Why Zillow Has Less Homes But More Traffic

A recent study conducted by BuildZoom found that while the NAR (National Association of Realtors) operated website, Realtor.com has many more homes listed for sale, Zillow still gets most of the traffic. And I think I know why.

ZillowIt is no secret that a lot of consumers do not trust Realtors. The problem with the Realtor.com website is its name. It is a proxy for untrustworthiness. Conversely, consumers like, and more importantly, trust Zillow. Perhaps in part because Zillow is not operated by NAR.

I think Realtor.com would drive much more traffic to their website if they only changed the name, to anything else. How ironic. NAR has spent their lifetime trying to brand the term “Realtor” and now it has become their scarlet letter.

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

I Have Seen the Future of Real Estate and the Future is…

Quill Realty. This company gets it. This is how all brokerages will function in the future. It is just a matter of time. Regrettably they are only available in Seattle right now. If I were selling a home there it is the only company I would consider using.

What is Quill doing that is so unique? They are actually pulling out of their local MLS (Multiple Listing Service), which is unheard of today. And why are they doing that when every other brokerage in the country belongs to an MLS? Because Quill understands that today MLSs exist ONLY to serve real estate brokers, and do almost nothing to help home sellers. And apparently Quill has this crazy notion that they want to serve home sellers more than they want to serve other brokers.

But you cannot sell a home without listing it on the MLS. Of course you can. When buyers shop for homes they do not go to the MLS to search for them, they go to Zillow or Trulia or Reatlor.com. And while it is true that those sites get their listings from the MLSs, anyone, including real estate brokers (like Quill), can send their listing directly to these sites and bypass the MLSs altogether. And that is exactly what Quill intends to do. And why do they want to do that? To save home sellers money. A lot of money.

When you list a home on the MLS you are expected to pay the cooperating broker. That is a fancy way of saying the seller has to pay for the buyer’s agent, a practice which is unfair to both buyers and sellers. By not using the MLS, Quill’s clients can forgo paying the 2.5% to 3% commission to the buyer’s agent.

By leveraging technology and NOT using the MLS, Quill will charge their home sellers just a 1% commission. That will save home sellers $25,000 on the sale of a 500,000 home (compared to the customary 6% commission). I would think that might get home sellers excited.

Naturally the other brokers in the area will be none too happy with this and will try to keep their buyers away from Quill’s home sellers, but with buyers seeing the homes on the Internet, it will be very difficult to do, and Quill knows that. A properly priced home in a seller’s market is going to get purchased, no matter how little the seller pays to the cooperating broker. Kudos to Quill for recognizing that AND doing something about it.

This is the future of real estate: listing brokers charging home sellers a fair price and home buyers paying for their own agents, if they feel they need one. I have seen the future of real estate and the future is…

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

For Sale by Zillow – I Love it!

For Sale by Zillow refers to an article (paid) on Inman News last week that describes something called The Zillow Effect.

In the article, the author explains how his aunt, a busy professional, wanting to sell her home quickly, bypassed the entire real estate industrial complex and managed to seller her home in three days for over asking price. No real estate agent. No For Sale sign. No 6% commission. And how did she pull of such a feat: Zillow.

Maybe you think she needed a professional home stager and photographer to take beautiful pictures to find a buyer. No such hassle. She simply used the photos that were still there from the last time the home sold. Maybe you think she needed a professional appraiser to help her set the asking price. Nope. She just used the value Zillow suggested (called a Zestimate). She used the existing photos, updated the description, used the Zillow recommended asking price and flipped the status switch to “Active.” Three days, above asking price, no commission. And what did Zillow charge her for her trouble: NOTHING.

The article goes on to explain the home that sold was in Portland, which is a particularly hot real estate market right now. That makes perfect sense. In a hot real estate market homes practically sell themselves, which begs the obvious question: why would anyone pay a real estate agent 6% commission in a hot market when you can pay Zillow nothing?

The article also speculates that “she probably would have gotten more for her property had she listed with an agent.” I am not sure that is true.

In an article published in 2008 by the National Bureau of Economic Research entitled Do Real Estate Brokers Add Value When Listing Services Are Unbundled, what the researchers found was that other than the benefit of access to the MLS, “a seller’s use of a broker reduces the selling price of the typical home by 5.9 – 7.7 percent, which indicates that agency costs exceed the advantages of brokers’ knowledge and expertise by a wide margin.”

