If It Ain’t Broke…

The real estate business generated some big headlines in the past few days with Zillow announcing that they are getting out of the business of buying and flipping homes, a business they have been in since 2018 in select markets across the country. Zillow revamped the entire company, invested billions of dollars and employed thousands of people to launch and run Zillow Offers, their iBuying business aimed at using digitization and automation to revolutionize the way we buy and sell homes. As it turns out, Zillow’s original model of steering website visitors to real estate agents who pay for leads is very different than actually buying and selling real estate. Today Zillow owns over 7,000 homes worth billions of dollars, most of which are currently for sale for less than the company paid for them. This from the same company whose “Zestimates” influence buying and selling decisions – and cocktail party chatter – across the country. Oops…

The Zillow story is the just the latest example of a business model that was supposed to upend the real estate marketplace and fundamentally change the way houses are bought and sold. Redfin’s various tech platforms and their promises of deep commission discounts with top-notch customer service were supposed to be another big market disruptor. They have since “tweaked” their model, reducing the discounts and leaving buyers in the hands of less qualified agents to show them homes. Their market share in our area remains in the low single digits and I can’t recall the last time I saw a Redfin buyer win in a multiple offer scenario.

When Compass, the big national aggregator of real estate brokerages came to town they were supposedly poised to dominate the market by attracting the best brokers and providing them and their clients with new technology and tools the likes of which we had never seen. Three years into the experiment, they too remain at single digit market share levels around here and many of the brokers who were wooed to Compass at the outset have returned from whence they came.

The fact is that at its core this is not an algorithm driven business, or a technology business at all. Technology has changed HOW we do business and it gives brokers and our clients better tools to navigate the home buying process, but this is not a tech business. This is a drive/walk the neighborhood, tour the house, understand the subtleties of clients, neighborhoods, and properties and communication business. I think that’s why I love it. Add in some smarts, professionalism and maybe a little technology and you can go a long way.

Incidentally, attracting and retaining smart, professional brokers has allowed Windermere to maintain a dominant market share position with both buyers and sellers despite all the “disruptors”. You can see the numbers HERE, but note that our 24% market share among sellers across the Eastside is equal to the shares of our next three largest competitors combined! The numbers stand up year after year and are similar throughout Seattle and when representing buyers, as well.

I’ll get off my soapbox now but just wanted to note that I’ve never heard of an algorithm finding a perfect off market property or winning the day in a competitive negotiation. As always, I’d be happy to drive, walk, tour or talk real estate (or anything else) with you anytime. Let’s just agree not to start with the most recent Zestimate on your house 🙂

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