Where Real Estate Gets Its Dirt

Welcome, Zillow. Seriously.

I had to chuckle when I read this recent press release from Zillow.

Selling made easier: Zillow customers can now choose between a cash offer from Opendoor or selling with an agent

“Customers who start their selling journey with Zillow can now simultaneously request both a cash offer from Opendoor and an estimate of what their home could sell for on the open market with a local Zillow Premier Agent partner.”

It reminded me of what we launched waaaaay back in 2018, called iBuyer Connect:

Cloud CMA will now include all-cash offers from Opendoor

“Agents using Cloud CMA, a comparative market analysis tool for listing presentations from W+R Studios, can now present listing clients with an all-cash offer from iBuying giant Opendoor alongside the traditional listing information.”

This integration in Cloud CMA has helped agents sell tens of millions of dollars of real estate without charging a 35% referral fee. And a majority of those sellers still wanted to be represented by the agent.

But hey Zillow. You, do, you.

Opendoor settles with FTC for $62M over claims of “false advertising”

FTC Takes Action to Stop Online Home Buying Firm Opendoor Labs, Inc. from Cheating Potential Sellers with Misleading Claims about its Home-Buying Service

“Opendoor’s marketing materials included charts comparing their consumers’ net proceeds from selling to Opendoor versus on the market. Those charts almost always showed that consumers would make thousands of dollars more by selling to Opendoor. In fact, the complaint states, the vast majority of consumers who sold to Opendoor actually lost thousands of dollars compared with selling on the traditional market, because the company’s offers have been below market value on average and its costs have been higher than what consumers typically pay when using a traditional realtor”

So wait, the FTC now wants everyone to use a REALTOR? #PlotTwist

Opendoor responds…

“While we strongly disagree with the FTC’s allegations, our decision to settle with the Commission will allow us to resolve the matter and focus on helping consumers buy, sell and move with simplicity, certainty and speed.

Importantly, the allegations raised by the FTC are related to activity that occurred between 2017 and 2019 and target marketing messages the company modified years ago. We are pleased to put this matter behind us and look forward to continuing to provide consumers with a modern real estate experience.”

Not a good look for Opendoor and the timing is terrible, being the week of Inman Connect in Las Vegas. And the fine? Settling a case like this is not unusual, remember when Zillow settled with Move for $130M? There are some hills you don’t want to die on, sometimes it’s just a math exercise.

But, the whole thing is a bit of a head-scratcher to me.

First, Opendoor’s value proposition has always been all about “certainty and convenience”, not you get more money if you sell to Opendoor. In fact, the whole industry narrative around Opendoor (especially in the 2017-2019 time frame) was that iBuyers (including Opendoor) had “low-ball” offers. I mean take a look at Opendoor’s homepage in mid-2017, there is absolutely nothing about how you’ll “make more money” selling to them. Just words like “simple” and “smooth”.

Meanwhile Wall Street has always classified iBuyers as “flippers”. The very definition of a “flipper” is to buy low and sell high, right?

Joe Rand had a funny take on Twitter on all this…

My takeaway is that maybe some aggressive sales tactics got out of control. While this will be fodder for the lobby bar crowd (including me) at ICLV I think Opendoor will take the hit and move on.

iBuying and Opendoor are here to stay.

Join Rhett Damon and Tyler Hixson of Opendoor and myself on a webinar talking about our Cloud CMA integration

Opendoor + Cloud CMA Webinar Registration

“Join us for a webinar with industry experts Tyler Hixson and Rhett Damon of Opendoor and Greg Robertson of Cloud CMA to learn about how you can serve more clients and win more business!“

We announced this integration over a year ago and it’s only gotten better. I excited to talk with Rhett at his new gig and reconnect with Tyler. I wrote an entire chapter in my book, The Art of the CMA, on why agents should be embracing iBuyers as an option for their sellers.

The webinar is Tuesday, May 18th.

Click this link to register => Opendoor + Cloud CMA Webinar Registration

Industry Relations Episode 51: We Don’t Know What to Call Zillow Anymore!

Zillow started out as a listing portal or syndication site. But the company has evolved to become… Well, we’re actually not sure what to call it anymore. Perhaps ‘the Amazon of real estate’ is most appropriate. And on September 23, 2020, the company announced that it’s hiring employee-agents to streamline the iBuyer process. So, if Zillow is a brokerage now, what does that mean for the industry?