In simpler terms, what that research finds is that other than the benefit of using the MLS to advertise a home for sale, real estate brokerage services costs more than they are worth. All that expertise results in a LOWER selling price. In other words, not only did she save the 6% commission, she most likely sold her home for MORE than what she would have with brokerage representation.

What is Zillow but the modern day version of the MLS. It enables home sellers to advertise a home for sale to buyers. And if the only true benefit of hiring a brokerage to sell a home is access to an advertising platform, and sellers no longer need that platform to advertise their home for sale, do they really need the brokerage services at all anymore?

Buyers and sellers can find each other today for free, without the MLS and without a real estate brokerage. It is only a matter of time before home sellers realize that the 6% brokerages are just not worth the money—especially when using them results in a lower sales price.

Home sellers can find their own buyers and come to an agreement on price without help from anyone today. What they need are transactions managers: real estate professionals, who work on an hourly rate, and make sure the transaction goes smoothly. Who will be the first one to fulfill this latent market need? You better hurry. It soon may be the only position available in an industry that is in desperate need of change.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Rarely is the Hypocrisy this Transparent

I have been calling for greater transparency in the real estate industry for years now, with little success. So, you can imagine how happy I was to see this article (paid) on Inman News a few weeks ago: Some brokers learning to live without Zillow and Trulia.

Apparently, Crye-Leike Realtors, one of the largest firms in the country, is pulling their listings from Zillow and Trulia in Nashville, TN. According to the article, the company claimed that “After testing life without the two popular portals in a handful of markets, the firm says that its business was unharmed.” Hooray for their business. But what about the home sellers they represent? Were they harmed? Most definitely.

You get top dollar when selling a home by getting every interested buyer to see that it is for sale. And since most home shoppers now look for homes to buy on Zillow and Trulia, the single best thing a home seller can do to market their home is to advertise it there. Purposely keeping a home for sale off those two sites without question reduces the number of buyers who see it. Not even a hypocritical Realtor can argue that more buyers will see a home for sale by keeping it off Zillow and Trulia.

So, why would Crye-Leike keep their listings off the two powerhouse real estate sites? Because advertising a home for sale there benefits agents who do not work for Crye-Leike. It would follow then that keeping it off those sites benefits Crye-Leike agents at the expense of their competition. So, this little stunt is all about putting Crye-Leike agents first. Go Crye-Leike. You’re number one.

The agents who work for Crye-Leike are “Realtors”. I know that because I see that word in their corporate name. And Realtors have a code of ethics that basically says they must put the interests of their clients before everyone else’s, even their own. Pulling listings from Zillow and Trulia would seem to me to be a clear violation of their code of ethics. Eh, no biggie.

I bet whenever a Crye-Leike agent sits down to do a listing presentation they explain to the naïve home seller that they should choose a Crye-Leike agent to list their home because Crye-Leike agents are Realtors and Realtors have a code of ethics. Oh the hypocrisy.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

Do the MLSs Need to Exist Anymore?

Ask 100 real estate agents and 100 will answer that question yes. That is because MLSs exist to serve agents, not buyers and sellers. But what if you posed that question to a home seller? The chances are they do not know the answer to that question, and more importantly, they do not care. They just want to sell their home.

But wait, you cannot possibly sell a home without putting on the MLS, right? Oh yeah, ask any real estate agent who has ever done a pocket listing if that is true. The frightening truth for the real estate industry is that the MLSs are no longer needed to market homes for sale. Buyers do not go to the “MLS” to find homes to buy. They go to Zillow and Trulia and Redfin and Realtor.com and Homes.com and… The MLSs exist primarily as a channel of communications between brokers and agents. How does that benefit sellers? It doesn’t.

Now it is true that all those websites mentioned above get their information either directly or indirectly from the MLSs. But that is just an artifact of a bygone era. When you market a home today, you take photos, a description and a price and upload it to a web server. That web server could belong to an MLS, or it could just as easily belong to Zillow. Every buyer who uses Zillow to search for homes—and that is a big number—will see the home either way. The MLS is just a relay point in a communication link.

If you want to sell your home today and you take some beautiful photographs, figure out an entice asking price and post it to Zillow directly (which is free), buyers will see it, they will want to view it and they will want to buy it. And all of that will happen outside the confines of the MLS. So, again I ask: Do MLSs need to exist anymore?

