Thursday, June 4, 2009

simple tech to reduce RE transaction costs

I don't really know why real estate agents still exist. I'm using one right now, but only because I have no choice in the matter. Selling agents won't let you see a place unless you have a buying agent. It is 100% ridiculous.

They basically represent a 5-6% transaction tax on top of the other transaction costs.

Many web sites exist to lubricate most of the process. The part that remains is the lock box. Buyers will only give the lock box code to a seller's agent. Not individuals.

The idea to replace the lock box is such:
It is a lock box that communicates via the cell phone network. The buyer contacts the seller to set up a time. The seller enters that time and the buyer's cell number into a permission database. When the buyer goes to the house, they text the lock box. If it is the right time and the right phone number, the lock box unlocks and the buyer can see the place.

If you wanted to get fancy, you could add cameras and such to the lock box to make sure the key gets put back in, etc. But this covers the basics. Or a temporary wireless security camera system to the whole house to make sure it doesn't get trashed while empty.

Other than giving access to places, I don't see that RE agents add any value to the transaction that couldn't be replaced by a good automated system. Certainly not enough to justify a 5-6% tax.

You'd replace the buyers agents first with a fixed cost discount service that is accessible to anyone - agent represented or not. Then buyers agents would slowly disappear.


Justin Mann said...

Works great if you can trust potential buyers. Since a potential buyer could easily give the seller false information, get access, and steal everything, I doubt this will work. A real estate agent is more trustworthy because if they allow anything bad to happen they will lose their license and get sued. Also, the real estate agent system does some verification on the agents meaning that should be able to trust their identity.

I believe this system necessitates an independent 3rd party like the role of an escrow company. For instance, a potential buyer could put x amount of money in a trust which then would vouch for them. The trust would promise to handover the money to any seller that was harmed as a result of the potential buyer's actions.

shaun said...

yeah, thus the security system.

nowadays most houses for sale are empty anyway, so not much stuff to steal.