Buying a Home Through Zillow is so Easy, Right???

Background  

Nobody needs to tell you how rapidly the world is changing, and nowhere is that change more evident than in today’s residential real estate market. The most prominent driver of the change has been Zillow. The rapid nature of the change, in addition to the uncertainties and glitches one expects when a huge new program is rolled out, will inevitably lead to some confusion on the part of buyers and Realtors in the loop. This brief guide will attempt to clear up these uncertainties.

 

What is a Zillow Premier Agent?

Zillow is NOT a real estate agency and does NOT directly connect buyers with sellers, nor buyers with listing agents. The Zillow model is based on the premise that Zillow can provide massive amounts of good data to allow you, the buyer, with a great idea of the attractiveness of certain neighborhoods. Zillow correctly realizes that such a broad-based data system (and any others in existence today) have sever limitations when it comes to “local knowledge.” This is where the Premier Agent comes in to play for you.

Zillow makes its money by having real estate agents around the country buying advertising on its site. This takes the form of local expert agents buying exposure to potential buyers through zip codes in which they consider themselves expert. Zillow considers these agents as the experts in the specific communities in which you show interest, and when you click a listing in these agents’ areas of expertise, you are generally given three options of agents to call. These agents are referred to as “Premier Agents” in that community.

 

Why Should I Use the Premier Agent? Why not try to locate the Listing Agent?

Simply stated, the Premier Agents dedicate an enormous amount of time in their specific communities, and have a history of success you will not get by searching for agents on your own. There is a major myth floating around in some circles that you will be better served by contacting the actual Listing Agent on a property, and nothing could be further from the truth. In many jurisdictions, the Listing Agent cannot also be the Selling Agent, and even in states in which this is permitted (Virginia being one), there are strong warnings in Listing and contractual documents against doing this. The reason is simple: The Listing Agent has a strong code; he/she MUST represent the interests of the Seller in the strongest way. There is no ambivalence about this: The National Association of Realtors and most others warn buyers AGAINST dual agency situations, and in the case where a Listing Agent show you a house that may be of interest to you, it is highly recommended that you get another agent to represent your interest completely.

There would be no better choice than for you to choose to work with a Premier Agent in the designated community.

 

But will I save money by using the actual listing agent?

In the overwhelming majority of cases, the answer is a resounding “no”. The seller pays all real estate commissions. The only way this might be true is if a Listing Agent proposes to “cut a deal” with you to somehow provide a better deal based on his/her reducing commissions to the seller. This is often a very small amount and does not at all overcome the fact that this agent is clearly obligated to be a strong advocate for the other side of the transaction from your side. Don’t fall for this.

 

But I thought that when I clicked for more information, I was being connected to the Listing Agent? 

This is a common misunderstanding. Zillow connect you with a Zillow Premier agent; someone who knows the neighborhood well and is a Buyer’s Agent for this home. You are highly unlikely to be connected to the Listing Agent, and as stated above, this is actually a good thing for you. Always get your own representation.

 

But each time I click on a Zillow property, I seem to be connected to a different agent?

This is probably the source of more confusion and frustration than any. I consider it a major glitch in the Zillow program, and a source of buyer and agent angst that should not exist.

This is the problem, and I will provide a suggested solution. Too many buyers go to see individual properties with different agents they contacted through Zillow by separately clicking on the “more information” button. The agents have no idea what other properties you are looking at, nor how many other agents you have contacted. Compounding this problem is that you may have visited neighborhood open houses, and now are being aggressively pursued by the Listing Agent.

Too many buyers believe they need to categorize each individual house with the particular agent who showed them the house. Nothing could be further from the truth, nor create more anxiety in your search.

