fbpx

Zillow and The Future

zillow harwood 008

The speaker yesterday mentioned that Zillow did a survey a while back and asked, ‘What is your favorite real estate website?”

Amazon came in 5th place.  But Amazon doesn’t offer a real estate website.

Remember when you would never send your credit card data over the internet?  Now look – people are becoming brand-loyal and trusting of internet companies that offer maximum convenience.

It seems like it will only be a matter of time before 1-2 companies dominate the real estate space.  And it probably won’t be long now!

The length of time people own their home gets longer with every survey.  The rah-rah days are over, and from now on, you might buy and sell 2-3 homes in your lifetime.

With little recent experience to rely on, who will you trust the next time you move?  By then, you will probably have even more comfort in doing business with internet companies, and prefer those who are most transparent.

Zillow is looking to capitalize on the consumers’ brand loyalty to quality internet companies.  What’s the impact?

Zillow is becoming the Amazon of real estate.

The Zillow Group already has 70% of the mobile real estate traffic.  They’ve had over 500 million homes viewed on mobile devices, or 185 homes viewed per second!

Their new Premier-Agent mobile app will alert realtors to incoming leads immediately, and give them the consumer’s Zillow home-search history, and their social media accounts.  A big advantage when trying to build rapport with a potential new client!

Zillow has also developed additional tools for their agents to use when managing contacts and transactions, and has a phone team who will call your leads and set appointments for you!

They aren’t a brokerage, they have never sold a house (Their CEO still hasn’t sold his house that he listed in July), yet Zillow is providing a top-notch website, $100 million in advertising, and several powerful tools for agents to use to improve their business.

Eventually they will be advertising that their agents are the best in the business.  But are they?  All we know is that they are the agents willing to spend thousands per month to get on the Zillow bandwagon.

Zillow is catering to the big agent-teams, and thus, that will be the future of real estate sales.  To build a big enough team to be able to afford $10,000 – $50,000 per month in Zillow ads.

It will be a few years before it really takes hold, but the realtor old guard is already on it’s way to retirement so it seems like a natural progression.

With internet companies like Amazon dominating their space – combined with consumer not moving as often – the next time you think about buying or selling, who will you text?

Zillow Summit

The Z team was in town today.

Here is a video of their presentation of the SD stats, plus Doug Harwood and myself discussing the future. My comments were based on this piece:

http://www.notorious-rob.com/2015/11/the-winds-of-war-zillows-q3-earnings-call-and-the-inevitability-of-conflict/

Donna thought my words were a little strong, but they need to be to emphasize the point.  Zillow intends to change the whole game – they have from the beginning, and they demonstrate the killer instinct regularly.  But they are so nice about it that they are sneaking up on most agents who don’t see it coming.

The lower-producing agents will be the first casualties, and they will just retire and watch from the sidelines as Zillow starts advertising that they have the best agents.  They don’t mind spending $100 million per year on those ads, and no other real estate company comes close.

There are 11,000 agents in SD County, and around 3,000 sales per month.  Agents who sell 2-4 houses per year won’t be able to keep up with superior agents teams that will be outfitted by Zillow to dominate the market.

Handling A Lower Offer

low

Bidding wars provide several advantages to home sellers, centering around the additional leverage they enjoy during the negotiations.

But not every seller gets to experience the thrill.

How about those sellers who aren’t receiving any offers?  First, decide if you want to sell, or not sell today.  If you don’t care about selling today, then sit tight and hope for the lucky sale.

For the sellers who are motivated to sell before their listing gets stale, just lower the price early and often until showings and offers commence.

Generally, buyers are willing to pay your price, or close to it, during the first 7-10 days of a fresh new listing.  After that, the showings die down and sellers are more willing to accept the reality.

My pricing-accuracy guide for sellers:

  1. If you are getting offers, the list price is about right.
  2. If you are getting showings but no offers, your price is 5% to 10% wrong.
  3. If you aren’t getting any showings, your price is more than 10% wrong.

Eventually, the market will catch up, and an offer will trickle in.

If the listing has been active for months, you are going to get low offers.  All that buyers know is that your current price isn’t right, and they are going to take a crack at you.

Don’t take it personally – if you were in their shoes, you’d do the same thing.

How much below list price are we talking?  Roughly 10% to 15% below list price – lower than that and buyers won’t bother.

The typical knee-jerk reaction by sellers is to reject the offer outright, or counter-offer with a price that is only 1% or 2% off the list price to show everyone who’s the boss.

Let’s assume that both buyers and sellers are motivated. Where can you expect a typical negotiation to end up?

The eventual sales price tends to be around the midpoint of the buyer’s original offer, and the sellers’ first counter offer.

Buyers and sellers are prone to dis-engage, rather than battle, so you want to get this over with as quickly as possible.  Two counter-offers from each side is about the max, because it will take a week to process that many.  If no agreement is reached by then, it’s too easy to give up.

So working it backwards, any buyer or seller can plot out their next two moves.  Resolve all the other negotiable points in the first counter, and keep the remaining counters focused on price alone.