On this episode of the podcast, Rob and Greg are discussing Zillow’s decision to take its iBuyer operations in-house and how that move will impact other aspects of organized real estate. Our hosts explore how MLSs might respond to having Zillow as members and describe how access to MLS data could change the consumer experience on the Zillow site.

Rob and Greg go on to consider the impact of Zillow being part of NAR and state and local associations, weighing in on how their participation can be seen as a win for the industry. Listen in for insight on how Zillow’s announcement demonstrates their commitment to becoming an iBuyer-brokerage and learn how Zillow entering the system might lead to an improvement for everyone—or a ‘horror show.’

What’s Discussed: 

The evolution of listing portals into brokerage and iBuyer hybrid models

How Rob and Greg define brokerages differently

Zillow’s decision to use employee-agents to bring its iBuyer operations in-house

How MLSs are likely to respond to having Zillow as members

Rob’s theory on how Zillow might reposition its Industry Relations team

The potential impact of Zillow being part of NAR as well as state and local associations

How access to MLS IDX data and VOW rules could transform the consumer experience on Zillow

The leverage Zillow has in getting information from smaller MLSs

What makes Zillow’s shift a WIN for humans (and organized real estate)

Connect with Rob and Greg:

Rob’s Website

Greg’s Website

Resources:

Opendoor vs. Zillow on Industry Relations EP050

Greg’s Blog Post on BPP

Rob’s Blog Post on Zillow

Stop Zillow Campaign

Greg on Twitter

CLAW’s Delay to Syndication Feeds

REALTOR Political Action Committee

NAR’s Rules on Virtual Office Website

The 2008 DOJ-NAR Settlement Agreement

‘It’s a Good Life’ Episode of Twilight Zone

‘A Trifecta! NAR Sued Again Over Buyer-Broker Commissions’ in The Real Deal

Thomas Jefferson’s Quote on Change in Laws and Institutions

Collateral Analytics

Greg’s Blog Post on Zillow

Our Sponsors:

Cloud Agent Suite

Notorious VIP

Opendoor might go public via merger with Social Capital II

Report: One of Social Capital’s newest blank-check companies is looking to reverse merge with Opendoor

“According to a new report in Bloomberg, Opendoor, the San Francisco-based company that aims to help people buy and sell homes with the “push of a button,” is in advanced talks to go public through a merger with Social Capital Hedosophia Holdings Corp. II.
The outlet says the blank-check company, which raised $360 million in April and is led by Palihapitiya, is “discussing raising fresh equity to help fund the transaction with prospective investors,” and that the combined company would be valued at around $5 billion in the deal.”

Never heard of a “blank-check” company” before. But this move makes sense. Opendoor has a concept that people can easily understand, people also understand that real estate is hot and seems to not only be “pandemic proof”, but thrive. Opendoor’s concept of buying a home “at the push of a button” seems to be a perfect model for the current environment.

This also gives Opendoor an easier way to go public (and quickly) to raise the necessary capital they need to execute on their vision.

Keller Williams ends partnership with Offerpad

Keller Williams ends exclusive deal with Offerpad

“As Keller Williams does with any product or service for associates, Keller Offers consistently measures the value we provide to ensure we remain a product that agents want in their tool belts,” Gayln Zeigler, director of operations at Keller Offers, said. “As part of that process, we now recognize the need to expand the program beyond Offerpad.”


Going forward, the company will use multiple offers for each home that requests an offer through Keller Offers. The aim, according to Zeigler, is to provide homeowners with more competitive offers and fuel the company’s expansion plans in 2020 and beyond.”

This was not going to last. Gary only wants to work with Gary. Gary wants to be the only vendor that KW agents work with, period. He basically craps on all other vendors, not in private, but on a stage in front of thousands of people. It’s a shame because some of the most passionate and smart agents I meet are from KW.

The multiple offer concept is great, but if you play it out it will never work. iBuyers don’t want to be aggregated, and building a network of independent investors that have the resources to actively service these types of requests in real-time is really hard, if not impossible.

