Zillow.com and 10-Year Anniversary of Housing Bust! (St. George Real Estate Morning Drive Radio Show)
Click on Facebook Live. to see the entire recorded show from Facebook! Below is the actual S. George Real Estate Morning Drive show, hosted by St. George Real Estate Agent Jeremy Larkin, word for word! Enjoy and please share if you find it valuable!
Jeremy Larkin and The Larkin Group @ Keller Williams Realty can be reached by calling 435-767-9821, or emailing email@example.com.
Jeremy: … good day to everybody. It is kind of nice out there. What do you think about the little bit of rain, Mike?
Mike: I am loving it. It is all right by me.
Jeremy: You are not offended?
Mike: No, not at all.
Jeremy: Do you remember 2013? Do you remember about this week in 2013?
Mike: It got a little white around here, didn’t it?
Jeremy: It did, didn’t it?
Mike: Yes, it did.
Jeremy: Can you believe that?
Mike: I am okay with that, too.
Jeremy: I actually think it was this, well, I know it was this week because it was during the Dickens Festival.
Jeremy: I know for a fact. Oh, I could mic up, Mike. I could have a mic on and even sound better this morning for the lovely people of southern Utah. So it was, we ought to look that up. It was plus or minus this day, these days, this week in 2013 we had the Great White December. I do not know what you want to call it.
Jesse: Is that when all the water pipes were freezing?
Jeremy: Yes, so we had the snowstorm.
Jeremy: And there was, we have talked about it on the show here before in the past, but you could not even get up and down this hill. Right, Mike?
Mike: No, it was snowing and then it was very cold. Everything froze and it stayed around for quite a while.
Mike: We had fun. I was sitting here watching people slide all over the place.
Jeremy: Yeah, because they could not go up, up and down Bluff Street.
Mike: Yeah, you only had two or three lanes on Bluff to choose from then.
Jeremy: Yeah, yeah.
Jesse: Not six?
Jeremy: You were not up to six lanes plus a turning lane plus, plus.
Mike: Plus, plus.
Jeremy: Yeah, this is pretty incredible. I came out of the Dickens Festival that year. You know what we did? We had gone there to see, they were putting on the Christmas Carol, and it was afternoon time. I remember going in and it looked like it could be, it may have even been snowing a little bit when we went in. Then we came out of the Dickens Festival about 90 minutes later, and it was absolutely astonishing what was going on. It was like being at a ski resort. It was more than that. I have never seen a snow like that in St. George. And then it did that until about eight or nine o’clock and that night and then the rest is history. You know what is fascinating though, Mike? They did not shut school down because they do not. I thought they would.
Jesse: It is Utah, come on.
Jeremy: Well –
Jesse: We might be St. George, but we are still Utah.
Jeremy: Well, remember that St. George does not even have a snow plow. Per se. Right.
Jesse: Yeah, that is true.
Jeremy: I think there was some construction grading pieces of equipment out there. Well, it is what it is, and of course, that was five years ago. Five years ago, which is kind of fun. Jesse, Good morning. I have got Jesse Poll in the radio studio with me today.
Jesse: Good morning, everybody.
Jeremy: Five years have transpired, have moved through since we had that period, and what a difference it made in real estate. Do you remember what we talked about last week? The average home value from five years ago is up –
Jeremy: So as of, I am going to move this chair for our live viewers on Facebook. I hope you are watching. We broadcast the show on Facebook dot com slash Jeremy Larkin. I think that is where we have it running. Of course, you can listen to us on 94.9FM, 890AM. But in April it was 110. So we know it is higher now.
Jesse: It is probably higher now because it has been creeping up there.
Jeremy: 120, 125 I think we talked about.
Jesse: I just looked yesterday. I think the average sales prices for Washington County is 352.
Jeremy: 352. Is that nuts? It is nuts because we are going to talk about a couple of things today. We are going to talk about what is happening in the market, and what people really need to understand is happening in the market. If they feel like something has changed, something has changed, but there is no data to support it.
Jesse: Right. We were just talking about that.
Jeremy: Yeah, so we are going to talk about that today. We are also going to talk about Zillow dot com. And when I posted this thing up to Facebook, I just asked the question do you use Zillow dot com. Yes, and we are going to talk about that. We are going to talk about the statistics, the consumer reaching out to Zillow dot com, which is, we will explain it better later. But it is just a real estate website. It is not owned by any agent. Right? It is a national website. And the data that has come out on what the consumer thinks is happening, what they think is happening when they contact Zillow. Who they think they are contacting, which is quite intriguing to me. Who they believe they are contacting, who they are actually contacting, and the lengths that Zillow is going to, and this is really important for the consumer because it is a consumer-facing brand, just understand if you are a buyer, a home seller or a home buyer, Zillow, it is like Google now. People throw the word around like Google. Right?
