Regular Inman contributor Teresa Boardman talks about how Zillow Offers just launched in the Twin Cities and what buyers and sellers truly need in her market (and probably yours, too).
Teresa Boardman is a long-time columnist with 400-plus Inman columns under her belt. She writes about her real estate observations and experiences as an officeless indie broker in Minnesota.
I noticed that the service isn’t available in my ZIP code, probably because the houses are old. They can easily be sold to companies that pay cash for old houses.
Zillow and at least one local broker got a lot of publicity and news coverage of their launch. The general media narrative was that the process of selling a house is difficult, and cannot be done without repairs and open houses and six percent Realtor commissions. They touted Zillow’s service as one that homeowners really need.
Real estate is local, and for the third year in a row, home sales in the metro area are down. The reason for this is that there are fewer houses for sale. The number of houses on the market is shockingly low and has been for years.
There are several reasons for this state of affairs, but the main reason is that a large number of current homeowners are older, and statistically, older homeowners do not move.
There is a war in the Twin Cities as the competition to list homes is fierce. There are far more practicing real estate agents than there are homes for sale and more agents with five-star reviews than I could count. There is an abundance of homebuyers with limited and expensive housing choices.
Sellers’ markets are wonderful for sellers. They can put their home on the market on a Thursday and get a few offers over the weekend. They have the upper hand, and it is fairly easy to get any closing date they choose.
Sellers can refuse to make repairs, and if the buyer backs out, we can usually sell the house to someone else within a week or so without changing the price. There is some uncertainty but nothing close to the amount of uncertainty that goes into buying a home.
Homes sell quickly, but not quite instantly, and there never seem to be enough of them on the market. In fact, instant offers are not quite instant. I believe they send someone to look at the house at some point in the process.
Sometimes we can get an offer to a homeowner just as quickly, assuming the seller agrees to a fair price. We just cannot guarantee a closing date because we don’t provide the financing.
Services that buy houses for cash have been around for a long time except when they disappeared during the Great Recession and housing market crash. They could have had a ton of business in 2009. During that time corporations bought up houses and turned them into rentals, and companies that provide services to landlords began to grow.
As services like instant offers hit the market, they are being marketed by spreading what I’d call misinformation about what it takes to sell a house and how much money real estate agents charge.
Now when I go on a listing appointment, I tell the homeowner that they do not have to do anything to their home. I can sell houses that need work if that is what the seller wants.
Open houses and staging are not an essential part of the sales process, and just because the news media says all Realtors charge six percent and require homeowners to do a lot of work doesn’t mean that we do.
The biggest challenges in the local real estate market is finding affordable houses for homebuyers. No one is addressing that issue. There aren’t enough houses on the market, and the houses are getting too expensive. The local real estate market feels broken as buyers engage in bidding wars.
There is very little new construction, and what there is isn’t affordable. Rents keep rising, and the number of tents near the practice freeway keep increasing, even during our brutal winters.
In fact, I now live in a city where there are more people renting than there are owner occupants. Before the Great Recession, there were more owner occupants than there were renters, and rents keep rising.
Listings are the currency that feeds the real estate machine. Our market appears to be contracting rather than expanding. There don’t appear to be any services that will cause the local real estate market to expand.
New business models find new ways to squeeze a little money out of existing real estate transaction and distribute pieces of it from real estate companies to technology and media companies.
What consumers appear to need right now is more housing, affordable housing, sustainable homeownership and fair housing. Buying a house over the internet without an agent seems like a wonderful service for some homebuyers, but it will work better in a buyer’s market.
I am not at all concerned about competition from instant offer type services. I am concerned about the lack of housing on the market, the cost of housing and working in a contracting market rather than an expanding market.
Housing is more than something that we can all make money from. Houses are where we live and to a certain degree, they become part of who we are as we form communities. It’s hard to get excited about new ways to buy and sell houses while working in a strong and relentless seller’s market.