This week we continue our search for the Holy Grail of Home Valuation. Why? Because everyone wonders what their home is worth. Now or in the future. It’s always the biggest question. And wonder can quickly become hardcore worry when people are facing significant change – like buying or selling their home.
Nothing odd about that. Home is the biggest asset most of us will ever own. And home is also the hallowed bastion of refuge, privacy, comfort and security that nourishes our lives. It’s both a real place and a symbolic place of centering for people. Of course we worry about it!!
When home and the concept of it are in a state of flux, people tend to gravitate toward anything that offers them a heightened sense of certainty. They want as much of it as they can get their hands on or wrap their minds around.
Certainty helps people anchor their hopes. Quantify their fears. Quell those nagging what-ifs. Without a little certainty, selling a home feels like a high-wire circus act. Walking a slippery slope without a net sheet below. Balanced on the precipice of that yawning chasm known as the unknown.
But is there really such a thing as a little bit of certainty? Is it possible to be 20% or even 50% certain? If you aren’t totally certain then you aren’t really certain right? Anything less than 100% certain and it’s all just another guestimate (or quantum probability) – whether it’s offered up through the medium of experienced analysis, intuitive insight, algorithmic aggregation of detail, some ritual form of reading the tea leaves or anything else.
Enter Zillow. The trending poster-child of certainty in the increasingly crowded suburban strip-mall of Home Valuation. The recently anointed oracle of truth and big data sooth-saying. By far the flashiest new player on the national real estate scene – as witnessed by the company’s recent media coup – scoring a town hall-style interview with President Obama on housing policy.
Real Realtors were conspicuously absent for the yahoo’d and much ballyhoo’d Zillow web event. They were busy sulking about their White House snub. Nursing their wounds back in the stately, cigar-filled. mahogany-paneled boardroom of the NAR (National Association of Realtors) which I’m convinced must share the same bunker/headquarters with the NRA (you all know this smoking gun).
They tried to do damage control. Issuing media releases pooh-poohing Zillow as an upstart “real estate entertainment site” while frantically consulting their own programmers about upping Realtor.com’s profile to earn the same kind of street cred that competitors like Trulia and Redfin (& Zillow) have garnered with the general public.
There’s a huge shift that’s happened/happening and traditional Real Estate’s branding is way behind the curve. I’m not sure how many hearts and minds Status Quo Real Estate ever really won, since Real Estate Agents are often considered just a little higher up the food chain than their poorer second-cousins that hawk used cars for a living.
However many hearts and minds we had in our corner in the past… that number is shrinking. People don’t trust us as much as they should or could. The profession and the industry from individual Realtors all the way up to the Regional MLS to the CAR and NAR should own up to it. And change.
Bottom line? The average person sees traditional Real Estate as always trying to sell them something. Industry information geared towards control and “making more sales.”
Zillow on the other hand is perceived as being accurate and free. Direct data and non-partisan information not filtered through salespeople wanting a piece of the action.
Nothing could be further from the truth. As a wise-person said: “Anytime you are on a site and think the content is free, you are the content.” So the other bottom line: If you are on Zillow you are getting sold. Literally and figuratively.
To be continued next week.
Welcome to another installment of Real Estate of Mind folks. Tryin’ to keep it as real as possible here. I know…Real Estate is already supposed to be the Real Thing. Real Property. Solid Ground. Stable Brick and Mortar. But sometimes it feels more like a drug-induced altered estate of mind when you are inside it. Anything but the immovable terra firma it’s cracked up to be.
Trying to make sense out of real estate isn’t easy when so many conflicting ideas are competing for chunks of our brain space at the same time. A task made even more difficult by brains that weren’t really designed to distinguish between interesting facts and creative fiction in the first place.
Human beings are elaborate story-telling machines. Serial random-story generators. In the beginning, God hard-wired us with circuits full of neurons and synapses imprinted on a sea of glia. In the end, he downloaded algorithms and told us to go forth and multiply our stories. And after that? He rested and said: “When in doubt…pray.”
That’s our immutable nature and ongoing nurture. Toss any of us a few crumbs of information and we’ll happily, unconsciously construct a plausible narrative in a New York nano-second. Any day. Any way.