I will provide a recent example of how this becomes an extreme source of frustration for both the agent and the prospective buyer:

  • I recently was given a buyer lead from Zillow to see a nice town house in a good neighborhood. There were two other listings in the neighborhood, so I arranged for showings on all three properties. This would greatly benefit the buyer, and is a somewhat time-consuming service prided by the Buyer Agent. After seeing the first home and finishing by 2:20, the buyer begins to hem and haw about seeing the next home. This makes no sense to me, and he finally reveals that, “I set up an appointment with another Zillow Agent to see THAT one at 3:00.” So now the buyer has to kill 40 minutes, the agent he was working with (me) has to cancel our 2:30 appointment and enter into a ludicrous competition with another unknown agent, and both buyer and Zillow Agent are on a lose-lose merry-go-round.

This is a comfort thing: CHOOSE ONE AGENT AND WORK WITH THAT AGENT!!!!!!!

I cannot implore you enough on this. Trying to find the Listing Agent on each property, or agreeing to meet with all sorts of different agents to see different properties is a frustrating game that is almost guaranteed to have a losing outcome. Don’t do it.

The alternative is simple: Work with the agent who seems most knowledgeable to you, and the one who will be personable and easy for you to work with. When Buyer Agents realize that you are not committed to working with them, they will not provide the type of diligent work you need from an experienced professional. The process of searching for homes can take months, and no good agent will commit to doing this while knowing you are also trying to use other competitors. Only a foolish agent, or one who has nothing else to do, would ever agree to do this.

Once again, the solution to the multiple agent, Zillow-directed, problem is as follows: Choose the one agent you are most comfortable with and develop the rapport necessary to make a great decision.

 

If our paths cross in your search using the Zillow Premier Agent program, I will provide you with diligent effort and detailed expertise in the neighborhoods you choose to consider. That is my pledge, and I look forward to working with you.

#ZillowPremierAgent

 

Ray Wedell, Realtor

Zillow Premier Agent

Chartered Financial Analyst, CFA

703-855-7299

raywedell@comcast.net

 

 

 

 

 

LOCAL REAL ESTATE OUTLOOK IN TIME OF RECORD UNCERTAINTY…2017

(rare night pic of Wash Monument)                                                 As we enter 2017, it is that time of the year for something I usually avoid: Annual Forecasts. Everyone seems to make them; how many ever pan out?

washingtonmonument                                 But the enormous change and uncertainty that people feel following the past election, and introduction of a new Administration increases uncertainty, compels me to outline where we are and where we are likely headed in terms of residential real estate in Northern Virginia and Washington, D.C.

First, according to a recent Inman survey, the gauge of professionals’ optimism is as follows, nationwide:

—- 27% of respondents claim to be “optimistic” about the overall housing market.

—- 52% say that Donal Trump will have a positive impact on real estate markets.

—-50% think unit sales will be higher in 2017 than 2016.

—- 75% believe prices will rise in 2017.

My followers know that I am always hesitant at a time of universal optimism or pessimism. The survey results indicate a very mixed bag, as most real estate surveys prior to any year have a slightly upward bias. So the above results are not too different from the norm.

Trends Which We Will Likely See in 2017:

—— I am in the camp that says the long period of incredibly ultra-low interest rates is over. I am somewhat surprised that we have not seen more price appreciation over the past few years given how low interest rates have been. I am also concerned that with today’s long term fixed rates at levels lower than most us us used to consider “teaser” rates on an ARM, new entrants to the market have become too complacent in assuming these rates continue. How buyers react to higher interest rates will be a major factor in real estate sales and prices in 2017. Housing as a form of stability and long term wealth creation will be re-introduced as a driving force for buyers in 2017.

Prediction: With inventory levels at extreme lows entering 2017, the initial move in prices will be up, as buyers scramble to purchase the better alternatives, and do so while interest rates are still extraordinarily low.

