The Flaw In Zillow’s Strength: Your Competitive Advantage

Yesterday, Kendra Gemma sent me a link to an article in the San Diego Union Tribune about the real estate syndication flap.  That, in itself, is pretty amazing:  Kendra, who is in Sarasota, is sending me a link to an article in my hometown newspaper!  (Here is a link to the article)

The piece was a rehashing of the syndication battle but focused on one of the underlying truths about the big aggregator sites (Trulia, Zillow, Et. Al.):  their data is littered with errors and inaccuracies.  It’s easy to see why:  Zillow, for example, receives real estate listing data feeds from dozens of sources.  Your Help-U-Sell listing may get to Zillow via your MLS, your ListHub account, Help-U-Sell, personal input, and on and on.  Zillow has an algorhythm that kicks in when it spots duplicate listings and grants priority to feeds they deem most reliable, but it has to recognize the listings in question as duplicates first.  So there are duplicates on Zillow.  And status changes are often mishandled by agents and/or syndicators, so there is the potential for many homes listed as ‘For Sale’ on Zillow actually being sold and closed.

One San Diego broker did a test last month.  She went ‘one of the popular real estate search sites’ (unnamed) and did a search for houses in her Scripps Ranch Zip Code:  92131. She then did the same search in her MLS and compared the results.

There were 220+ results on the search site.

• 54 were not for sale on the MLS

• 46 were condos, although she limited her search to houses.

• 24 had sold. One dated back more than a year.

• 17 were contingent.

• 10 were in escrow.

• 8 were expired, canceled or withdrawn.

If you do the arithmetic, there were problems with 159 of the 220 results!  The article mentioned that this particular broker has a problem with syndication in general, and I have no idea whether or not that played into the results, BUT I think you’d be wise to do your own search and comparison for your area.  And, please, when you do:  share the results with me!

(Before we go any further let me remind you that I LIKE Zillow.  They took an opportunity on which the REALTOR community turned its back and quickly became the home search tool of choice for consumers.  Bravo.  Now they kick off leads like crazy to brokers who are sharp enough to pay their price.  Instead of moaning about how wrong that whole scenario is, I think it’s wiser to recognize that at this moment in time, Zillow is a lead generating titan, and to find ways to tap into that flow of potential buyers and sellers. )

Here is a lesson in packaging.  I found it  not in the article, but in the comments to it:

Mark and Karla Stuart, Prudential California Realty:  We were so frustrated with the innacuracies created by all of the different IDX sites, including Trulia and Zillow, we created our own….exclusively for San Diego County. It is 100% accurate, and doesn’t waste our client’s time with “Pending” and “Sold” listings, and is updated overnight, every night. Our goal was to be 100% accurate with regards to what is coming from the realtor’s database, the MLS. Though expensive, it has served our customers quite well. http://www.freesandiegosearch.com

Wow!  Their website sounds like a dream come true!  No inaccuracies!  Just as up-to-date as the local MLS!  You can’t beat that! And you know what?  It’s the same IDX feed you have you your website. The feed you have on your Help-U-Sell site comes straight from the MLS, every night, and is as accurate as the MLS is at that moment in time.

It’s time to start working on how we communicate this to potential buyers.  It has to be done quickly and elegantly during the first meeting.  Something like:

Agent:  How long have you been looking?

Buyer:  Oh, a few weeks, I guess.

Agent:  You found me on Zillow, is that how you’ve doing your searches?

Buyer:  Yes.

Agent:  It is very easy to use, I know. . . but have you noticed how many homes on there are not really for sale?

Buyer:  Well, now that you mention it . . .

Agent:  They have a real challenge there; it’s because they’re trying to do a local job on a world-wide platform.  They get housing information from so many sources it even confuses them!  Listen, how about letting me give you access to the local MLS – without all the data from Boston and St. Louis and Puerto Rico gumming up the works!  You’ll have the most accurate and best information on houses for sale today in this market?

