We wondered what might happen when Zillow changed from a search portal to a brokerage last week.
Zillow showed us who’s the boss.
They deleted the last 50-100 sales from EVERY agent I checked, and ALL active listings were wiped off the agent profile.
They also tweaked my headshot!
None of my past sales on Zillow had any connection to the MLS – they were all manually uploaded, so this wasn’t a MLS-related event. So I guess Zillow deliberately removed the past sales and active listings!
They haven’t responded to requests as to why, or whether they will put them back.
The MLS-listed properties used to have the listing agent plus the three-headed combo of Premier Agents who were prominently featured in the right-hand column. The PAs pay hefty advertising fees for placement, but now they are listed below the schools which is down towards the bottom of the listing. They are called ‘personal guides’ now:
The listing agent does get a one-liner mention too.
Zillow demonstrated their killer instinct previously when they tried to squash Trulia by out-spending them on advertising. Then Zillow bought Trulia and made them a sidekick. Has anyone heard of Trulia lately?
The days of Zillow playing nice with agents are over.
Today’s realtors might survive as long as the baby boomers, who are the only people left who might remember – and appreciate – getting good help. After that, Zillow will declare that the cabal has been broken, and convince you that all you need is a transactional brokerage to handle your paperwork.
In November, Zillow busted out of the pack of prognosticators and predicted around 7% appreciation for NSDCC zip codes over the next 12 months. They have revised again – now predicting that our North San Diego County coastal areas will appreciate at least 10%:
La Jolla:
Carmel Valley:
Del Mar:
Encinitas:
SE Carlsbad:
NW Carlsbad:
NE Carlsbad:
SW Carlsbad:
Where will they be next month?
It doesn’t really matter how they got to these predictions, or if they are realistic. They are broadcasting these to the masses, and with their reach, their forecasts alone can influence the market!
We’ve all been there this year — toddlers interrupting Zoom meetings, daydreaming for more space, and shamelessly feeding sourdough starter kits. 2020 has changed the way we live in and outside our homes.
As people rethink their homes’ functionality after spending more time in them, features we never knew we needed — such as a home gym or no-touch appliances — are more important than ever. While public health precautions continue to keep us at home, these features will only become more popular to create spaces that keep our families safe, all while providing an oasis of comfort.
Driven by this new COVID era, Zillow shares top 10 home trends for 2021 that will not only add comfort, but might even add extra value to your home.
‘Zoom Rooms’
A Zillow survey found a desire for a home with a dedicated office tops the list of reasons why Americans working from home say they would consider a move, if they were to continue working remotely at least occasionally. In 2021, people will receive more clarity from their employers about the ability to telecommute moving forward, which could trigger a move to a home with more space. And, as people tire of working from a kitchen table, they will be wanting a more permanent — and quiet — solution for their at-home desk.
As of November, the number of listings mentioned “home office” or “Zoom room” increased by 48.5% compared to the same time last year. Pennsylvania home builder Berks Homes also says requests for an at-home study in lieu of existing living space more than doubled this year.
‘Homecation’ Amenities
With lots of time and nowhere to go, homeowners are coming up with creative solutions to create vacation-vibes right at home. “Pool” was the top Zillow keyword search term in 2020. “Waterfront” and “dock” also landed in the top ten. Additionally, homeowners may be looking for big and small ways to create a luxury experience at home, from upgrading to a spa-like bathtub or relaxing rain shower. Zillow research shows home buyers paid more for amenities that make their home feel like a retreat. Listings that mentioned a free-standing tub typically sold for 5.5% more than expected, while the listing keyword “spa-inspired” contributed to a 1.8% price premium.
The rise of remote work will allow more homeowners to turn their favorite vacation destination into their hometown. Page views of for-sale listings in areas typically considered vacation destinations – such as Key West, the Jersey Shore and Cape Cod — are up nearly 50% compared to last year.
Intergenerational Living
Intergenerational living will rise in popularity as young adults and grandparents alike find themselves moving in with family for financial and health reasons. According to Generations United, about one in six Americans currently live in multigenerational households, and this year, the share of young people moving back home reached all-time highs as more Millennials and Gen Z’ers than ever – particularly renters – found themselves packing their bags and moving back in with their parents.
Katie Detwiler, Chief Experience Officer at Berks Homes says this trend is manifesting in how people are designing new construction homes, with more requests than ever before for a finished basement with a full bathroom, and bedroom additions.
Gourmet Kitchens
This year inspired people to break out of their old baking habits and start new hobbies in the kitchen, and in 2021 homeowners will want to level-up from their sourdough obsession to create other culinary masterpieces. A previous Zillow survey finds 41% of people value a well-equipped kitchen more than before as a result of social distancing recommendations — and more people will want the space to show off their new culinary skills in the next year.
“We’ve seen an increase in requests for gourmet kitchens,” says Katie Detwiler, Berks Homes’ Chief Experience Officer. “This includes bigger cabinets and island additions so homeowners have the space they need to cook their gourmet meals.” Berks Homes has seen more than 100 more requests for alternate kitchens and island additions this year compared to last.