Jesse: That is true.
Jeremy: Don’t they? And then I am also going to talk about –
Jesse: Except for they, most of them know how to say Google. A lot of people do not know how to say Zillow –
Jeremy: Yeah, they do not know how to say Zillow.
Jesse: Zilloow or Zeelow.
Jeremy: It is pretty cool stuff, and I think people need to understand what is going on out there. It is an interesting time. So it is December sixth for anyone how is listening and picks us up after the fact and they are watching on our Facebook feed later or they pick it up. Folks, we are not linking up most of our radio shows, well, when I say most, going back chronologically, they are not all there. Going back a couple of months. You can visit Sold in St. George dot com, Sold in St. George dot com and click on the shows. We actually have a podcast, and sadly we have not been loading the shows to the podcast because we started the podcast for something different. And then there was an evolution in our thought process, and we said maybe we will do it differently. And now we are also going to be loading up our radio shows to that podcast, but we are just not there today. So visit Sold in St. George dot com.
Jesse: Now that we have made it public, we will be there soon.
Jeremy: Well, yeah, correct. These last couple of days, I have been working on trying to nail this thing down with my marketing people. All right, Jesse, let’s talk about this.
Jeremy: Let’s talk about this market. So we had someone pull their home off the market. I think this is actually kind of fun. Over at the Larkin Group, we have a cancellation guarantee, and then what that is what we call an Easy Exit Listing Agreement. Tell people what that means. Now, we are not here to so much market that, but this is a great segue into, and we will absolutely never mention the name of a client on the phone or on the radio, but I want to talk about the listing that came off yesterday.
Jesse: Okay. Yep.
Jeremy: Go ahead. So our Easy Exit Listing is what?
Jesse: What our Easy Exit Listing Agreement is to protect the seller. So if for some reason, either the market is just not correct or things, or we are not making them happy –
Jeremy: If they are not happy.
Jesse: — if they are not happy, if we are not happy. There are a lot of different reasons, but what it says is if for some reason you need to get out of your listing, we will let you out.
Jesse: And in most cases, there is a small fee to help us pay back for the photography, but that miniscule. So that is what it is. So you are not binded into a contract that is doing you any good.
Jeremy: Yeah. Yeah, so we got into this Easy Exit Listing Agreement maybe five years ago. And the Easy Exit Guarantee is pretty straightforward. You are not happy, you fire us.
Jeremy: Of course, there were Glenn Beck ads running. We had Mike doing stuff and other stations talking about this Easy Exit, if you are not happy, fire us. Well, we had an interesting situation with a client deciding, it is interesting. I guess they really did not fire us.
Jesse: No. In fact, he decided he will probably call you back in the spring.
Jeremy: Yeah, but I think it is a really important example of what is happening in the market. So we put this home on. $400,000 range. Right? And 399,900, and the consumer, excuse me, the seller wanted to list it for 425, and everything I had said 375. So what did we do? We met in the middle.
Jeremy: Right. I said, well guys, we can try it at 399. We tried it at 399. We had a handful of showings. We modified the price at 395. We had more showings. We brought a huge group of real estate agents through. Huge group of real estate agents through, and this is where it gets really fascinating. So we brought through, and I am going to pull this up. I can actually share this with what happened or what the, with our listeners. I think that you are going to like this. So we brought a big group of agents. What is called the Board of Real Estate, Board of Realtors tour, caravan tour. With 15 agents giving us written feedback, okay, and here is what we asked them. Ready, Jess? Scale of 1 to 10, how was the condition, and they ranked it an 8.87 on average. Some of them said 10.
Jesse: And I believe that. It is a nice house.
Jeremy: The home was built around 2005? Five-ish. I should know this, but it is just not top of mind right now. Number two, in your price and your opinion, what price would cause the home to sell? Now this is interesting. The home was listed for $395,000, and here is what they said. 369,900; 374, 379, 379, 299, ouch, 375, 375, 375, 380, 349, 375, no opinion, 380, 369, 379. Every single agent said 380 or below. One agent said 299 to be safe, which is getting out there.
Jesse: Yeah, that is –
Jeremy: I would have bought it for 299.
Jesse: Anybody will buy it for 299.
Jeremy: And if you average that out, essentially it is 370. 370.
Jesse: But that 299 brings up an interesting theory. When you have the biggest home in the neighborhood, you still have got to consider what neighborhood you are in.
Jesse: So that neighborhood they are in is actually a 299 neighborhood.