Give us lots more data to organize, infintessimalize and wig out on and we may eventually reach a tipping point. Brain lock down on some compelling storyline that becomes completely intractable. Ready to go to war to protect the hallowed turf of our ideas and constellated belief systems.
Real Estate of Mind isn’t here to tell you what to think. Just to encourage you to think. Perhaps offer a few simple perspectives to stick under your thinking caps while quietly cogitating. Meanwhile don’t forget to question authority. Subvert any paradigm anyone tries to sell you. Even if it doesn’t seem like they are selling you. Even me.
Today? We’re beginning our several installment search for the Holy Grail of Home Value. Where does it come from? How do we find it? We’re going to start by taking a quick survey from A to Z. In 500 words or less.
A is for the Appraisal that comes after a buyer and seller decide on price.
B is for last night’s Barbeque where people were talking about how hot the market is.
C is for Chinese investors purported to be plowing all cash-offers into SF luxury properties.
D is for Real Estate for Dummies that still recommends 3 different CMAs from 3 different agents.
E is for Everyone that gives you advice when you buy and sell – whether you want it or not.
F is for the Fear of paying too much or leaving something on the table.
G is for all the Guesses you make – educated and otherwise.
H is for the real estate Headlines you’ll read between now and whenever.
I is for the Interest Rates people get fixed into and fixated on.
J is for all the ways people Justify their decisions.
K is for Knowing what you can’t Know.
L is for the canned Listing Presentation(s) you are going to hear.
M is for Median Price figures that don’t always add up to much.
N is for the evolving New Normal that doesn’t feel very normal.
O is for that One Perfect Buyer that might be out there.
P is for Peak of the Market Prices that become the yardstick.
Q is for Quality of Life considerations that should fit in somewhere.
R is for the Remorse everyone feels both before and after.
S is for Search Engines that make TMI more possible.
T is for the Truth the market eventually reveals.
U is for Urban Myths that still exist – like real estate as a seasonal phenomenon.
V is for all things Virtual that make it seem so real.
W is for the Wiggle room you think you need.
X is for X-factors of fate, blind luck and divine intervention that help decide the outcome.
Y is for You. Your money. Your house. Your decision.
Z is for Zillow the recently anointed oracle of all things real estate.
More Next Week: The rising phenomena of Zillow Zestimates and what it all means.
I don’t know. I can’t tell if it’s my imagination or not. Sure feels like the sheer volume of marketing solicitations for web design, search engine optimization, cloud sharing, google ad words, social-media and lead-capture generation is increasing at a scary pace.
The number of pokes, prods, pings and pitches aimed in my direction on any given day is staggering. It was one thing when companies trying to hand out keys to real estate success shipped their content to my email address and let it camp out in my spam filter. Hoping some of it might eventually spill over into my in-box and force me to notice before I hit the delete key.
These days those offers arrive non-stop in a flood of calls to my personal data switchboard. My phone vibrates in a steady state of arousal and constant contact. Listing leads proposition me when I’m in the middle of listing appointments. Buyer leads offer themselves up when I’m in the middle of showing property to real buyers. Big data reaches out to touch me whenever I’m trying to focus on the small details of a difficult purchase contract.
Aren’t we Realtors supposed to be the pushy ones? The used-car salespeople with the Svengali-like powers that enable us to talk unsuspecting buyers into purchasing $700,000 fixer-uppers before they’ve made it halfway through an open house?
Somehow all those new web marketing companies keep coming up with better and better Svengali-like algorithms and I’m not really sure anymore if I can get along without them.
They have a captive audience. A sitting duck. I can’t run. I can’t hide. And I can’t escape the onslaught of their eager voices. Because I can’t possibly turn my phone off. I’m the “I” in the I Phone. I don’t exist without it. We co-create our realty.
And so…in a stunning reveral of roles, we Realtors have become the favorite new flavor of chum that’s getting fed into the rest of the world’s rabid shark tank.
Every time I see a 480, 503 or 619 area code pop up on my phone, I have a Pavlovian response. No, not salivation…more like rolling eyes, twitching lips and an automatic groan punctuated by a curse.
