Online Property Appraiser Breaks Into the Real Estate Listing Game
Beginning today, Zillow.com will allow homeowners and real estate agents to advertise for-sale properties on its website at no cost.
The Seattle-based company, which rocked the real estate world this year when it began offering free online valuations of almost 70 million homes, made the announcement Wednesday evening, the Seattle Times reports.
It also announced a feature called “Make Me Move” for owners who’d consider selling if the price were right. If it catches on, this could create a shadow “for sale by owner” market with the potential to bypass formally listing homes or paying agent commissions.
Owners adding “for sale” or “Make Me Move” data can upload their photos, neighborhood commentary and descriptions of the property, potentially justifying a price higher than Zillow’s “Zestimate.” Also, real estate agents can add contact info and link to their own website for free.
For an industry that’s long sought to control for-sale information, it’s a pretty radical approach. Historically, online real estate companies have sought permission from listing services or real estate companies to display listings.
Now, Inman News predicts that agents will jump at the chance, particularly in this slumping housing market, to bypass that step. It’s already happening with other sites, such as Craigslist, which allows posts of for-sale properties, complete with photos.
“Homes are on the market longer and agents’ commission dollars aren’t as fat,” Inman said. “If someone is going to give them a free alternative online, I think agents are going to flock to it.”
A 2004 National Association of Realtors (NAR) study found that Realtors’ median income was $49,300, and that they spent a median $1,150 annually on promotion and marketing expenses, although almost 20 percent spent $5,000 or more. This was on top of marketing expenses paid by their parent real estate companies.
With Zillow offering free advertising, pressure may be put on real estate agents to cut commissions, which are about 6 percent of the sales price, paid by the seller. On a $350,000, house that’s $21,000. And that $21,000 understandably means a lot to the people who will be forced to take out a new home loan.
Agents argue that the complexity of real estate transactions justifies that cost. Still, online real estate brokerages, including Seattle-based have made inroads by offering discounts. When you consider the high cost of a Washington mortgage, any way to cut costs is worth a serious look.
Marketing homes directly was Zillow’s plan even before it launched in February, but it wasn’t a priority, spokeswoman Amanda Hoffman said.
“There are already so many sites that offer homes for sale,” she said. “This just makes our site more complete.”
Zillow logs more than 3 million visitors a month. Some 80 percent of all homes in the Seattle housing market have been viewed at least once.
A National Association of Realtors survey found that 12 percent of homes are sold directly by their owners. That percentage has actually dropped, from 18 percent in 1997, because of the increasing complexity of transactions and the amount of time they take, NAR spokesman Walter Molony said.
“The other issue is security,” Molony said. “Anyone with any motivation can come see your house without being prescreened,” Molony said.