There is a chance that disruption could be upon us.
Reader Booty Juice said today said that since he bought his house 30 years ago, the transaction process hasn’t changed a bit. It hasn’t – sellers still pay a full commission for two agents to figure out how to get to the finish line.
Is it possible that Zillow could make the MLS obsolete, and cause a sea change in how real estate is sold?
Let’s test it every chance we get.
I inputted a ‘Coming Soon’ listing this morning, and it has had 162 views in the first 12 hours – most of which were probably buyers, not agents.
The new Paragon MLS allegedly has a listing counter too. I’m inputting the new listing now, and will try to track how many views happen through the MLS. My guess is that Zillow views will exceed the MLS.
The inventory should find relative equilibrium for the next month as buyers grab something and get settled before school starts. What happens after that (August and beyond) is when it will get interesting. The highest category, Over-$2,400,000, has 416 listings now and the new MLS system only allows 400 maximum. I’ll use the actual count but stats from the first 400 listings:
North SD County’s Coastal Region (La Jolla-to-Carlsbad)
Two of the seven are new-builds listed by the developer, so with five resale listings, we can say that realtors aren’t flocking to the opportunity yet.
The ‘Coming Soon’ listings are getting some good exposure though – the seven have been featured for an average of 8 days each, and are averaging 341 views each!
There are those who poo-poo the whole idea, but this is just the beginning – Zillow is looking to dominate the real estate industry. For starters, they are spending $65 million in advertising in 2014, and already have 82 million unique viewers per month. After a few more years, they will be the go-to website in the consumer’s mind.
They can empower those consumers with new features that are complete – and that’s the problem with the ‘Coming Soon’ listings, they don’t ask enough questions. As a result, the same tactics used with the fraudulent short sales will be in play – buyers who have agents will be told to wait around, and buyers without agents will be rushed to the front of the line.
Zillow could go a little further to making this feature less sleazy in appearance by adding a mandatory questionaire to the Coming Soon agent-inputs. Here are questions to be answered on each listing:
1. Can I see the house today? If not, when?
2. Can I buy the house today? If no, when?
3. Will you pay a commission to a buyer’s agent? How much?
4. If you have multiple offers, when and how will you decide?
We should have the same questions on MLS listings!
It would be helpful if Zillow would also keep a record of how each agent performed, compared to their answers on the questionaire. Yes, Zillow allows agents a testimonial category for clients to leave glowing recommendations, but a timeline log for ‘Coming Soon’ listings would keep agents more honest.
We don’t have to debate whether every new Zillow feature is good or bad, right or wrong – they are what they are. Let’s try to use them in a way that we forward the business at hand.
Now that it is more obvious that pricing has slowed, there should be more potential sellers inching closer to the exits. But don’t expect any wholesale dumping of properties – they don’t have to sell, they’re not in a hurry, and they aren’t going to give it away!
A year ago, buying foreclosed homes to rent out was the sure-thing trade for investment firms backed by money from private equity companies, hedge funds and pension systems. But with the supply of cheap foreclosed homes dwindling, some early investors are looking to cash out a bit by flipping homes to competitors.
The Waypoint Real Estate Group, one of the first companies to raise money from private investors to buy foreclosed homes, is quietly shopping as many as 2,000 houses in California that it acquired in the last few years in several private investment funds, said three people who had been briefed on the matter but were not authorized to discuss it. The homes, which are largely rented, are being shown to other companies backed by investor money that have also scooped up distressed houses in states including Arizona, California, Florida, Georgia, Illinois and Nevada.
Waypoint is considering selling about half of its 4,000 homes. Some of the biggest institutional investors in the market for foreclosed homes — companies like the Blackstone Group, American Homes 4 Rent and American Residential Properties — have slowed their pace of acquisitions in response to an increase in home prices and a dearth of foreclosed homes that do not require significant renovation.
Waypoint is following other early investors like the Och-Ziff Capital Management Group and Oaktree Capital Management, which have sold homes bought near the start of the financial crisis. But unlike Och-Ziff and Oaktree, Waypoint is not leaving the single-family home market. It is still managing more than 7,000 homes for a publicly traded real estate investment trust, or REIT, it formed last year with the Starwood Capital Group called Starwood Waypoint Residential Trust.
They are wrapping up the TB Stonebridge tract, and the models will probably be hitting the market before the end of the year – with prices close to $2,000,000. Here’s a video preview of the two main features:
The millennials who have student-loan debt and low-paying jobs will have to stay home longer – and may never buy. But there’s still plenty of demand – these guys spend so much time worrying about what might happen that they lose sight of what is happening.
If student loans end up being an issue, home sellers will have to adjust. There’s nothing price won’t fix!
I mentioned on video that my phone has been blowing up the last couple of weeks, and other agents are reporting the same thing. The graduation season is over, and July is only five days away!
Are buyers fired up because of USA Soccer?
Part of the action may be due to the lack of new listings – there still hasn’t been any flood of sellers:
NSDCC Detached-Home New Listings in June
2010 = 533
2011 = 503
2012 = 436
2013 = 478
2014 = 388 (so far)
The next 30 days should be lively – buyers are making their last push to buy/clean/move and get settled before school starts up again. If you are thinking of selling, it’s a great time to hit the market – contact me today!
Zillow has been accurately predicting the changes in the Case-Shiller Index lately, swamping the boat like most everything else they touch in the industry. The C-S Index is becoming an after-thought for those thirsty for price data.
While the San Diego CSI has been showing a YoY double-digit gain for the last 15 months (including March’s 18.9% and April’s 15.3%), those days are rapidly coming to an end.
Zillow is predicting that their San Diego ZHVI index will show a 12.7% YoY change for May:
It was the rise in mortgage rates about a year ago that helped slow the frenzy conditions, and cause prices to level off. The YoY changes will be catching up, and by the end of summer be back in the single digits – we could even get close to zero.
Yesterday, Professor Shiller hoped that people wouldn’t get too worked up about prices, and I doubt they will. Buyers especially will be happy to tread water as long as prices and rates are both stagnant – which makes it tougher on sellers to sell for their price.
For sellers waiting for the market to top off, I think you can say we are here. Yes, there will be slight appreciation here and there, but you could also get a couple of bad comps around you too.