Google this why don’t you? Quit bugging me!!
I’m not sure why so many people living in Portland, San Diego and Phoenix are employed as phone solicitors with Realtors as their chosen targets. I guess those of us who can – do. And those of us who can’t move to Portland and try to sell more marketing to those who can.
If there really were all those buyer leads that buyer lead companies say they have, we’d be able to resurrect 2005 all over again – on steroids. There would never be another market slowdown again. There would just be one long housing bubble exceeded by an even bigger housing information bubble.
Here’s the way I’m starting to think about this: Remember when the mortgage industry took a wrong turn? At first fewer and fewer loans were actually portfolio’d by the companies making them. Afterwhile as soon as the ink of the notary stamp was dry on the deed, the mortgage was already sold.
Eventually the entire world economy revolved around mortgage debt. Real people purchased real homes. From there it got surreal. Loans were sold. And sold again. And yet again. Packaged and tranched and bet against in the form of credit default swaps ad infinitum, ad nauseum. Some mortgages were sold so many times, when it came time to foreclose, no one could figure out where the paper was or who owned it.
Middle men selling to other middle men selling to other middle men – making money at each point of sale. But the system needed that real loan origination in the first place, as content to kick off the fun.
These days when I list a property and put it on the MLS, the MLS sells it to all kinds of other real estate information sites. Zillows, Trulia and Realtor.com et al package and provide the information to a larger public audience and sell advertising back to us Realtors for the privilege.
Creative people come up with all kinds of crazy ways to sell the sell of the sell to the rest of us. Everyone can make money without having to actually make anything or do anything other than manipulate data. Real estate once again leads the way to economic recovery from the recession. Leave it up to the algorithms – let the monetized free-for-all begin.
I’ll try to hurry this along. Sellers out there don’t have a lot of time for idle chit chat. They’re busy primping, painting and prepping their homes for the crush of Facebook millionaires about to overwhelm the marketplace and make real estate feel all warm and fuzzy and magically 1999-ish again.
Remember? IPOs. Stock Options. An endless supply of money falling out of the sky like manna from heaven. Swarms of 30-somethings wandering house to house. Millions of dollars of what felt like “found” money, burning holes in their jean pockets. Competing with each other to play beach-blanket–bingo and push our ocean view prices up.
Now, more than a dozen years later, way post-tech and way post-housing bubbles, there are new signs of life. Everyone is getting addressed up. Poised with plenty of expectations. Asking the proverbial question: “How do we get us some of that?” As in – a Silicon-induced altered-estate of mind riding a new wave of mojo and moolah.
Funny thing… the revolution that transformed the market of the 90’s, also transformed the way real estate works. And although we all want the dough, some still seem slow to catch on to the altered the landscape and how Buyers actually Buy.
Here’s an exercise for those currently selling a home: Google your address and zip code. Get one of your kids to do it, if you have to. Hit search. See what comes up.
Say hello to the global village. An instant tower of babel that kicks into gear the second your listing gets loaded on the MLS. From there it’s downloaded through the wormhole-like portals of cyber-space. Distributed to the far reaches of the globe.
Look at your screen. There’s your home. Wave to yourself on Zillow, Redfin, Trulia, Movoto, Realtor.com et al. Check the satellite view. See if you were nude sun bathing in the backyard, the day it circled overhead and snapped the picture.
The feed doesn’t stop there. It keeps moving. Places like the Wall Street Journal, MSNBC and the DuPont Registry. You name it. Your home is a home away from home on thousands of search engines – cranking 24/7/365 – driving it directly by the eyes of tens of thousands of prospective buyers – primed for virtual drive-bys.
More than 90% of buyers and agents looking for property in Santa Cruz are using the web as the source. And most Sellers would be shocked at how many homes get deleted from consideration because they lack virtual curb appeal. Buyers zoom past with short attention spans. Quick reactions. Thumbs up or thumbs down. Until… something catches their eye and engages their attention. Then they switch gears. Suddenly they want as much information as they can get.
Sellers – stop worrying WHERE your property is being marketed. If it’s on the MLS, it is already everywhere. www. means the whole world is watching. Time to adjust your world-view.
