Though it feels like a lifetime of cacophony, today marks the one-month anniversary of Zillow’s controversial Instant Offers program, which connects homesellers with investor bids alongside comparative market analyses (CMAs) from participating Zillow Premier Agents (ZPAs).
What have we learned?
Since the launch 30 days ago, Zillow shareholders enjoyed a nearly 20 percent hike in their Z holdings, a whopping $1.75 billion bump in the company’s market cap to $9.32 billion at the end of trading on Friday.
But come on, seriously. Did the Instant Offers test in two markets single-handedly boost Zillow stock? No, but it got Wall Street’s attention.
“With the launch of Zillow’s Instant Offers, we believe it is ramping its sell-side opportunity, which could be a meaningful driver of sustained growth going forward,” wrote analysts at JMP Securities.
‘Keep the furniture, get me out of here’
We already know that homesellers are listing property with agents who participate in Instant Offers. Orlando realtor Veronica Figueroa has nabbed three listings, though one fell out, and she expects to sign three more within the next week.
Sources tell us some sellers are taking up investor offers to sell quickly, even if the fees are higher and the prices are lower than what they might get by putting their homes on the MLS.
Like ending a bad relationship — “keep the furniture, get me out of here quickly” — some consumers want certainty and will trade a higher home price for it. Others are not so cavalier with their home equity.
Figueroa may encourage one seller to go with an instant offer from an investor. “They are hoarders, the house has problems and it does not show well, it might be a more viable option than me listing it,” she said.
Meeting the needs of many types of sellers, a burgeoning marketplace may be taking shape.
Dancing with the Stars (homesellers)
Reliable stats are still being held tight by Zillow — too early, say the execs. But I predict that the test will turn into a full-scale roll out. Seller leads are an irresistible opportunity for the portal giant, and Instant Offers looks like a promising casting call for Dancing with the Stars (sellers are the stars in real estate).
In the last couple of weeks, we also saw Zillow haters boil the pot to a new temperature — 27,000 degrees exactly. That is the number of people (mostly real estate agents but also homeowners, appraisers, etc.) who signed a grassroots (we are told) petition to “Stop Zillow.”
Specifically, it called for the National Association of Realtors (NAR) to “demand that Zillow discontinue Instant Offers or risk losing the MLS IDX listing feeds and Realtor advertising.”
That is like asking Exxon to stop Tesla. Ain’t going to happen.
The government as NAR watchdog
But their rabble-rousing did push NAR to issue an attack on Zillow. But in the same broadside, the trade group conceded it could do nothing about it — Trump-like chest-beating posturing.
Why would NAR show up to this battle without any weapons?
Because the U.S. government keeps tabs on the real estate trade group and watches for any signs of antitrust, constraint of trade or other nefarious acts. In other words, what NAR couldn’t say is “sorry, POS (parent over shoulder),” but that’s why its hands are tied.
Let’s start with history. After a protracted antitrust case, NAR settled with the Department of Justice less than 10 years ago, promising to not circumvent technology innovation. The DOJ wants to make sure NAR is abiding by the agreement.
The DOJ is staying informed, it signed up for an Inman Select group membership a few weeks ago.
Russian election hackers aren’t its only concerns.
Agents alone in fighting for their livelihood?
What about the future? It is becoming clearer every day.
Many new institutional investors are launching their own iBuyer operations to use new technology to make quick offers on homes and close in days. This financial muscle — Zillow, Opendoor and the entire instant offer movement — will methodically create a more efficient marketplace. That can be good or bad, depending on where you sit in the value chain.
We will see these new entrants all competing for market share as more and more sellers take investors up on iBuyer offers. But we will also see power agents feasting on the program to get prized listings.
These agents will also be the experts behind a new human-powered Zestimate. Algorithms and ZPA CMAs will create the third brain of future home value estimates. It’s an interesting combo, solving the sloppy zestimate problem and inserting the ZPAs into the flow of consumer curiosity.
Agents not participating on these new platforms could find themselves too many blocks away when the fun bus pulls away from the curb.
At some point in the next few years, many homes across the U.S. will be commoditized in a pool that satisfies Wall Street’s push to expand its real estate portfolio. They will also trade differently than today, with some form of iBuyers controlling the market, with or without an agent’s help.
A bigger share of homes will not fit into the model and will demand the expert services of a qualified real estate agent and the power of the MLS.
The overall trend will lead to a redefined real estate industry, one where empowered agents, like high-net-worth financial advisers, will make oodles of money advising clients on their homes and their transactions.
The rest of the inventory will trade more like stocks and bonds on Wall Street. Agents may or may not be involved, but their role could be diminished and their fees reduced.
As always, agents will more or less be on their own in fighting for their livelihood.
“We must sharpen our blades and show our true value,” said realtor Figueroa. “Times are changing and we must change with it.”
The last 30 days was also a case study on why agents cannot depend on industry leaders to help them navigate these sorts of changes.
NAR demurred, and the reason we didn’t hear from too many franchisors, broker-owners and other industry leaders is that they must have locked themselves in a panic room.