Real Estate: An Industry in Disruption
Updated: Oct 15, 2020
Siri, turn on the living room light. Siri, play Metallica. Siri, buy my house!
Sounds crazy, but it’s happening. The real estate industry is in an upheaval & it’s affecting our local market.
From the cancellation of the Waterhill Music Festival to the Gelman plume conversation, we never have a shortage of local real estate news. I love talking about real estate. My ears perk up when I hear someone talking about the value of their home, whether I’m enjoying a comfy chair at Sweetwaters or a corner stool at Jim Brady’s- I’m always up for a real estate conversation. Not just the typical, “Hey, can I sell your home?” either. I am truly interested in what’s happening at the hyper-local level.
On a national scale, the industry is undergoing changes that have already begun to trickle down to our community. People are relying more on websites for all of their information (or misinformation) & even transacting online. The accessibility of information to the consumer has changed drastically in the past decade. When I meet with sellers many talk about the “Zestimate” of their property. The “Zestimate” is an algorithm used by the real estate giant Zillow to come up with an estimated value of the property. With some properties, it is surprisingly accurate but in others, it can be off by tens of thousands.
In a transient community like ours, with so many homebuyers coming from around the world, inaccurate estimates of value can cost sellers a lot of money & frustration. The steadily increasing value of many neighborhoods has caused investors to sell off their portfolios. Many of these properties have not been remodeled or updated like surrounding homes, yet the algorithm makes little or no adjustment for these improvements. Construction quality, layout, updates, & exterior improvements factor greatly into consumer desires but are often not factored into these estimates.
From a buyer’s perspective, the free flow of information seems like a great thing. School ratings, walkability scores & crime statistics are just a few of the features that consumers love about sites like Redfin, Realtor.com & Opendoor. Uber has even entered the real estate market!
You can sell your home to these companies sight unseen through a program being coined as an “iBuyer.” Upload info about your home & receive a cash offer in minutes. Usually, the offer is lower than what the property could fetch on the open market but the convenience is unmatched. After purchase, the company will then improve the home & list it.
These companies have agents across the country feeling discouraged about the future. Stocks for some brick & mortar powerhouses have been on the decline while venture capital money continues to flow into the real estate disrupter market. Some envision a future where you throw on a pair of virtual goggles & tour your dream home from your living room. Then you make an offer in bitcoin & your new home comes fully furnished by Amazon. No human contact necessary, isn’t that great?
Hey Siri, what’s the Waterhill Music Festival? Hey Siri, what’s the Gelman plume. Siri? Siri? Hey Siri, find me a local Realtor in Ann Arbor.