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Why Redfin, Zillow, Trulia and not killing Realtors

feature_redfin In the last decade, the Internet has been leaked on the basis that the U.S. economy: the housing market. A group of growth and most profitable websites have emerged to help guide consumers through what in many cases will be the largest operation and most distressing of his life. Four websites Redfin and Zillow (Z), based in Seattle, and Trulia (TRLA) and Realtor.com, based in San Francisco Bay, attracting 61 million of the 67 million visitors to the websites of real estate each month in the U.S., according to ComScore (SCOR). They also generate hundreds of millions in revenue, and have helped make the purchase of a house in entertainment, a sports that can be enjoyed without throwing random surreptitiously open houses. Ninety percent of consumers now begin their real estate deals on the Web, according to the National Association of Realtors.

Everything looks at first glance like the same type of electronic market that has eliminated travel agents, decimated ads, stockbrokers and depressed taken the arrogance of car dealers, but has not made a dent in the fortunes of the brokers real estate. Most buyers and sellers still end up working with the traditional players, one on each side of the deal.

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They have not only withstood the attack of the runners by the websites of real estate, but their rates are stable. Actual trends, a research firm, reports the average commission paid to the buying and selling of runners was 5.4 percent of the price of a home in 2011, up from 5 percent in 2008. (The seller’s agent collects the commission from the seller and then divided evenly with the buyer’s agent.) That is considerably higher than the average salary in foreign markets, where there can only be an agent involved in the transaction such as the UK (1 percent to 2 percent share), Germany (3 percent to 6 percent), Israel (4 percent) and the Netherlands (1.5 percent to 2 percent), according to a 2007 report by the Organization for Economic Cooperation and Development. “Ten years ago hardly anyone started their home search online. Yet, none of that has returned value to the consumer,” says Glenn Kelman, CEO of Redfin.
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Redfin has listed 20% from Zillow, Trulia

Redfin has been trying to change the equation since its founding nearly 10 years ago, and in part explains its history as a kind of intermediary has hung so tenaciously. Unlike other real estate websites, Redfin employs its own agents to trudge through open days, the pound-for-sale sign on the lawn, and work directly with buyers and sellers. Based on the model of traditional brokerages, however, Redfin pays its agents with an annual salary, rather than commissions, and bonuses linked to customer feedback on their performance.

You can save customers a lot of money, but Redfin, which had more than $ 50 million in revenue last year, has grown more slowly than competitors like Zillow and Trulia, which display advertisements and other information and then move customers outside the traditional real estate agents, ending the agreement. Redfin represents less than 3 percent of buyers and sellers in Seattle, his hometown, and has a negligible market share in the 20 other major metropolitan areas in which it operates. Nor is still profitable, in part because of the cost of hiring staff and setting up offices as it enters new markets.

Economists have long been puzzled by the resistance of the realtor. The theory suggests that the relationship between the agent and the buyer or seller is far from optimal, and that conflict is often assumed in practice. At the root of the difficulty is what economists call the principal-agent problem, which describes the divergent, often conflicting, interests of the principal (the client) and the agent representing him or her. (Since agents bear much of the costs of selling a home, in the time spent to host open houses and touring with customers and the money they spend on ads for properties, are rewarded for pressing customers in selling quickly and accept offers suboptimal or, in the case of a buyer’s agent, by allowing the customer to pay too.) In 2008, Stanford University economics professors B. Douglas Bernheim and Jonathan Meer published the results of their study of nearly 30 years of sales of houses and condominiums in the university campus. We found that the use of an owner of a broker to sell your property reduced the final sale price by 5.9 percent to 7.7 percent, compared to homes sold by the owner directly.

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