Is Zillow a Threat to Real Estate Agents? Some Say Yes

Ed. Note:  As realtors, we can no longer assume the world hasn’t changed.  The net has changed everything from gathering news, buying shoes, making investments and purchasing real estate.  

Zillow and all the other real estate sites now provide more information to the buyers and sellers of the real estate than ever before.  Some realtors based their entire sales approach on being the “guardian of the data.”  Thinking that if they focused on the data, they would stay ahead of the game.  They either forgot or ignored what being an agent is, an expert service provider.

I have not been one of them.  Agents need to focus on the one thing that can’t be duplicated on any site, providing a service with knowledge of the process of buying and selling real estate.

As noted in this article, underlined near the end, as well as many other sources, sellers can expect to sell their property for more money if they use an agent.  (A buyer of real estate can expect the reverse when using an agent, paying less for the purchase)  The reason is not found in the data, but in the knowledge of the market and the buying and selling process.  

An investment expert once told me, and any good one will tell you, that I could make all the same investments he does and perhaps be just as successful.  After all, I can go on line and gather all the data myself.  But, I would have to spend all of my time researching and analyzing the market.  Then, with experience and knowledgeable judgement (what I lack in the investment field), understand what all the data means and the history of all the investments.  

It is no different with a real estate agent.

Zillow, Trulia and all the other online sites are here to stay.  While they can provide data, they can’t substitute the knowledge and judgement of a good agent.

For more information about the value of using a real live person to help with your transaction, see “Using a Realtor to sell your home.”

Is Zillow a Threat to Real Estate Agents? Some Say Yes

Samantha Joseph, Daily Business Review

October 30, 2014   

Realtor Claudia Rubio with Xtreme Realty Team in front of a typical listing in Grand Isles division of Silver Lakes in Miramar. Melanie Bell

A robotic hand encloses a human one on the cover of the Miami Association of Realtors' October newsletter.

The topic is new technology and listing portals, and whether they threaten the human side of the business—the real estate professionals who rely on face-to-face contact to close deals.

"We should never equate hits with true customer service," the commentary reads.

Real estate brokers have a contentious relationship with online listing sites like Zillow.com, which they say are slow to update listings, deliberately leave old postings in place to lure users, offer inaccurate valuations and profit from trade association data.

And as tens of millions of users flock to apps and websites to trade real estate or list apartments, some brokers say the new platforms are shaking up the industry.

In August alone, nearly 86 million unique users visited mobile applications and websites belonging to Zillow Inc., operator of the largest real estate network on the Web. They viewed more than half a billion homes, scouting information on buying, selling, renting, financing and remodeling.

Their searches fuel Zillow's bottom line, propelling the Seattle company's meteoric rise from a 2005 startup to a powerful corporation with projected annual revenue of $321 million. The firm has more than 800 employees, updated listings for more than 37 million homes, rent estimates and "Zestimates" or valuation data on more than 100 million properties.

Its share price more than quadrupled in the last three years, traded Thursday above $100 a share and has a one-year range $70.28-$164.90.

Its strategic acquisitions gave it control of real estate search site HotPads in 2012, New York-based StreetEasy in 2013 and real estate software company Retsly in 2014.

Already a juggernaut, Zillow announced plans in July to purchase rival Trulia in a $3.5 billion stock deal that would make it the largest online real estate advertising company.

"That kind of shook up the market," said real estate instructor Tony Martinez, broker and president of Xtreme Realty Team in Davie. "Real estate associations are keeping an eye out wondering what's going to happen with big bad Zillow.”

Their concern is that new technology and Zillow's growth cut out the middleman by directly connecting real estate buyers and sellers.

"What's going to be the role of the Realtor? What's happening now is that so many consumers are going to the Internet to see the data, they have almost as much control as we do," Martinez said. "One school of thought is these cannot replace the Realtor. ... But the biggest fear among associations has always been the data. They see themselves as the guardian of the data."

Realtor associations have long controlled the Multiple Listing Service, or MLS, which once belonged exclusively to registered real estate agents but is increasingly the basis of listings on third-party sites.

"Realtors had power because the MLS was a book, and people used to take that book to the grave," Martinez said.

But third-party sites are increasingly competing with the National Association of Realtors' online listing Realtor.com, now set to trade to Rupert Murdoch's News Corp. for $950 million.

