The Evolution of Home Sales Is Here
Dear Readers: I recently listened to Zillow's third-quarter investor call. At the end of the call, Rich Barton, the CEO of Zillow, had a comment to share with investors and reporters. It struck me when I heard it, as I have a different opinion. Barton's final comments reflect many of the beliefs that have been part of the decadeslong understanding of how real estate works. I believe the past 20 years of the internet have made many of his beliefs obsolete. Below are his comments first, then my comments:
"The second principle is independent representation. People deserve and need independent representation. We've seen double citing in the industry, which is clearly a conflict and, at certain times, more expensive for the -- to the transaction. We do support DIY -- the people who want to do DIY, and we have a pretty healthy DIY FSBO marketplace. But in most instances, movers want and need counsel. And we think that takes the form of a buyer's agent." -- Rich Barton -
I think it can take the form of technology. All of us negotiate from a young age all through life. We negotiate major purchases, salaries, bedtimes, dining choices, vacation spots and more daily. Technology has made our lives easier in many ways. One way is with home sales. Over 10% of home transfers in 2022 were owner-direct (aka for-sale-by-owner).
FIVE NEW ADAPTATIONS AND WHY THEY EXIST
No. 1: The home inspection comes first -- not last. Both parties can make informed decisions early, preventing the second negotiation when defects appear just before the sale is finalized.
No. 2: The internet replaces multiple listing services. Pooling inventory 100 years ago was a significant benefit. Today, homebuyers using this technology can simply call the seller directly.
No. 3: The paperwork is standardized. The product has all the options built in. The buyer clicks a button on a list that includes the contingency in the offer. The sellers react to short and easy-to-understand documents. Both parties know what they are doing and why. This new efficiency reduces stress and misunderstandings.
No. 4: Peer-to-Peer communications. The party's direct communication has many advantages: a) Two parties are more likely to avoid a misunderstanding than four; b) the negotiation is memorialized directly in their dashboard thread to reduce miscommunication further; c) the efficiency of direct communication reduces anxiety produced by waiting for replies; d) the expense of two or more extra voices, who may put their interests ahead of yours, is eliminated.
No. 5: Peer-to-peer participant rules are few and simple. The buyer furnishes evidence that they can buy before they make an offer. The seller provides the condition report when publishing their ad. These actions remove important concerns upfront and build trust. These two modifications, and similar ones, simplify the process and reduce the chances of unwanted surprises. Establishing realistic guidelines reduces unrealistic expectations.
Technology has taken the guesswork consumers face along the homebuying journey out of the equation and replaced it at each step with the answers they deserve. This statement is not a prediction; an early version of this technology is available today. Over time, it will improve as early adapters shape the product with their input on the process and suggest new features. Think of when Amazon first started; all it sold was books.
Richard Montgomery is the Founder of PropBox, the first advertising platform to bring home sellers and buyers directly together to negotiate and close the sale online. He offers readers solution choices for their real estate questions. Follow him on Twitter(X) @rmpropbox or DearMonty.com.
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