Backyard Oasis
A yard that is safe and functional has taken on renewed importance — a Zillow survey from the Harris Poll found that 41% of people say they value a large outdoor space more as a result of social distancing recommendations.
There are many easy upgrades to make a backyard a relaxing oasis the whole family can enjoy, and in tandem, increase the resale value of your home. Zillow research finds homes mentioning “firepit” in the listing sold for 2.8% more than similar homes, and “outdoor kitchen” sold for 4.5% more. Smart sprinkler systems and outdoor lighting are other features that add a contemporary flare to a backyard that also help your home sell up to 15 days faster than expected.
I showed three houses over the weekend, and other buyer groups were looking before and after. For every hot buy, it seems like there are 5-10 buyers!
This enthusiastic demand coming in November can only mean that the 2021 market is going to go ballistic. We will get the latest Case-Shiller Index tomorrow, and the month-over-month gain is going to be close to 2% for the San Diego metro area.
Even Zillow is getting more fired up – they raised their forecast of annual appreciation for Del Mar.
+6.9% forecast last month
+8.5% forecast this month!
If the high-end goes up 8.5% in the next year, then the low- and mid-range markets should be even hotter!
Here were their forecasts for our local NSDCC areas from last month:
If we have an uptick in boomer inventory that cools off the market slightly (and the right surge could increase sales) then we should survive quite nicely at 3/4 speed of where we’ve been the last few months!
This is a good summary of the Zillow Offers homebuying machine. Like Amazon, they are hoping that consumers are willing to overpay for convenience:
The website that allows you to imagine living in homes you could never afford is out to do to real estate sales what Amazon did to retail.
“Our vision with Zillow Offers and Zillow is a one-stop shop, buy, rent, sell, lending and closing service,” says spokeswoman Jordyn Lee, who says the company is working toward a more streamlined approach to cumbersome real estate transactions.
It’s even partnering with homebuilders to buy their customers’ old homes, with closings scheduled to coincide with completion of the new property. The inability to sell a home is a primary source of new home purchase cancellations, experts say.
“It makes complete sense for an entity like Zillow, that is a dominant force in the housing market with its listing and information service,” says Dr. Vivek Sah of UNLV’s Lied Real Estate Institute. “Expanding into its own brand of residential brokerage will align its services together and provide a one-stop shop to its customer base.”
It also eliminates the awkward process sellers face of showing their home while living in it, and synching the timing of buying and moving to a new property.
A variety of “iBuying” services on the market cater to different niches. Some provide loans to facilitate deposits on new homes before existing home sales have closed. Others allow buyers to design new construction. Zillow is branding itself as the choice for stressed buyers seeking an immediate, hassle-free transaction.
Zillow says it’s not out to undercut sellers, citing a study by ibuying expert Mike DelPretethat indicates its purchase offers are about 3.3 percent less than market value.
That’s not the only seller concession.
“For the convenience of not doing repairs and holding open houses, we do charge a service fee of seven to nine percent,” says Zillow spokesman Viet Shelton, adding the fee is the primary source of revenue and profit from Zillow Offers.
That’s more than a conventional commission of six percent, generally split between agents for the buyer and seller.
In addition to the higher fee, Zillow deducts the costs of repairs the property needs from the amount it pays the seller.
Still, DelPrete says, it’s not a moneymaker for the biggest iBuyers, such as Zillow and Opendoor.
“The average percentage increase of a home purchased and resold by Zillow in 2019 and 2020 was 1 percent,” Del Prete said via email. “The iBuyers are not trying to profit on the resale value or appreciation of a home. This is part of the reason the model is so unprofitable and why the iBuyers are losing tens of thousands of dollars on each home sold.”
Hat tip to Susie who sent in this article about a law recently passed in California:
The new rules apply to one- to four-unit properties sold at foreclosure auctions. If an investor wins one of those homes at auction, then people who want to live in it, as well as nonprofit organizations and government entities, get 45 days to submit competing offers.
If the home is a rental, the tenants living there could win by matching the investor’s offer. Other would-be buyers must offer more than the investor.
Known as SB 1079, the law takes effect Jan. 1, 2021.
State Sen. Nancy Skinner (D-Berkeley), the bill’s author, said her goal was to make it easier for individuals and affordable-housing groups to compete with investors.
“Homeownership is the primary way people have to build up generational wealth,” she said. “When we have rules that give advantage to a corporation, then that dream is just not available.”
The manager of the foreclosure auction is required to maintain a website that details the highest bid at the auction and how to submit competing offers.
I don’t know how many amateurs will be paying more than investors for homes sight unseen, and without proper title searches for additional liens. But there will be a few!
It was the last paragraph that was the most intriguing.
The State of California has institutionalized transparency!
Making the highest bid known to the public could revolutionize our business. Can you imagine if Zillow ran a website that openly tracked the offers on their homes for sale – buyers would love the transparency! Then every brokerage would be pressured into doing the same, and boom – no more agent shenanigans!
Are you thinking of selling?
