What this Means for you and how it affects Home Values in Waxhaw
Zillow has been a well known name in the Real Estate Industry since they were founded in 2004. Specializing in consumer facing real estate data and listing information they were able to grow to one of the leading real estate websites in the world. Their model was always quite simple, provide as much data and drive as much internet traffic as possible to create buyer and seller leads and then sell those leads to local Realtors. This model changed dramatically when Zillow announced that were stepping into the real estate industry as a direct competitor with Realtors and their buyers by opening a new arm of their business, Zillow Offers.
Zillow created the Zillow Offers platform with the idea that they would “flip” homes for a profit by buying from sellers for a low price and then listing them on the market for an inflated price to capitalize on a highly competitive real estate market. Zillow has been purchasing homes all across the country and has purchased many here in Waxhaw and the surrounding area. Zillows model is nothing new as investors and wholesalers have been doing this for decades, but Zillow felt they could capitalize on their name and sheer size by offering this option to sellers on a larger scale.
Zillow entered into direct competition with the very people that made their website popular and profitable, YOU. Zillow made the conscience decision to enter into the market as a buyer and compete with consumers who were using their website to search for homes to purchase. They would purchase homes from sellers and then turn around and list them at a considerably higher price, thus elevating the local market and driving buyers to either purchase homes at unrealistic values or drop out of the buyers market all together. To be very clear, Zillow directly competed with YOU as a buyer to buy the homes at a discount and then turned around and tried to sell you the same product, but now overpriced, and usually with very little repair work or renovations being completed. Don’t forget they would also sell you the home with no disclosures of property history or condition because they never lived in the property they owned and sold.
Let’s also not forget that Zillow entered into direct competition with their most profitable consumer, Realtors. The sale of real estate leads had previously been the most profitable aspect of Zillow’s business by connecting consumers with Realtors willing to help them buy or sell a home. By creating Zillow Offers they quite literally snowballed their lead based business by telling Realtors they were going into direct competition with them and their clients in an attempt to disrupt the industry. All of this is based on the “Algorithm” created behind the scenes that told them what houses were worth and what they should purchase and sell them for. Fortunately, this “Algorithm” proved faulty as no online program can value a property with the accuracy and consideration of a local professional.
Zillow announced last week that they were suspending their Zillow Offers program and yesterday announced that they would be shutting down the program for good and would no longer purchase homes. Little news has been given at this time, but it’s believed that Zillow has over 6,000 homes in inventory across the country that will be liquidated to institutional investors instead of taking adequate price reductions and selling these homes to consumers at fair market values. Zillow has also announced that it would be laying off 2,000 workers, approximately 25% of its workforce, just weeks before Thanksgiving and Christmas.
How this News will affect your Homes Value in Waxhaw
Short answer: It shouldn’t affect it much at all, but time will tell.
The only thing that Zillow succeeded in doing was adding fuel to an already burning hot real estate market. Zillow Offers wasn’t the only business purchasing homes and there are multiple others still moving forward with the direct purchase model. Zillow Offers was certainly one of the largest, but based on the numbers of sales in Waxhaw they had minimal impact on inflated pricing. Over 90% of homes sales in Waxhaw in the last year have been sold to families and primary residence owners. Buyers are still desperate to get into Waxhaw and competition on homes in are area is still as high as it was 6 months ago. Listings are still at historic lows, with only 69 active Single Family Homes available for sale in Waxhaw at the time of writing this article.
It’s projected that the closing of Zillow Offers will have larger impacts on metropolitan areas like Charlotte and Raleigh that saw a larger percentage of homes sales go to investment firms and business direct buyers.
Although sellers may have one less option when it comes to selling their homes, there are hundreds, if not thousands, of other buyers ready to purchase homes here in Waxhaw. If you’re a seller and considering selling your property in the near or distant future always weigh your options and speak to a local professional about the value of your home. No one will worker harder for you than a quality, local Realtor that knows what it means to invest in their own Town.
Matt Lawson, MBA is the Owner and Broker in Charge of Briggs American Homes, a real estate team at Keller Williams Ballantyne area. Matt lives and operates his business right here in Waxhaw, NC and is passionate about all things Real Estate.