Buyer:  You can do that?

Agent:  Sure.  I just need an email address and phone number and I can set you up with a buyer’s account  on my website.  You can search to your heart’s content, save listings, even set up email alerts when new properties that meet your needs come on the market.  Plus, any time you have a question or want to see something, I’m just a click away.

Buyer:  Sounds pretty good.

It’s the same basic pitch the Listingbook folks use.  Of course, their feed is real-time, not once a day, and they have ways of tracking buyer behavior on their site that are very powerful.  But the same concept applies:  The most popular home search tool buyers have is loaded with bad data.  You can give potential buyers a better search tool without the inaccuracies.  I’m suggesting you set a registration threshhold on your website – use either option:  3 searches and then register or register to get detailed information.  When you use your dialogue and sign up a new buyer, you go into OMS, create a buyer account for them, and communicate it back to them via email.  By doing it this way (as opposed to having them do it themselves), you’re giving them something of value.  And since the perception of Value is a key consideration when choosing a real estate professional,  it could be the start of a wonderful working relationship!

(If you haven’t read our discussion about syndication, you can access it by following these links: Syndication Storm, Syndication Update, The Final Word on Syndication and Another Word on Syndication.

 

An Android Phone MUST!

There is a free app in the Android Marketplace called ‘Wheres My Droid’ that you really need to get.

Once you install, configure and enable the app, it lets you find your phone when it’s lost!  Even when it’s stolen!

Can’t find your phone?  go to www.wheresmydroid.com and you’ll be able to start it ringing even if you have the volume off.

Then, from the same website, you can do a GPS search for your phone that will return longitude and latitude and show your phone’s exact location on a Google Map.

And, if your phone is unrecoverable for some reason (maybe you just don’t want to go into that Crack House to confront the bad guys), there is an option to ‘Wipe’ your phone so that your personal data is vaporized!

Now THIS is cool!

How Do You Talk About Marketing?

Marketing has undergone a huge change over the last decade.  Unfortunately, your clients’ ideas about marketing haven’t.  Most still believe that an ad in the newspaper or in a Homes magazine will sell their house . . . so your challenge in the Listing Consultation is to do a credible job educating the Seller about how marketing really works in your office.  Failure to do this will result in countless ‘what are you doing?’ calls . . . and will likely lead you to do what ordinary REALTORS do . . . which is to put an ad in the newspaper to pacify the seller, knowing full well it probably will accomplish nothing.

Start by painting a different picture of your Help-U-Sell office and what you do to get property sold.  You have a marketing system that includes lots of internet marketing, some direct mail, a little print media (and more), all designed to generate buyer inquiries into your office.  When the inquiry comes in, your staff expertly handles it, captures contact information and earns the right to help the caller find their dream home.  Sometimes it is the property that motivated the inquiry in the first place but usually it’s not; it’s another home in inventory.  The office acts as a kind of clearinghouse – or matchmaker – connecting buyers and their specific housing needs to inventory.  All of the marketing you do (even pieces that don’t feature your Sellers’ listing) is working to produce the one thing needed to get the Seller’s listing sold:  Potential Buyers.

Listen:  there are a finite number of people interested in buying real estate in your market place at any given time.  Maybe it’s 50 people today or 200 people tomorrow.  The best thing you can do for your Seller is to cause as many of those people to contact your office as possible, and you do that with Marketing – not advertising, Marketing.  But how do you communicate this to a seller who expects to see his or her home in the newspaper or in the homes magazine at the grocery store?  Try this:

You know, Sue and Al, marketing is very different today than it was just a few years ago.  The National Association of REALTORS reports that nearly 90% of home buyers start their search online.  That’s why Internet Marketing is the real heart of my Marketing System.  I put your home on dozens of property websites – everything from Trulia and Zillow to REALTOR.com and the local MLS.  I also get you up on my own websites that have all been optimized to be attractive to search engines so that homebuyers can find you.