Transparency can help ignite a bidding war, and get buyers to bid up the price because it becomes more about winning, then getting a deal. It’s how I handle my listings – let’s talk about how I can help you!
Here’s the classic courthouse-steps example of how auctions help to drive up the price:
Zillow’s estimates of appreciation over the next year:
Carmel Valley, 92130: +7.2%
NW Carlsbad, 92008: +7.7%
SE Carlsbad, 92009: +7.2%
Encinitas, 92024: +7.2%
Del Mar, 92014: +6.9%
La Jolla, 92037: +7.2%
Rancho Santa Fe, 92067: +6.9%
Santaluz/4S/Del Sur, 92127: +7.1%
It looks like Zillow expects 7% price appreciation for our area, which is wildly explosive for them. I looked up a an old blog post where their forecast numbers were virtually all 1s, 2s, and 3s for several years, and the actual increases usually exceeded the Zillow guesses.
Relatively-speaking, they are suggesting full-blown frenzy conditions!
The pandemic is still raging, the President of the United States is in the hospital, the election is right around the corner, and so are the holidays. The frenzy has to slow down at some point, doesn’t it?
So I schedule for 11am, and show up to find today’s list of showings taped to the front door:
The listing agent happens to be there, so we discuss the current market conditions. She is a long-time independent broker like myself (who now also works @ Compass) and we agree that the environment is ripe to convert to single agency naturally, and buyer-agents being eliminated.
It’s not because it’s what best for everyone involved, because clearly it’s not good for buyers and sellers – except maybe for those sellers who live in the house being barraged by showings the first few days on the market. It doesn’t sound like much of a price to pay, but for homebodies, or those with little kids & pets, it can be a major inconvenience.
Zillow is the only entity who spends eight or nine figures per year on advertising, so they will control our destiny – and with them setting up brokerage units manned by employee-agents in all 50 states, you can get a feel for what’s ahead.
In the meantime, consider these developments.
Today’s listing agents are making it harder to show and sell their listings, they are lowering the buyer-agent commissions (and taking the difference), and some realtors are advertising guaranteed cash offers as the better way to sell your house.
As is the case throughout America, the truth doesn’t matter nearly as much as how loud you can scream.
The greed displayed by these listing agents feeds upon itself, because other agents witness these practices happening without any reprimands, and they start to believe it’s acceptable…..and then they do the same thing. The game is evolving into how to beat the buyer-agents out of their commission.
In the short-term, realtors can justify this revolution by pointing to the commercial brokers who have practiced their real estate like this all along. Heck, less competition will slow down the rapid price increases we are experiencing, and help to trim the over-population of realtors everywhere too….so you can say there are good things about it.
But it all plays into the hands of Zillow, and eventually they will be who processes your order.
This sounds like a document-processing center where trainees guide consumers through the paperwork and hope they don’t ask too many questions. Sound familiar? They are going to walk right in and take over while the industry stands by idly – and we’ll look up in a few years and wonder what happened, just like we did when they began.
Over the last several years, Zillow has been transitioning from a real estate search portal into a streamlined buying-and-selling entity that offers iBuying services through Zillow Offers, and mortgage, title and escrow services through Zillow Home Loans and Zillow Closing Services. Now, the company has taken a big step further by starting its own licensed brokerage: Zillow Homes.
Zillow Group’s Chief Industry Development Officer Errol Samuelson provided details about the new brokerage in a video:
According to Zillow, starting in January 2021, Zillow Offers customers in Atlanta, Phoenix and Tucson will be working directly with a licensed employee of Zillow Homes. In addition, any Zillow-owned homes in these three markets will be listed by Zillow Homes employees. Although the services will be limited to these three locations to start, the company says it plans to expand into additional markets later in 2021.
In the video, Samuelson emphasizes that Zillow Homes will not be recruiting agents from other companies, but instead will be licensing existing Zillow employees under the Zillow Homes entity.
“We’re excited to add another important link in the Zillow Offers transaction chain to offer our customers greater choice and convenience when considering a move,” said Jeremy Wacksman, president of Zillow, in a statement. “At Zillow, our mission is to give people the power to unlock life’s next chapter and we want to help them on their journey home through a range of services that meet their preferences—whether through Zillow Offers or through a trusted Zillow Premier Agent partner.”
Zillow Offers launched in 2018 and is now available in 25 markets. According to the company, Zillow Homes will be “the brokerage of record for Zillow Offers transactions.” The move also frees up the company from using “thousands of disparate data feeds,” allowing them instead to pull from “MLS Internet Data Exchange, or IDX feeds,” according to the video statement.
“We look forward to working more closely with our agents, industry and MLS partners to efficiently serve our mutual customers,” added Wacksman. “Together, we will push to keep the real estate industry moving forward, and adapt to changing consumer preferences and virtual technologies.”
Zillow says it has plans to join local real estate associations, as well as the National Association of REALTORS®. The company also says it will continue investing and expanding its Premier Agent business—through which buyers and sellers can get connected to Zillow Premier Agents—and added that it expects this to be the “preference of the majority of Zillow’s customers.”