Once the sellers make their first counter-offer, you can predict where the negotiations will end up, roughly.  Select two prices in between, and make them easy to digest by selecting a nice round number.  Making a bigger move early does help to keep the other party engaged.

Regardless of how many times the players have been through this process, don’t skip it.  This is a new deal, with new players, and going back and forth with counters is the best way to discover more about whom you will be dealing with over the next 30-45 days.  You don’t want to rush anyone into a deal.

Get Good Help!

Auction Update

sharga

Auctions have a seat at the house-selling table, and their ultra-low opening bids are eye-catching for buyers hungry for new product.  Will one player emerge from the pack to dominate the space, or will every realtor be offering an auction option some day? These guys are figuring it out – it’s better to cozy up to agents, rather than try to replace.

From the wsj.com:

The hors d’oeuvres and drinks were flowing at an Auction.com broker party in Midtown last week when Rick Sharga shushed the crowd of commercial real-estate brokers to explain to them why the online property-sales service is their friend, not their competitor.

About 75 brokers from the New York region were at the event, lured in part by Auction.com’s promise to give away five $1,000 gift certificates. The service—one of the largest online property-auction sites—also is offering brokers $5,000 for simply listing one of the properties they represent on the site, whether or not it’s actually sold.

“We believe the best model is a hybrid model” that combines traditional brokerage and Auction.com’s online bidding service, Mr. Sharga, an executive vice president with the firm, told the crowd.

Auction.com is launching a major push to develop stronger ties with brokers as part of a broader effort to expand its commercial-property business. The firm, which started online real-estate auctions in 2008, has been listing commercial property since 2009.

But so far its volume has been dominated by residential sales.

The firm expects to sell 1,000 to 1,500 commercial properties this year and 50,000 to 60,000 homes.

Read full article here:

http://www.wsj.com/articles/auction-coms-delicate-real-estate-expansion-1447641268

Inventory Watch

The Paris attacks didn’t impact our weekly stats – there were 56 new pendings, which were just above the average over the last ten weeks.  The current inventory of houses for sale Under $800,000 is the lowest since May – and it may not get much better!

Click on the link below for the complete NSDCC active-inventory data:

(more…)

Paris Attacks and Real Estate

france

The Paris terror attacks are another example of the despicable horror being perpetrated throughout the world.

Will they impact our local real estate market?

Buyers drop out every day for a variety of reasons – mostly because the houses they can afford are not up to their standard.  This terrorist act will cause some to pause the home search and wait until next year to see what happens.  But there will always be buyers available for the quality properties.

Will sellers panic?

After the 9/11 attacks, our local real estate market stalled for a couple of weeks.  But it bounced back quickly, and within a month it was back to normal.

The sellers are the key.  Will they hurry up and list their home now, instead of waiting for spring? It’s doubtful that a terrorist attack in Paris will change the plans of home sellers here – especially about their price.  Until we experience another attack in America, sellers will shrug it off and proceed will their plan.

Selling Your Home Around the Holidays

estates sunset 048

If you are thinking of selling your home, it is tempting to wait until spring before going on the market.  Here are reasons why you should drop everything and call me today!

  1. Virtually no competition – Sell when everyone else isn’t!
  2. Inventory is picked clean – Buyers would love to see new choices.
  3. Fewer looky-loos means less showing hassles – Motivated buyers only.
  4. Holiday decorations = Instant staging.
  5. Price Discovery – If no takers, cancel after 2 weeks and try again next year.
  6. Rates have gone up, and the Fed hasn’t done anything yet!  The best way to combat rising rates is for the seller to offer a rate buydown.  The Estates off CV Road is offering to buy down your rate today to 2.625% for a 10-year interest-only loan, which is a nice incentive.  Offering a rate buydown is cheaper when rates are lower – paying to get the buyer a 30-year fixed rate below 4% in spring may be costly.

In other parts of the country where the weather is bad, it’s understandable to take the holidays off.  But here it’s going to be 74 degrees today – which is great home-selling weather!

The bottom of the San Diego market was April, 2009 – we’ve been on a six-year run, and overdue for a burst of inventory. If that happens on your street or neighborhood, you’ll be glad you sold now.

If it helps, we can close escrow in January!

NSDCC 2-Month Sales

estates sunset 034

The stats from the first ten months of the year looked good.

How do the last couple of months compare to previous years?

Are we reaching the buyer-exhaustion stage, where the inventory is so picked over that sales are suffering?

September-October Detached-Home Sales, La Jolla to Carlsbad:

Year
# of Sales
Median Sales Price
Avg DOM
2011
414
$820,500
84
2012
586
$799,851
73
2013
529
$1,000,000
55
2014
480
$1,022,500
55
2015
460
$1,075,000
46

The buyers have been remarkably resilient, and if there were more higher-quality homes for sale at reasonable prices, I think sales would be even higher. When is a good time to sell? When everyone else isn’t!

Get Good Help!

Pin It on Pinterest