In addition, I use a lot of direct mail – things like these just listed cards and this big marketing piece that get delivered to thousands of households in the area, signage and even some print advertising in local newspapers and homes magazines.

All of my marketing is designed to do one thing – and I know you think I’m about to say ‘sell your house,’ but I’m not:  it’s designed to generate inquiries from potential buyers into my office.  You see, the best thing I can do to find the very best buyer for your home – the one who is not just qualified but also willing to pay the most for it – is to be in touch with as many buyers interested in the area as possible.  And I use my Marketing System to find them.  It’s funny though:  most times, the caller quickly eliminates the property that motivated their call; they find it’s too small or in the wrong location or doesn’t have the amenities they want.  But my staff is expert at quickly building rapport and credibility with those buyers and then matching them to houses we have in inventory that DO meet their needs.

So we use the houses we have in inventory to fuel our Marketing program . . . which produces dozens of homebuyer inquiries into the office (last month we had more than 200 inquiries).  We then match those buyers to houses we have in inventory that meet their needs.  The office, my staff and I, act as a kind of clearinghouse or an old fashioned match-maker, putting buyers together with houses that meet their needs.

The real key, though, is Marketing to Generate Buyer Leads.  We don’t just advertise your property – though you’ll see your property in our advertising – we are a marketing company and we market your home by producing leads from potential buyers.  You list with us – of course because you want to save money – but also because we have an ongoing flow of buyers coming through our office, any one of whom might be perfect for you home.   Make sense?

It’s important to have examples of your marketing with you when you meet the sellers for a listing consultation.  It is important to put your brag cards and ETMs out on the table, to show your Internet syndication diagram, and your Homes Magazine ad.  But don’t fall into the trap of describing every individual piece of advertising you do!  That only reinforces the sellers’ misconception that advertising their house will get it sold.  If that’s all it took, they could do it themselves!  Instead, simply put them out, let the seller pick them up and look them over as you continue to talk about how your office acts as a property clearinghouse.

Old style Listing Presentations would spend a lot of time doing ‘show-and-tell’ about advertising.  The idea was to overwhelm the seller with all of the different places the agent was going to advertise their home.  And by the way – that’s pretty much what your competitors are going to attempt today. Taking this tack sets up at least two false expectations for your seller:  first, that advertising is what will sell their home and,  that they should find their home in every bit of real estate advertising they see!

Be different! You should be able to convincingly present your marketing system in 5 – 10 minutes at the most if you focus on concepts – not on the individual marketing pieces you do.  You’ll find that the seller will be much more understanding and supportive of your efforts if you do.

 

Should Your Seller Do a Lease/Option – Lease/Purchase?

Disclaimer:  I am not an attorney and the ideas expressed here are those of an educated layman (me).  Rules and law governing property transactions including those mentioned here are State specific and vary from location to location.  Please do not consider this post to be ‘advice;’  and before proceeding with any property transaction seek the counsel of a qualified, local, real estate attorney.

Situation:  Your Seller has very good, even excellent credit.  He/She has never been late on their mortgage or anything else.  This is very important to them:  they’ve worked very hard over the years to budget, live within their means and meet their financial obligations.  Unfortunately they are now upside down on their house:  current market value is $225,000 and the mortgage is $250,000.  They paid $300,000 seven years ago.

Even though Short Selling has become an acceptable option for most sellers, in fact a wise choice for many, this seller just can’t go there.  But he/she wants to take advantage of the great mortgage rates and excellent deals in the marketplace right now and upgrade to a bigger house in a nicer neighborhood.  This might be a good situation for a lease/option or lease/purchase.

