Category: Technology

Why this is not an innovation

by HOMEiZ Blog Team Posted: 07/10/2017 Views: 1180

Lately we hear a lot about “instant offer” from Zillow, and now from Redfin. Both companies must satisfy their shareholders with new innovations. In some top blogs sites who talk on real estate, this instant offer is accepted as an innovation and it was highly praised. Also, it was highly recommended for other real estate companies they should follow this business model, and if not, they will find themselves financially in a bad situation. By giving consumers that option, is Zillow or Redfin about to disrupt the residential real estate industry? Many realtors have been skeptical about Zillow's motives from the first day it entered the business and now they have to compete with Redfin who is a licensed brokerage. There is concern that the internet is going to disrupt the traditional residential real estate business model and the lucrative commission structure that has attracted many agents to the profession. Many real estate agents do not trust Zillow and now they have another Zillow but with license, they have Redfin. Many say that Redfin is destroying the commission structure who hurts many real estate agents. Zillow is not a licensed Brokerage and non-compliance in Listing, but Redfin is a licensed Brokerage and compliance in Listing.

What is an instant offer?

An “instant offer price” is a price that an investor will pay in cash for your home within three to seven business days. The instant offer price is designed to provide an alternate selling option to sellers who are in a rush to sell. In a seller's market, homes are sold fast with multiple offers with closing price who is a above asking. So, the instant offer business model is not attractive to sellers. In a buyer`s market things will change. Many homeowners will need to sell due to a foreclosure, then the instant offer will be attractive to sellers, since it will be a faster way to sell. This business model has been in the real estate industry for many years, way before Zillow and Redfin “innovation”.

Innovation or Flippers

Low ball is the name of their game.
There are many signs hanging on many poles and on many trees.
“We buy homes for cash” so, what is the difference between “We buy homes for cash” to an “instant offer”? Well, there are some differences between the two. “We buy homes for cash” does not have the exposure Zillow and Redfin “instant offer has”. Yes, that is the major difference in nowadays way of doing business. But the main question is it going to change the way real estate is bought and sold? Of course not! To call in an innovation? Of course not! To think that Zillow and Redfin will change the game rules? Of course not! Zillow and Redfin both are taking advantage on their nationwide exposure to deal directly with the seller. This creates a potential for Zillow and for Redfin to tell consumers their property is worth less than its real market value and then buy it cheaply. This approach will hurt real estate agents, but defiantly will not eliminate them from the transaction. Many people want and need real estate agents to help them with the process of selling and buying real estate.

A Real Innovation

Cutting in your home price because you want to sell fast and get pay in cash within 7 business days, is not an innovation. Any real estate investor is expecting to get the best price for cash and will not pay a retail price. They all have the same approach way before Zillow and Redfin came with their “innovation”. A real innovation is to empower people with new technology and not to try to eliminate them. Zillow is trying very hard to achieve the success that was achieved in the travel industry, to eliminate the middleman. Billions are spent in new technology, but very little in people to teach them how to use new technology. There is no doubt that new technology is important, but if it harms people jobs, then it’s in a big question. The problem is that most new technologies are killing jobs and that should raise a red flag to all of us.

Bottom Line

I am not against “Instant offer”, but to say it is an innovation, is nothing but a bad joke. “Instant offer” is not an innovation, it is just a different word for, “We buy homes for cash”. Zillow and Redfin will not change the way we buy and sell real estate. Properties are like fingerprints, they are unique and different from each other. Each transaction is different from the last one. Real estate agents should be concern and ask themselves the main question: Why in the world I want to have my listings to appear on portals who are competing with me? The problem here that real estate agents DO NOT have any control on their listings. The MLSs built a great system to make millions $$ on the back of hard working real estate agents, by taking control on their listings. Amazon wipes out retail stores, Zillow et al wants to do the same to Real estate companies. Time to fight back with all power!

Can anyone tell me, is there an innovation here with “instant offer”? What is your stand on Zillow’s latest foray into the real estate space? What is your stand on Redfin`s instant offer as a licensed broker?

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