Jesse: Tops 320. So you have got the biggest home there. How are buyers perceiving you? They still have the neighborhood to consider. It does not mean they are right.
Jeremy: It is absolutely right.
Jesse: But that is how they are looking at you when you are walking in the door.
Jeremy: So the biggest home in the neighborhood, nicest home in the neighborhood, usually comes back to bite you in rear end, doesn’t it?
Jesse: It really does.
Jesse: It really does because at the end of the day you still have got a certain demographic of buyer that is going to buy a home there.
Jeremy: So here is what was going on. We had a neighborhood full of 2100 square foot and smaller homes. And this one happens to be 2800 square feet. So what would happen is the client, great people, would say but we have the biggest home in the neighborhood. Shouldn’t we get more? You should get more, but the market would not support that much more.
Jesse: Right. Right.
Jeremy: So we have 15 agents go through the home. Every single one of them says the price needs to be 375. So we sat down last Friday and we visited, and I said here is what we need to do. We need to be at 375 or we need to cancel the listing. And I handed them two forms to sign, a cancellation form or a price change form. And the reason I talk about this so boldly on the radio is because this is like the conversation that real estate agents do not want to talk about. Well, we would never ask you to reduce your price.
Jesse: Well that is –
Jeremy: I would never ask you to reduce your price. I would tell you that you have to reduce your price based on the market rejecting your price. And that is what we did. And yesterday stopped by the office, dropped off the cancellation form. Hey, we will probably call you in the spring. We are going to see if it will go better. Remember that the value of our home is not what we want. Right, Jesse?
Jeremy: But, Jesse, I want, it is not what you need, Jesse. I understand that you want to do a home equity line, redo your roof, but who does not care whether you want to do that or not?
Jesse: Right. The buyer.
Jeremy: The buyer does not have any emotion about what you and your family what to do with the equity in your home.
Jeremy: It is not what we paid. But Jesse, I paid 250,000, shouldn’t I get blank?
Jesse: My question is what does that have to do with it? Because if you would have paid $100,000, do you want to sell it for $100,000 if it is worth 300?
Jeremy: Yeah. And if we bought Microsoft stock at 50 and it is selling for 30 today, that is just what we would get today.
Jesse: So what we paid is irrelevant. It is do we need to sell or not and can we or will we sell in the current market.
Jeremy: And most importantly, it is never, a home is never valued at what another agent or your agent says it is valued at. It is always valued at what price?
Jesse: The price that the buyers are willing to pay.
Jesse: And the seller is willing to sell.
Jeremy: Bingo. So it is a cautionary tale and the challenge is that at 375, the home would have been sold a long time ago and there was equity. And it could have been done, but there was this feeling and there is always this feeling, but I need to buy a new home and I need all of the money from this home to buy the new home. Right? Which again comes back to making the, somehow us trying to believe that our product, I am selling a bike right now. It is on KSL dot com and a website for mountain bikes called Pink Bike. It is a mountain bike wholesale. Of course, I put it on at $100 higher than I thought I should, and then I modified it 24 hours later. That fast. And do you know what I went through? I said but I changed out the aluminum wheels for carbon wheels. I changed out the regular handlebar for a carbon handlebar. But wait, I upgraded the seat. Wait. I changed out the seat post. I started running a tally on all of the money that I had spent on this bike. And guess what all the guys and gals across the planet who visit KSL dot com classifieds and Pink Bike do not care about?
Jesse: Yep. That is great.
Jesse: Because we all go through that. Everyone of us when we are either thinking about selling something and when we are buying something. It is just flipped in reverse.
Jeremy: By the way, that is exactly right. By the way, I tallied up $1600 in upgrades on a bike. The bike is worth about $1800. I am like I am giving the bike away. How many clients have we heard in real estate say I do not want to give my home away?
Jeremy: Am I giving the bike away, guys, if I sell it for the value that the market will bear? Well, of course not. Right? So as you move through this market, understand something we are seeing. We are seeing the prices of listings be reduced and we are seeing them being reduced all over the place.
Jesse: Yeah, there is a lot coming through.
Jeremy: There is a lot coming through. We do not believe that home values are falling. We believe that there has been 5-10% over market value that people are asking. Right?
Jesse: Well, because in the market that we have been in it is normal or not surprising to see somebody that goes hey, let’s try to get this. Once in a while, they do.
Jeremy: Yeah, once in a while they do.
Jesse: They might get really lucky, but as the market starts to shift, we either, we have a few choices. We either have to go okay, we better get in front of this before we get behind it because you will never catch it.
Jeremy: You will never catch it.
Jesse: Or you go okay, let’s just take a break. Let’s stop.