"It's pretty obvious that consumers have taken to Zillow. Their traffic is unbelievable, probably higher than Realtor.com, and that's scary," Martinez said. "The complaint is the data is not current. And if they're not getting a direct feed from the MLS, they're completely reliant on garbage in, garbage out."

A move by Zillow to preempt MLS listings led to a lawsuit Monday in the U.S. District Court for the Northern District of California. Top Agent Network Inc., a members-only online community of real estate agents, sued Zillow, claiming the company stole the idea behind its new "Coming Soon" feature. The suit claims Zillow feigned interest in investing in the network but instead produced its own version to share real estate listings before they hit the MLS.

But not all brokers fear the rise of advertising portals.

"Leads are leads," said Samantha DeBianchi, founder of DeBianchi Real Estate and star of Bravo's reality show "Million Dollar Listing Miami."

DeBianchi spends about $500 a month to participate in a Zillow marketing program that allows brokers to appear as featured agents when users search by zip code. The costs vary by zip code, but DeBianchi said she purchases Miami Beach and Fort Lauderdale codes for about 15 leads per month and 10 sales.

"Real estate is a numbers game," she said. "Whatever source you use, you don't know if someone is a qualified buyer until you talk to them. But more traffic in only helps sales on the whole."

That's what Xtreme Realty's Claudia Rubio found in her early days as a real estate agent in Davie.

"This is not an easy business as people think," Rubio said. "When I started I didn't know how to get customers. I signed up with Zillow for referrals and was getting calls and emails from the first day."

In the 18 months she's advertised on Zillow, Rubio said the website delivered 600 leads and generates 99 percent of her sales.

"Not every lead is a good one, but I receive good leads," she said. "It's up to you to convert them."

Zillow spokeswoman Katie Curnutte said the company offers marketing platforms for tens of thousands of brokers each month.

"They're definitely partners," she said. "Most home sellers and their agents believe it's in the seller's best interest to market the home widely, which is why Zillow is such a great platform. With 83 million users per month, there are an awful lot of people looking for homes on Zillow."

The bad news for agents is some of the sellers reach out directly to buyers, bypassing agents to save on commissions. And brokers say the strategy could backfire.

Data from the National Association of Realtors show the median price was $230,000 for agent-assisted sales versus $184,000 for houses sold by owners with no brokers.

"Our concern is that when the public goes on these sites, they have correct information," said Teresa Kinney, CEO of the Miami Association of Realtors. "For our association, it's all about choices for members. Our members want the leads, but it's better if the leads that come to them are accurate."

Read more: http://www.dailybusinessreview.com/id=1202675085497/Is-Zillow-a-Threat-to-Real-Estate-Agents-Some-Say-Yes#ixzz3IOKimR3Y

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.

10 tips for holding a safe open house

Open houses can be a great sales tool—but hosting one also exposes you to numerous unfamiliar people for the first time. Take these steps to stay safe:

1.      If possible, always try to have at least one other person working with you at the open house.

2.      Check your cell phone’s strength and signal prior to the open house. Have emergency numbers programmed on speed dial.

3.      Upon entering a house for the first time, check all rooms and determine several “escape” routes. Make sure all deadbolt locks are unlocked to facilitate a faster escape.

4.      Make sure that if you were to escape by the back door, you could escape from the backyard. Frequently, high fences surround yards that contain swimming pools or hot tubs.

5.      Have all open house visitors sign in. Ask for full name, address, phone number and e-mail.

6.      When showing the house, always walk behind the prospect. Direct them; don’t lead them. Say, for example, “The kitchen is on your left,” and gesture for them to go ahead of you.

7.      Avoid attics, basements, and getting trapped in small rooms.

8.      Notify someone in your office, your answering service, a friend or a relative that you will be calling in every hour on the hour. And if you don’t call, they are to call you.

9.      Inform a neighbor that you will be showing the house and ask if he or she would keep an eye and ear open for anything out of the ordinary.

10.  Don’t assume that everyone has left the premises at the end of an open house. Check all of the rooms and the backyard prior to locking the doors. Be prepared to defend yourself, if necessary.

(Sources: Washington Real Estate Safety Council; City of Mesa, Arizona; Nevada County Board of REALTORS^Ò; Georgia Real Estate Commission)

It is smart to review the value of your home annually

Many people when asked if they would like to know the current value of their home shrug.  They don’t see any reason why they should at least get an estimate of the market value of their home on an annual basis.

