“To understand ‘informed discretion,’ consider all the things your dog has devoured that he shouldn’t have.”
If you list your home for sale with me or any good lister, you will net around 92.5% of the purchase price, after real estate commissions and miscellaneous closing costs.
Advantage iBuyer?
Not hardly. Until now, iBuyer offers have been below Fair Market Value, where listed homes have been selling above market – well above market and for the past seven years, where I work.
So, a year ago, before the lockdowns, if your home was worth $300,000, they might have offered you $290,000 – netting you $272,600. I would have listed at $300,000 and sold then for $305,000 – netting you $282,125. I sell in a weekend and my prep costs are running under $1,000, so convenience back then cost the price of a steller vacation or a decent used car.
But now everything has changed. For one thing, I can reliably sell at 5% or 6% above FMV right now, so I might start at $305,000 and finish at $315,000 – netting the seller $291,375.
But the other big change is that Zillow will now use the Zestimate for many houses as its “instant offer.” They should have done this three years ago: Zestimates are reliably erroneous – I could tell them how if they but had the nerve to ask – but the errors would tend to cancel each other out. Plus which, Zillow is playing with lives as if they were Legos: They don’t give a shit about money.
So what now? In our example, Zillow offers $300,000 – netting you $282,000. I’m beating that by nine grand and a nice dinner for two.
Any comparison shopper would list in this market. But every other iBuyer knows where to start, now, to beat Zillow. And there are a lot of them out there.
iBuyers sell very slowly, by my standards. Buying from you, they can beat me to Close of Escrow by around 10 days, on average – and most of my listings are selling for cash right now. But reselling into the MLS, they are horrible: They take forever to do way too much prep work badly, then they list above market – the rookie mistake they can’t stop making, thousands of times a year – so they sell very slowly.
This matters why? A rising market will meet a too-high price – in time. The seller pays for that time, and Zillow is its own seller, so their resale pricing mistakes are already costing them money. But flip the script by a year or two and let prices decline, where now they are rising. Buy high, sell low – slowly – thousands of times a year…
I don’t know how this plays out for Zillow. They are betting that people will make six-figure mistakes on impulse – an exceptionally ugly view of humanity. But they may capture more transactions, anyway, even though I can now tell you exactly how much better I will do for you than the misanthropes from Seattle.
Yesterday on BloodhoundBlog:
Brian Brady: Where have all… the buyers gone?
In other news:
CNBC: Texas judge finds national eviction ban unconstitutional.
Reason: After a year of pandemic, state legislatures look to strip Governors of emergency powers.
American Thinker: Now’s Our Chance To Create Public School Alternatives.
Zero Hedge: ‘Brace For Rampant Inflation’: Hedge Fund Billionaire Stunned At “Market Craziness”, Sees “Trouble Ahead”.
American Greatness: The Last Stop Before Thermopylae.
