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The Cost of Convenience

Zillow may win. The consumer then loses or as Franklin Foer notes in his book “World Without Mind”:

“We have deluded ourselves into caring more deeply about convenience and efficiency (not the good kind) than about things that last.”

Coupled with my opinion that people value celebrity(fame/advertising) over character (do the right thing), what Zillow is attempting is possible. The consumer loses but it’s on the consumer if they don’t take the time to understand business, manage their money and follow process.

Zillow (and others for this discussion) are rolling out options for sellers to sell their homes to Zillow quickly and buyers to buy quickly from Zillow. On the sell side Zillow touts their goal:

“Zillow Offers (the name of the program) is helping transform the real estate transaction by giving consumers more of what they want – a seamless, convenient way to sell and buy a home.”

I’ll translate: How can I sell my home for less than it’s worth with a larger service fee for the convenience of having it happen quickly?

From a buying side Zillow is setting up a platform that will allow buyers to make an Offer on a home with one click.

I’ll translate: How can I buy a home conveniently, with no one representing my interests as part of the purchase (value) or inspection process, from a company represented by agents and lawyers?

And then there is little ol’ Homebuyer Associates, a business started in 1985 with the goal and intent to provide a service to homebuyers. Our mission: To provide information to make an informed housing purchase – not an emotional one.

This encompasses helping to locate the home but of more value – negotiating the Offer and home inspection negotiations.

As an example of an Offer negotiation, we recently helped an out-of-town client negotiate a home purchase for $710,000 with an original asking price of $799,000. It’s America, you can ask whatever you want, but our analysis said the home was a $710,000 – $715,000 home.

As part of an inspection negotiation, we are in the middle of negotiating a $20,000 basement repair for our client from the seller – signed off by an engineer – or we will recommend our client walk away and continue the home search.

Our mission can be difficult in today’s real estate market. Homebuyer Associates, as a fiduciary, works for your interests. In the vast majority of real estate purchases (unless working with Homebuyer Associates) you are the customer.

In the traditional system the agent tells you to accept the $725,000 counter offer our client received on the example above. True to form we reaffirmed to our client our analyis had the value at $710,000-$715,000. $710,000 was accepted. “Fiduciary” defined.

The concept of fiduciary holds true in many other aspects of life so do your homework.

Zillow is an ad platform (not a real estate site) that loses money annually but is in a race to reach scale. Understand if you contact an agent based on looking for a home on Zillow, that agent has paid anywhere from $1,000 – $4,000 a month to appear on a rotating list of agents. Pay more money to appear more often. No mention is made of skill level, experience or whom the agent really works for (not you).

By selecting an agent via Zillow or at an open house …you are playing “agent roulette.”

Visualize this. On the back of my calf is a tattoo, the Zen symbol for truth. On my interior calf is one of Don Quixote. The former speaks to my belief in a fiduciary relationship; the latter represents my belief that convention (celebrity) needs to be challenged in the search for truth.

I hope my real estate writings cause you to think about real estate and money, maybe even a bit about life.

Thanks for reading,
Michael D. Holloway

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Homebuyer Associates
1835 N. Riverwalk Way
Milwaukee, WI 53212
Phone: 414-254-4129