. Uber does the same thing with drivers, When a driver
gets a bad rating he gets less calls therefore makes less money. CX is a
natural part of the sales process. You only get feedback on the deals you
close therefore the more deals you close the more ratings you get. You don't
close the deals with bad CX. It is in the best interest of the agent to
provide a killer CX. IMO: You can be a nice guy and get great ratings, but if
you don't close, you'll be canned quick fast.

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protozillastunt
You have the file concerning the property, with all the information about it,
including a photo gallery. Location (GPS lat/lon) and ask price are certainly
important filter fields.

You may want to hire an hourly-rate admin clerk to prepare all the information
and file it into a long list of web-based databases.

Next, you may want to hire a person to show potential buyers around. So, an
hourly-rate "showaroundist".

So, that means that you are dealing with two hourly-rate persons doing some
work for you to market your property.

If you are incapable of organizing this, in that case, you are probably
incapable of organizing anything at all, and in that case I wonder how you
managed to get the money to buy the property that you are selling now in the
first place?

In other words, someone who agrees to pay a percentage value of his property
to a real-estate agent, is simply someone who will not be capable of making
enough money to own a property in the first place.

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thejerz
What is the average W2 salary of a Redfin agent? The NYT left this out.

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TheCoelacanth
It did say this:

> Average annual compensation for Redfin agents is over $80,000, with agents
> in exceptionally expensive markets like the San Francisco Bay Area earning
> more, the company said.

Though it isn't clear if that is just salary or if there is something else
included in "compensation".

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therestisgone
Hey, you're supposed to incorrectly call it sharing economy. Hmm... somebody
sharing a car with you... somebody driving you around... sound like it's the
same thing... Offering a service is obviously the same as offering access to a
resource... except it's not so why do online newspapers call it sharing
economy? Do they want to show off their lack of competence that much?

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jtchang
Does anyone else find it odd that houses have agents that take huge
fees/commissions but other financial products can simply be bought and sold in
a way easier manner?