Jeremy: Let’s stop.
Jesse: Because you have got to rethink. You have to correct yourself. The marketing, the pricing, the whole thing. Or you just chase and chase and chase.
Jeremy: Yeah. Well, you do. We talked about if a ball is running down a hill, and if you remember this as a child, and you are trying to get in front of the ball. Trying to get in front of the ball, excuse me, try to catch the ball, but you cannot catch the ball –
Jesse: Because you kick it.
Jeremy: (Indiscernible) front of the ball.
Jesse: Because you kick it.
Jeremy: You try to reach them, you lunge, and you pull a muscle and then you are kicking the ball further down the hill. All right. Zillow dot com. It is like Google. Literally in real estate, well is it on Zillow? Is the home on Zillow? I am For Sale By Owner. It is on Zillow. Well, have you looked at Zillow? Well, what does Zillow say. Last night, last night, someone asked me how accurate is the Zillow’s estimate? Last night. Yesterday afternoon, I am with a friend. He is a close friend. He is a CPA in town. He is a great guy. How close is Zillow? And then you know what he said? Well, it does not show 1200 feet in my home. Well right. Or 2000, maybe it was 2000. Because Zillow does not pick up the basement. But today we are not here to talk about whether Zillow is accurate or not. And real estate agents love to hate this site because the consumer looks, it is the Google of real estate, and real estate agents hate it because they have this brand.
Jesse: They do have the brand.
Jeremy: But here is the deal, guys. Us getting on the radio and convincing you that Zillow does not have accurate data, you will probably not even listen to what I am saying. You are going to go to Zillow.
Jesse: Well, it would be wrong because sometimes they do and sometimes they do not. Just like us.
Jeremy: Yeah, here is where we are going. Statistically speaking, you saw this. What percentage of people when they contact Zillow think they are contacting the real estate agent on, excuse me, when they contact Zillow think they are contacting Zillow?
Jeremy: Well, not according to the data.
Jesse: They think they are contacting Zillow?
Jeremy: Yeah, when they contact Zillow, when they go and click on a form, did you see this in this article yet?
Jesse: It is like 19 pages. I did not get through it all.
Jeremy: There you go. I did not know if you saw this. 50% of the consumers. Zillow just came out with their report. 50% of the consumers when they contact Zillow believe they are contacting Zillow.
Jeremy: They believe they are contacting, actually contacting someone at Zillow.
Jesse: So when they go in and ask about a property they think they –
Jeremy: Well, they absolutely believe that they are asking, just asking a question of the website.
Jesse: Oh, okay.
Jeremy: So who are they actually, in fact, contacting?
Jesse: Buyer’s agents really. Any agent.
Jeremy: And how are agents showing up in that? Are they showing up in that because they are the best agent or what?
Jesse: They pay to be there.
Jeremy: They, we, that means we.
Jesse: We do. Yes.
Jeremy: We. We are part of it. We pay. Now listen. Paying to have your listing featured and become a premier agent on Zillow is great for your client.
Jeremy: So for home sellers, you definitely want to hire an agent who is spending money on Zillow, to be quite frank. Until they kick these guys out of the market, you almost have to hire someone. So Zillow, there is a huge report that came out. It is not a Zillow article, but it is a report that Jesse and I are checking out. 50% of the consumers believe that when they contact Zillow, they are actually contacting Zillow. The –
Jesse: That number surprises me. I would have said they think they are contacting the listing agent.
Jeremy: It is real. It is real. And because they think they are contacting Zillow, Zillow has a situation, and the situation is that they now have to protect their brand. Because if you have a giant brand, Jesse, and 50% of the consumers are contacting it thinking they are contacting you, can you allow agents across the planet to not follow up, to not call the client back?
Jeremy: No way. You now have to control the process. So what is happening is Zillow is charging agents, we are one of them, an arm, a leg, and a kidney to feature our listings on Zillow. And then what they are doing is they are selling the information back to us so we can talk to you as the buyer or the seller on the other end. Right? They are vetting you.
Jeremy: They are vetting to make sure you are giving accurate email addresses, phone numbers, names, and it is coming back through. How crazy is that? So let’s wrap up. The two big trends: Zillow is now Google of real estate. When you contact Zillow understand you are contacting an agent. You might want to visit us at Sold in St. George dot com if you want to bypass Zillow and not have them vet your information. And number two, there is a good chance if you have your home on the market, the price, you are asking too much, and you are going to need to sit down with a good agent as we move into January second, first of 2019, whatever the first business day is, and get that price amended right now. Right now so you are not chasing the snowball down the hill.
Jeremy: Yuck. Yuck. Thank you