—– 2017 will be seen as an unusual year marked with high unpredictability. There will be greater differences in demand from state-to-state, town-to-town, and neighborhood-to-neighborhood than we are used to seeing. I say this for two reasons: 1) The “Trump Effect” will reallocate areas of emphasis for capital that will be a boon to some areas and not to others; 2) The nature of real estate sales, and public awareness of alternatives, is changing on a daily basis. This trend is not going to decelerate in 2017. Such changes will make many of today’s cast-in-stone mantras less relevant and in some cases, obsolete. It is easy to say there will be significant change. Pinpointing what that change will be difficult, and how it will effect the overall industry remains the challenge. What will be viewed as uncertainty will actually be a progression from one way of doing business to another; of viewing alternatives in a different way than in the past.

Prediction: The era of the part-time real estate professional may be coming to an end. Technological changes and the need for knowledge will force those who hope to be successful to be on top of things everyday. This will become a necessity for those hoping to succeed. The pace of change and introduction of new technologies will increase, not slow down. So will demands on individuals and firms.

—– Higher interest rates are likely to free up inventory, which could lead to an explosive spring market. Granted, this is a bold statement and may be based on hope and intuition as much as facts. However, low inventories are the norm now, and many of those homes still for sale are on the market for a reason (poor condition; not showing well; markedly overpriced, etc.). Well-priced homes are selling almost immediately across-the-board. If interest rates begin to rise, sellers are likely to surface who do not want to “miss the boat”, given the traditional relationship between interest rates and housing demand. Buyers (and there are many sitting on their hands at this point) will respond to the improvement in inventory by stepping up before interest rates get beyond their affordability ranges. Fundamentals for an active spring market are very much in place. Potential sellers should take great care in choosing a listing agent. Buyers should use premier sites like Zillow and stay abreast of inventory in their desired markets.

Prediction: Changes in Administrations generally increase activity. Changes which fundamentally shift employment emphasis do so even more. Both factors are in place now, in addition to a long hiatus of low activity in a period of low interest rates. Volumes will increase. The chance that a “sling shot” effect takes hold is not to be ruled out; volumes could boom this spring.

—– The average age of first time home buyers has been increasing. This is no longer a young “millennial” market (aren’t we tired of hearing this yet?) but a very mature group of renters who are beginning to surface as real buyers. They are smart, know what their life style is, and have a keen eye to the future. This group will be significant buyers in 2017.

Prediction: Demand from new buyers, particularly at the middle and lower-middle price ranges, will be strong in 2017.

—– For Reston in particular: The overbuilding in new rental units will set the stage for future condominium conversions, likely in 2018-2020. The process of getting project approval, construction, and sales for major new projects is extraordinarily lengthy. Many of the buildings coming online now were planned during a completely different economic time. Today’s “rental squeeze” is becoming more of a mirage, and the likely introduction of over 2,000 new rental units in Reston alone in the immediate future will likely transform this market in ways people are not considering today. How do these periods of overbuilding/underbuilding always occur? For many reasons, but for the current crop of upcoming units, decisions to make these rental units were made years ago when investment capital was raised for their financing. Rising prices will likely generate requests for condo conversion in many rental buildings, but that effect likely will not take hold until 2018-2020. There will be a glut of “luxury” apartments that will rely on higher overall prices to correct an upcoming imbalance between rental housing and demand to own. Apartment managers will attempt to disguise the burden through aggressive move-in incentives and unpublished individual “deals”, but this is merely a response to an environment in which supply exceeds demand at builders’ desired prices, and one in which developers seem to be all building to the same price point rather than where the demand is likely to be. Keep in mind: This is NOT the prevailing opinion out there today, but my own conclusions based on personal observation.

—– Expect the unexpected. We are faced with a changing environment on almost all fronts, and the pace of change in many areas is simply mind-boggling. Those sticking firmly to a plan set in stone on January 1 to get them through the entire year will suffer, as quicker organizations/people identify changing trends and act accordingly.

Ray Wedell, Zillow Premier Agent

Realtor & Chartered Financial Analyst, CFA

Samson Properties

703-855-7299

raywedell@comcast.net

rayblackwithgoldtie

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