A Lease/Option is two things:  an Option to purchase the property on or before some date in the future, and a Lease agreement giving the Option holder possession of the property during the interim period.  The Option is usually accompanied by non-refundable Option money, which can be substantial.  The eventual purchase price for the property is either locked in at the time the Option agreement is reached OR can be ‘Market Value’ at the time the sale is eventually consummated.  In the latter case, ‘Market Value’ must be carefully defined:  is it the opinion of one appraiser?  Two?  Do we average three? or take the middle figure of the three?  And, oh, by the way:  who’s going to pay for all of these appraisals?  During the Lease period, part of the rent paid can be credited against the eventual purchase price.  The Option money, however, is only there to secure the Option:  it would be rare for any of it to apply toward purchase price.  In a Lease/Option, the purchaser is not obligated to buy the property.  If, at the end of the Option period, the buyer does not want to complete the purchase, he can either renegotiate a lease (or new sale) with the seller or move.

A Lease/Purchase is similar:  there is an agreement to purchase at a later date that is secured with cash, there is a Lease agreement governing the interim period and part of the rent may be applied toward the eventual purchase price.  But there are some differences.  First, this is not an Option situation.  The buyer is paying the seller a non-refundable fee upfront for the privilege of purchasing the property at a later date.  The purchase is not optional:  the buyer is obligated to buy or face consequences like specific performance.  Usually, in this kind of transaction, the eventual purchase price is locked down at the time the purchase agreement is ratified.  Often, the price is current market value PLUS an increment over and above.

Back in the late 70s and early ’80s we experimented with these kinds of transactions.  Back then, interest rates were spiking well into double digits.  Often the lease periods were very long and it was clear what everyone was trying to accomplish was a way around the due-on-sale clause in most mortgages.  The courts were not pleased and some sellers, buyers and agents paid dearly.  That’s another reason to get competent legal advice before proceeding here.  It was that crazy interest rate period that gave birth the first adjustable mortgages any of us had seen.  We learned to think of them as temporary financing to bridge the gap until sanity returned to the market and a refi could be done.

So, back to our Seller – the one with excellent credit and an upside down home.  You just helped a family navigate a short sale.  They are good people, no doubt, but were WAY upside down:  the home was work about 50% of what they owed!  They aren’t able to get a mortgage today but unless financial disaster strikes, will probably be in good shape in a couple of years.  They love the seller’s house and offer an Option to purchase on or before this date three years hence, secured by $10,000 (non-refundable). The eventual purchase price will be $250,000.  They’ll pay monthly rent of $2,100 on the property during the lease period and $500 of each month’s rent will apply toward the eventual purchase price (If the rental period runs the full three years, that will be $18,000 in ‘credit’ from the Seller to the Buyer).

This is attractive to the Buyer because he gets to get back into a home he loves immediately.  The $250,000 purchase price is higher than the property is worth today but he is optimistic about the economy and thinks it’s likely the property will be worth that much or more at the end of three years.  The $10,000 cash for the Option in theory will be more than offset by the credit coming back at closing.  And, if it just doesn’t work out, he doesn’t have to purchase the property.

The Seller is intrigued but cautious.  This looks like a way to preserve their good credit and make a move as well.  The $10,000 Option money will help supplement the down payment they’ll need on the new home,  And the monthly rent is $500 more than their current mortgage payment.  The biggest concern is the Option:  what if the buyer rents for 3 years and decides NOT to buy the home.  What if the buyer gets into the home and stops making rent payments?  And so on.

The first thing you would do – and you’d probably have done it long before this situation got this far – would be to put the parties in touch with a good real estate attorney.  But having said that:  what do you think the Seller should do?  What would YOU do (as James Quinones might ask)??  Do you think this kind of strategy would appeal to some of your sellers?

Oh, by the way – there is something that I forgot t mention.  It has to do with the real estate fee.  Sometimes it is due and paid at the time the Option is agreed upon and funded.  Sometimes it is not payable until the property eventually closes. It’s a negotiation.   In our hypothetical example, the Broker’s fee will be paid by the seller at Closing.  Now:  what do you think?

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