I will say that I enjoyed Gary’s last interview with Brad at the recent Inman ConnectNow conference. I do believe his motivation is consumer-driven. But why all the vitriol towards other companies in the space? There are other good people in this industry who care about agents and have the same beliefs.

The sky is not falling on iBuyers

Zillow suspends home buying due to COVID-19

“Zillow said Monday it will temporarily stop buying homes in all 24 markets where it operates in response to public health orders related to the COVID-19 pandemic, the latest real estate startup to shift how it operates as the disease caused by coronavirus continues to spread.”

TechCrunch

Zillow is the latest iBuyer to suspend buying homes. Redfin was the first to announce and Opendoor after. I believe Offerpad just announced something similar yesterday.

Here’s the thing, I’m hearing a lot of people say that this coronavirus could be the end of iBuying. But its important to remember right now nobody is buying. With “stay at home” and “shelter in place” orders being given it’s pretty hard for any broker, agent, appraiser, county recorder clerk to do any business.

I think there are several factors that will actually help iBuyers once we are out of this crisis. People will want more certainty in the transaction, and less human contact showing homes.

The important thing to remember is that we are all connected, and we are all in this together.

Opendoor weirdness

Friday Flash: The year things got weird

“No, 2019 was the year consumers, also known as people, began to do very strange things in very significant numbers.
 
Two years ago, many in the industry thought the idea of a home seller paying 7-10% in fees for the privilege of getting a low-ball offer on their home was crazy, a pathway only for the desperate. 
  
Turns out lots of people were willing to do this in 2019. “

Brian Boero, 1000watt

Over the holiday break, I kept thinking about this insightful post (as usual) from Brian Boero of 1000watt. It pairs nicely with a webinar I did with Tyler Hixson, Opendoor’s Director of Real Estate Partnerships & Strategy.
You can watch the replay of the webinar in the video below. But one of the more “weird” things that came out of the discussion is that a vast majority of consumers were willing to pay the fee from Opendoor AND the agent’s full commission. They saw value in both. They appreciated the certainty and speed that Opendoor provided but also saw value in the guidance they received from their agent.

Think about that. In an age where many business models are trying to push commissions lower, or get rid of them entirely, many consumers are willing to pay more.

The fact that iBuyer offers have gone from “lowball” to fair market value might also be a factor. Here’s a quote from a recent article in the Wall Street Journal.

“The new study from Mike DelPrete, a scholar in residence on real-estate technology at the University of Colorado at Boulder, found Opendoor and Zillow typically purchase homes for just over 1%, or around $3,800, less than the value of the home as determined by First American Financial Corp. , a real estate title insurance company.”

These two shifts are more significant than people realize. iBuyers are not an either-or proposition, but something entirely different.

Things definitely got weird in 2019, hell I would include the entire decade. What weirdness this new decade will bring is what I’m excited about.

Back to work.

Does realtor.com have their heads in the sand?

Everyone’s rushing to be an iBuyer — except for Realtor.com

“Industry observers said the fact that Zillow views iBuying as a do-or-die phenomenon makes Realtor’s indifference that much harder to understand.
“How do you have a situation where it’s an existential threat to one portal, but the other is twiddling their thumbs at the back of the classroom?” asked Mike DelPrete, a scholar in residence on real-estate technology at the University of Colorado who studies iBuyers. “I don’t think [Realtor] needs to be buying and selling houses directly,” he added. “That’s not what this is about, and that’s probably a bad idea for them.”

I’ve been curious about this for a long time. I still surprised how many people still don’t understand the value proposition that iBuyers give consumers. The narrative on Wall Street still seems to be centered around iBuying as “flipping” houses. ????‍♂️

Webinar: What’s Behind Opendoor?

I’ve asked Tyler Hixson, director of Real Estate Partnerships & Strategy at Opendoor, to join me on a webinar on December 5th. On this webinar, I’m going to ask Tyler to explain how agents are using Opendoor to increase their real estate business, common misconceptions and other tough questions about where Opendoor sees the industry going.  We will have a Q&A session at the end.

Register for the webinar by clicking on the link below (Please feel free to share):

Registration => What’s Behind Opendoor?

P.S. Can’t make the live webinar? Register anyway and we’ll send you the recording.

Sponsored By VESTAPlus