Brandon Kuchta

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On March 18, 2016, Brandon Kuchta commented on The Realtors will Die :

This article is interesting – while I agree with the overall notion that brokers (particularly bad ones) do not add as much value as they claim, I do think that a significant portion of the U.S. population will continue to value established relationships with conventional real estate brokers. Addressing a few specific points mentioned:
1) Zestimate can certainly improve over time – however; one specific element that might be difficult to capture is renovations that increase home value. To the extent these are not filed with local municipalities, the pure statistical model may undervalue homes in which significant interior designs have occurred – leading people to think houses with lower Zestimates are in financial striking distance when in reality their market value is higher
2) One valuable role of good, hardworking brokers is to check out open houses in advance without the buyer so as to minimize time wasted by the buyer (pictures don’t always tell the full story)
3) I think home prices ARE more opaque than used goods given the significant illiquidity of a house. Price discovery is usually more difficult than a random used good in someone’s garage. In addition, the significantly higher dollar expenditure warrants more precaution. Importantly, home ownership is a significant source of intergenerational wealth creation. Whereas used goods typically have well-defined useful lives and are often rendered obsolete with new technology, home prices typically increase rather decrease over time – hence negotiation and more expertise on price can drive real value over time
4) I don’t find the Uber comparison particularly compelling. Driving from point A to point B is a MUCH more commoditized service than buying a house given the complexities in the entire process
5) I disagree with the notion that the value brokers provide via intelligence on properties not yet listed is limited to the “tip-top”. I think less expensive houses are just as likely to be off-market and this is more an indication of a forced seller who values certainty regarding price upfront for fear of risking a normal listing having underwhelming interest leading to price haircuts. This frequently results in attractive purchase prices
6) Regarding the point that brokers don’t do much in the value chain – I agree this is true for the bad brokers, but not always the good, more professional ones. Good ones often can provide introductions to banks and relevant third party advisors. The fundamental, systemic issue is the low barriers to entry to be a broker which gives license to too many bad brokers out there.
So – while I agree in spirit with your assertion that the value brokers capture sometimes feels unreasonable, I contend that home buyers will continue to seek brokers out for long-term, personalized relationships.