Truth is, there are many reason homeowners should get a real estate professional to provide an estimate on the market value of their home.  One example comes to mind of a man that left his house to one son and his investments to another.  (The situations are changed to protect privacy.) When he made the will, things were about even.  But, when he died, the estate was split like his will required, but the house was worth so much more than the investments that it was a very uneven split.  If the man had monitored the value of his house throughout the years, he would have been able to make adjustments to his will to keep it up to date.

Think about it, it is considered smart for people to meet with their financial adviser annually to review their investments.  It is also smart to meet with your real estate agent to review the value of what is for most of us, the biggest investment we make.

Here are some reasons to review the value of your home annually but certainly not an all inclusive list:  

• Make judgements about your own home by comparing it to the value of your neighbor’s home.  

• Make judgements about your community by comparing the value of your home to county, state and national home values.

• Knowing the equity in the home helps you plan for repairs that are needed.

• Your net worth can be more precisely known.

• You may want to make adjusts to your insurance policy to keep up with your home value.

• Some communities have rebuilding requirements that may affect your ability to rebuild if you are under insured.  

• Don’t pay property taxes beyond the value of your home.

• Better plan for retirement by keeping track of the equity in the home.

• If you are considering a reverse mortgage, knowing the value will help you make a better decision.

• Let’s hope you never need emergency cash, but knowing the value will help you plan for emergencies better and save money on insurance.

• Know if an improvement will be right for the house by not over investing in your home.  

• Be aware of the value of your estate.

• If you pay PMI (private mortgage insurance) when a equity level is reached, you many not have to continue to pay.

• If the equity in your home reaches a certain level you may not need to make monthly escrow payments for property taxes, allowing you to invest the money instead of letting someone else hold it.

• Pay off bills by taking some of the equity out of the home.

• If you plan on refinancing the mortgage you will need to know when you reach the equity level you may need.

A real estate agent that is looking out for your best interest will not charge you for a CMA (Comparable Market Analysis) for your home.  To get the best idea of the value of the home, the agent will need to visit to home, research recent history on comparable homes that have sold in the market and make adjustments in the value based on your home.  

Using a Realtor to sell your home

It was thought that the internet would help many more people sell their home on their own.  But, just the opposite has happen.  Research conducted by The National Association of Realtor’s found that For Sale By Owners (FSBOs) was 10% in 2011.  That is down from 14% in 2003 and 2004.

Half of all FSBO sales are transfers or other situations where the sellers were familiar with the buyers.  FSBOs were only 6% of all sales in 2011 when the seller and buyer did not know each other.

There are key reasons that sellers turn to a Realtor to help sell their homes.  Here are some:

• Price the home right for the market

Unless you have access to homes that are similar in the area that have sold in the last 3 to 6 months, it will be tough to price your home to the market.  The home may need to sell at a certain price to pay off the mortgage and provide a profit.  But, that isn’t necessarily the way the price is set.  If your home is overpriced, it will set on the market for ever.  If it is under priced, it will sell quickly, but not provide as much profit as could have been earned.

• The decline of print advertising as a major lead generator

In the past, newspaper ads would produce a fair number of calls on FSBOs. Today, a three-line ad in the local newspaper has little chance of competing with the wide array of information online, including video, color photos, 360-degree virtual tours, and a wealth of community and lifestyle data.

• Buyers seek rich content

Individual real estate companies, Realtor.com, and other national on line real estate websites provide the ability to reach all homes that are listed, no matter what agency listed the property.  Buyers find it more efficient to search these sites then to look for single homes for sale.  

• Instant gratification

Buyers will only view a home for 15-30 seconds on line.  If an owner doesn’t have a way of capturing the buyers contact information, they will lose them.  Then, if the buyer does contact the seller, if the seller doesn’t get back with them immediately, the buyer will move one.  Realtors know this well and make themselves available for any contact that comes forward.  Most people selling a home on their own have other things to do, like their job.  

• Buyers want the savings

When buyers do seek out FSBOs, they do it because they are expecting them to sell for less than market value.  Buyers even take 6-10% off the asking price at first approach.  In the end, homes sell for up to 20 percent off market.  

• The needle-in-the-haystack effect

Try searching for FSBOs on line and up will come real estate companies and individual Realtors.  To provide their clients with the best opportunity to sell homes at top dollar, these companies spend millions in designing their websites and managing their online presence.  When buyers search, their sites are on top.