In a hot seller’s market it is not uncommon to hear about a lot of pocket listings. Sellers are few and far between while buyers are easy to find. And a pocket listing is the fasted route to the double dip. Clearly agents have no problem “bypassing” the MLS when buyers are easy to find so they can get both commissions. That poses an interesting dilemma: If agents can keep it off the MLS to get both commissions, then sellers can keep it off the MLS to SAVE both commissions. You have to ask yourself of what use is a real estate agent in marketing a home when their primary benefit is access to the MLS and they do not use it to market the home?

Even at a time when there is talk about creating a nation-wide MLS, it would not surprise me to see the MLSs begin to slowly fade away. The only thing keeping that from happening is buyer and seller education, and that is about to get a big shot in the arm. Stay tuned.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

The Best Use for “Coming Soon” – Doing Away With Agents

The “Coming Soon” feature is all the rage. Ever since Zillow announced the feature, all I see now are Coming Soon notices on top of For Sale signs in my neighborhood.

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If you are not aware, last year Zillow announced a new feature available on its website called Coming Soon. This allows homes to be pre-advertised for sale, before they can actually be purchased.

In theory this is a good idea. It can help build excitement for a home soon to come on the market, as well as provide an opportunity for the home seller to get feedback on their asking price without spending any days on the market. If you are getting ready to price your home too high, it would be nice to know before you actually listed it. The problem is that Coming Soon has nothing to do with building excitement or getting pricing feedback. Coming Soon is about pocket listings. Coming Soon is about dual agency. Coming Soon is about double ending.

Most home sellers are too naïve to understand the subtle trick the real estate industry is playing on them with the Coming Soon feature. Most probably think it is a good idea, but nothing could be further from the truth.

Imagine you are a home buyer and you see a Coming Soon home that you are excited about. You want to get in to see it. You want to make an offer. But you can’t. The only thing you can do is contact the listing agent. And that is the key to the scam.

The listing agent gets to identify interested buyers WITHOUT having to put the home up for sale. And if they can identify enough interested buyers, they can convince their seller there is no need to list the home on the MLS because they already have a buyer for them. And if they can keep it off the MLS, then they can keep the buyer’s agent’s commission too. And while most home sellers would view keeping it off the MLS as a good thing, most home sellers also do not realize that they probably just got screwed out of several thousand dollars. Any marketing approach that limits a home’s exposure (e.g., pocket listing) tends to limit its sale price.

It got me to thinking. If an agent can identify buyers without actually putting a home up for sale, so too can the home seller. It is simply a matter of taking some nice photos, writing a description, coming up with an asking price and posting it to Zillow (which is free). Then, when an interested buyer calls, rather than speaking to the agent, they will be speaking to the seller. And if the seller can find a buyer interested in paying the asking price, then they truly can keep it off the MLS, and thereby save the entire agent commission altogether. All they would need is a few hours of a real estate attorney to help with the paperwork. Now that is a good use of Coming Soon.

To learn how to make sure Coming Soon works for you and not against you, visit ReaLising. ReaListing helps home sellers keep more of their hard-earned equity.

 

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.

The Root of all Happiness (and Unhappiness) When You Sell Your Home

Imagine you need to sell your home, and after doing all of your pricing homework, you fully expect it to sell for $500,000. After a few weeks on the market, you end up selling it for $490,000. How do you feel? If you are like most people, you are a little disappointed. You were really expecting $500,000.

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Now imagine you have to sell that same home, and after doing all of your pricing homework, you expect it to sell for $480,000. After a few weeks on the market, you end up selling it for $490,000. How do you feel? You are probably ecstatic—with an extra ten grand in your pocket.

So, the same home sells for the same price in the same time frame and in one case you are happy and in the other not so much. What changed? Your expectations.

When you sell your home, you can, to a great degree, dictate your satisfaction with the outcome simply by managing your expectations. In other words, selling your home is a really good time to be a pessimist.

Go ahead, assume the worst. It will never sell; I am going to take a bath; I am going down with the ship; I am going to be homeless; Nobody loves me. Really get into it.

Now that you have set your expectations properly, go ahead and do everything you can to sell it for top dollar. Clean it, paint it, stage it. Take beautiful, professional photographs. Price it a little below the appraised value. Put it on the MLS and every third party site you can think of (i.e., Zillow, Trulia, Realtor, Homes, Craigslist). Really market the hell out of it.

When listing day comes remember, it is okay hope for the best, just make sure to expect the worst.

To learn how to keep more or your hard-earned equity when you sell your home, check out The Intelligent Home Seller eBook and The Intelligent Home Seller eCourse.