13 new (and strange) rules for surviving the real estate market

After combing through a massive amount of data, Zillow has put together a compendium of housing market wisdom. Here are the most useful, or just plain entertaining, lessons.

1 Buy a house close to Starbucks

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While it's true that homes close to a Starbucks cost more than the national average, it's also true that they appreciate faster than the average home. Rascoff and Humphries hypothesize that this might be the result of the great work of Starbucks' 20-person location analytics team, which pores over data on traffic patterns and business density to pick the best places for their stores. If Starbucks' comes to a neighborhood, it's got a good chance of being the next up-and-coming spot.

2 Don't buy the worst house in the best neighborhood

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The old saying goes, "real estate is about location, location, location." And if neighborhoods are what drive real estate prices, then following the oft-repeated advice of buying the worst house in the best neighborhood makes sense. After all, you can always fix up a house, but you can't move your house to a new neighborhood.

In fact, the folks at Zillow found that "the more affluent a neighborhood is . . . the worse that homes in its bottom 10 percent tend to perform." They hypothesize that this is because people who look for houses in expensive neighborhoods tend not to be cheap, and will overlook your house when they are shopping for a new home.

3 It's not impossible to find an affordable house in a good school district

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School quality can vary widely from neighborhood to neighborhood, a dynamic that is reinforced by the fact that schools are largely funded by local property taxes.

That's why home values can vary so much between neighborhoods that are otherwise very similar. But by doing a bit of homework, you can find good schools at a great value. Rascoff and Humphries give the examples of Dublin, Ohio and Greer, South Carolina as towns where you can buy affordable housing in great school districts.

4 Foreclosed homes don't offer good value

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Following the housing bust, the media was awash with stories of homes that could be had at rock-bottom prices. But looking at the data, Zillow found that there were good reasons why these homes were inexpensive. First of all, foreclosed homes tend to be smaller than other homes nearby, and banks often require purchasers to buy without a home inspection.

5 When selling your home, don't describe it as "unique"

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Analysis of online real estate listings show that the language used to describe a home for sale is incredibly important. Homes that are described thoroughly and honestly sell for higher prices than comparable homes that aren't, and Zillow was actually able to zero in on a few words that usually drive demand way down.

If you are selling, stay away from "unique." Homes that are described as such, "can sell for as much as 30 to 50 percent less than expected," Rascoff and Humphries write.

6 If you want to increase your homes value, remodel your bathroom

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Investing in your home through maintenance or remodeling almost always increases its value, but some projects pay off a lot more than others. For instance, "a $3,000 mid-range bathroom model ... replacing the toilet and light fixtures, adding a double sink, and adding some wallpaper--would result in a $1.71 increase in home value for every $1.00 you spent on the renovation," Rascoff and Humphries write.

In comparison, a pricier bathroom remodeling will likely return less in home value than you spend, while basement renovations tend to do the least in terms of increasing a homes resale value.

7 When listing your home, "The Price is Right"

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Many people tend to shoot for the moon when selling a home. After all, if selling a home is a negotiation process, why not start high and come down from there, right? But the reality is that homes listed for close to their market value actually end up selling for 4% higher than homes that are initially overpriced.

That's because pricing a home at its fair value will attract more demand, and sometimes even start a bidding war.

8 The best time to list your home? Late March

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Most homebuyers begin contacting agents in May and June, so it's good to get your home listed in late March on average. That's enough time to make realtors aware of your listing, but not too much time that the home appears to have been langusihing by the time peak buying season begins.

However, this rule is a national average, and in colder locales like Boston, the best time to list is in early April, while places farther South call for listings a bit earlier. On average, homes listed in late March sell faster and for 2% more than comparable homes that are listed at other times.

9 Homebuyers can be really superstitious

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It's no secret that people can be really superstitious, but it might be surprising to hear that this can affect the real estate market in a big way. One example? Homes with the number 666 (the number of the beast, according to the Book of Revelations) somewhere in the listing sell for 3.2% less than expected.

10 Cool street names will cost you

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If you want to live on Penny Lane or Thunder Road, it's going to cost you. Houses on streets with these names sell for 53% and 46% higher than the median home, respectively.

11 Manhattan isn't being overrun by emerging-market emigrants

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Many think that foreign buyers of Manhattan real estate are mostly Russian and Chinese nouveau-riche looking for a place to stash their exorbitant wealth. But Zillow's data show that "Canadians and Brits are actually the foreigners flocking in greatest numbers to New York City."

12 Homeowners don't see as much action as renters

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Using Zillow data in conjunction with the General Social Survey, Rascoff and Humphries found that there are significant differences between the behavior of renters and owners. One fun fact: "In every age group, the percentage of renters engaging in sexual activity at least once a week is greater or equal to the percentage of owners knocking boots."

13 Homeownership isn't always the best way to climb out of the lower class

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Homeownership has a storied history in this country, and promoting it is a bipartisan cause. But as the real estate bubble showed us, owning a home can just as easily be a financial burden as it can help build wealth.

This is especially true for lower-class people, who typically cannot afford significant down payments and tend to live in neighborhoods where home values are most volatile. Homeownership should be the result of increased wealth rather than the thing that propels a person up the socioeconomic ladder.

Published online by Fortune on January 28, 2015 and written by Chris Matthews

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.

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.