Sellers can also post on the national real estate websites and for sale by owner sites.  But, again, it is the same issue as above.  Unless you are available from 7 in the morning till 8 or 9 at night, you will miss opportunities.  

Then there is Craig’s list.  The ad needs to be posted regularly to stay on top.  Since Craig’s only allows the same ad to be post every three days, for two of the three days the home is not on top.  A Realtor will make sure the posting stays on top.  Additionally, many people are very aware of the scams on Craig’s and have trust issues when contacting a private seller.  

• Potential buyers are reluctant to share information

When a potential buyer approaches a Realtor to get help finding a home, the Realtor needs a lot of information to help them find the home of their dreams.  This includes plenty of financial information to help qualify them for the home the buyer is looking for.  People will be reluctant to share this information with a stranger that is not licensed or insured.  

• Availability for showings

As above, being available 24/7 to meet with buyers is a problem.  Even if a lock box is on the door to let people in, can they be trusted.  Are they really a buyer or someone that just wants in the home?  When an agent lets people in your home, the agent is there with them.

• Understanding the Sales Process

Realtors are familiar with the process of selling a home.  They are accustom to working with purchase agreements, counter offers, negotiations, home inspections, title companies and closings.  Beside all the legal issues, there are agency policies, state and federal laws as well as issues that arise out of individual situations to satisfy.  If you work with a Realtor, you may want to consult a lawyer for many of the issues, but when you don’t have a Realtor, you will absolutely need a lawyer.  It will insure that something isn’t going to come up before the closing, during the closing or in some cases, a year or two later that will wreck havoc on the finances of the seller.

• Inspection

After the home is “sold” there are contingencies.  One is the inspection the buyer may require before providing a final approval.  There isn't a home that is perfect and the inspection will highlight all the imperfections in the home.  The buyer will return with a list of things that need to be fixed or will request money off of the sale price to proceed.  Realtors know about inspections and what may warrant repair or a price reduction.  Also, depending on a number of other factors, it may be best to pass on the sale and keep the house on the market.

• Appraisal

The home may sell for the price asked and be the best price on the market.  But, unless the lender for the buyer thinks that it is worth what it sold for, it will be tough getting an approval on the mortgage.  Realtors will make sure the house is priced right from the beginning, that the buyer is qualified and have the knowledge combined with experience to help, in many cases, get around the approval process.

In the end, a working with a Realtor is well worth the commission.

Morris Hagerman Properties Index

Morris Hagerman Real Estate One Website

The process of buying a new home

Purchasing a new home is not something we do everyday. So, it may be confusing and have issues that create concern. Even if you have purchased one in the past, laws and regulations change almost daily. With the help of a real estate professional, the process can be smooth.

Here are clear and practical steps for making a home purchase. Watch for more details on each subject in following posts.

Step One: Loan pre-approval
Before you begin to shop for a home, enhance your buying power by getting Pre-Approved or Prequalified. Don't know the difference? Watch for following posts to provide details. (Here is a link for details on getting pre-approval.)

Step Two: Learn the Market
Drive around the areas that you would like to live.  Take a look at the neighborhoods to find those that appeal to you, but be realistic.  Research the cities, the business and schools on line.

Step Three: Choose a Real Estate Professional
Select an experienced real estate professional to help you through the home buying process. Make sure it is one that is familiar with the locale that you are considering.  Start looking at houses in your price range and that fits the profile of the new home you would want.  Make sure you spend a little time at this, unless of course you have to move for some reason.  The more you look at the better you will feel about the home that will be right for you.

Step Four: Make the offer
Through your real estate professional make an offer on a house that you like.  The agent you are working with will provide you with comps from the area that help you craft an offer that is right for the house.  Keep in mind your mortgage limit established by your preapproval, your down payment and the closing costs.  Make sure you include the right to inspect the home by a qualified inspector.  This will cover you both from purchasing a home that has major problems or give you an idea of the cost of repair if you proceed with the purchase.  If you follow the outline in the offer, it also allows you to get out of the agreement if there are big problems with the house.

Step Four: Secure Your Mortgage
This is when you return to the lender you were preapproved for a mortgage.  The lender will want a copy of all the paper work so they can begin their work to get the mortgage approved for that house.

Step Five: The closing
Relax with the knowledge that you have two teams working to make your purchase as easy as possible. The closing team will get everything in order and be clear and precise with the paperwork. Also, a real estate professional that will be reviewing the documents to make sure they are correct. 

Step Six: Move in and enjoy the home of your dreams.

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.