Your home is a home page. You home’s setting is a web site. Your views are everyone’s views. If you want to obsess about something – how about: WHAT do buyers see when they take that first virtual drive-by of your home page?
Does your custom home even have a custom home page? A website commensurate with your remarkable setting? Sellers spend lots of time and $ staging their homes with interesting contents. Do their Listing Agents stage home pages with the same eye for quality content and interesting detail? Or are most Sellers just getting another version of the ten cent tour?
On the web as in real life, homes don’t get a second chance to make a first impression. What’s going to move that next generation of Facebook Millionaires? More great place looks and more likes online. Make sure your Agent is spending real time and real money in the virtual world.
For a long time, I’ve been inching my way forward. Cautiously beating around the bush. Discretely spinning my one-sided conversation in these columns towards just the right place in time. The moment when I could remove the gag order and finally blurt out the truth.
Well, it’s come to Jesus time and I’m here to tell you that we real estate agents – whatever we say, no matter how many years we’ve been in the business or how much we fluff up the auras of our own sales personas – don’t really know exactly how much your home is worth.
At least not before you agree to put it on the market and steel yourselves for that purgatory of a process otherwise known as listing your home. That’s the one and only way you are ever going to find out.
There can’t be anyone out there actually masochistic enough to enjoy opening their home up to the great washed and unwashed masses of the marketplace. The game of “show and sell” may ostensibly be an impersonal one but it sure feels like an intensely personal experience when all those prospective buyers and a revolving door of nosey neighbors, lookie loos and curiosity-seekers come trooping through your lives and your dinner times without a lot of grace or prevailing sensitivity.
Sometimes it feels like you are under perpetual siege by the lifestyle police. Sometimes it feels like every showing that goes unrewarded by an offer is a rejection slip handed out to one of the things you have grown to cherish most in your life.
Yes, we Agents all come to visit and perform some version of the old comparative market analysis trick, just before we whip out our bulging brag books and tell you all the incredible things we plan to do to bring more of those prospective buyers and nosey neighbors through your front door.
Somehow we are able to snatch a proposed value out of thin air for that geodesic dome you’ve lovingly remodeled. Even when there isn’t another one remotely like it between here and Timbuktu. To compare apples and oranges to comparing real estate comps in a place as diverse and eclectic as Santa Cruz, is a fruitless task. Specially in this market. Try to find all the similarities between apples and kangaroos and you’ll have a lot more success divining our local market’s secret handshakes and esoteric passwords.
What Agents don’t always tell you is: In the end, it doesn’t matter what we think your home is worth. (We aren’t buying it.) And it doesn’t matter what you think your home is worth. (Most of you wouldn’t or couldn’t buy your own homes in today’s market anyway.)
What matters is what those buyers out there think your home is worth. If you really want to sell your home, that’s just about all that matters. In the end, the truth always emerges out of the grand inquisition of the marketplace, resolved by trial and error and trial by ordeal.
I know you want us to be perfect. And we would dearly love to be perfect. Yes, sometimes, we get lucky and we get it exactly right. (Even a blind agent finds an acorn now and again.) Sometimes we read the auguries well and we get pretty close.
I always figured that if an Agent could predict home values consistently within 5% of their eventual sales prices then that Agent was right up there with Nostradamus, Edgar Cayce and the Oracle of Delphi in terms of his/her prophetic acumen.
A whole lot of other people figured that with the advent of Zillow.com all the muss and fuss and the great mystery of home valuation would disappear forever. They were hoping against hype that they could just type in an address, hit the return button and … Voila! – that great big braniac algorithm in the sky would spit out God’s honest truth and tell us all exactly what every home was worth. Heck, no one would ever be stuck again having to offer anyone coffee or pretend to smile while listening to a sales pitch extolling the virtues of one real estate company over the next.
Well, Zillow’s been around long enough now, along with a slew of sibling-spawn like Redfin and Trulia. Their results have been even less impressive than those of us real, realty people. Zillow has gone through enough accusations and lawsuits to remind us all once again, what we should already know and keep knowing. No one and no thing has the answer ahead of time. You just have to hitch up your doors and your drawers and make that leap of faith into the unknown.