Zillow a Brokerage? Seller's & Bidding Wars, and the Best in the Business | Quick Hits Volume 3

Quick Hits: Volume 3

Apologies for no video this week but it’s been 4 months since the last Quick Hits so I thought it was time again for my fingers be the medium in which to dump some thoughts. Here we go!

Multiple Offers - The Seller’s Perspective.

Last week’s video was all about how you can help your buyer’s get prepared to compete in multiple offer situations. A bidding war can certainly be a seller’s dream but if not handled properly it can turn out horribly. Just like with buyers, you should discuss with your sellers what could happen in a multiple offer situation and come up with a strategy - or a few strategies - on how to handle it. Here are a few I’m fond of depending on the situation:

  1. Negotiate each offer individually - If you don’t have many offers, it could be to your advantage to negotiate individually. Up to you and the seller on whether it is important to disclose multiple offers at this time. Getting to understand each buyer’s motives and working through that in a thoughtful negotiation can be your key to getting not only the best price but the best terms.
  2. Deliver the same counter offer to all - Instead of negotiating each offer individually, you could present the same counteroffer to all parties. This can work when you have several offers but none are over your asking price. This could help create some urgency if the buyers know they are competing. By delivering a counteroffer without a deadline, you are leaving the door open for continued negotiations if needed.
  3. Final and best - This is a popular and commonly used strategy for multiple offers. If you have a lot of offers and many are over asking, this can work very well. The strategy is very clear, deliver your highest and best offer by a certain time. Be careful though, if you don’t honor the terms of the negotiations you set forth you could frustrate some of your best buyers causing them to walk away.

So chat with you sellers and decide together on what is the best path given your situation. As I always say, do a little more preparation so you are ready to handle anything that comes your way.

REAL Trends 500 - The list is out!

Every year I have fun looking at REAL Trends top 500 brokerages. For this year’s report, no surprise we see NRT at the top once again, by a lot. Many of you might be thinking why this list matters, or if it even matters at all. For most people (particularly consumers) this list probably doesn’t matter one bit. It’s more of a scoreboard for brokerages to use for bragging rights (well deserved bragging rights). I’ll use this moment to congratulate all the companies that have made the list and particularly our fellow Leading Real Estate Companies of the World brokerages.

There are some fun trends to watch in this report year over year however. You can see certain brokerages jockey from rank to rank and what franchises are growing in popularity. One of my favorite things to look at is the volume of the 500th ranked brokerage. This year it was over $500M - whoa. Just two years ago it was $360M, that’s a big jump.

Are 100% commission brokerages opening the door for Zillow?

I read a good article on Inman this week about the rise of 100% brokerages. It created a question in my mind which I will probably expand on in a future post but I thought I would dump some thoughts out for now and get your opinion on this too. If 100% commission split brokerages become popular enough, does that open the door for Zillow to become a real estate broker?

This was the quote in the article that really got me thinking about this, "The winner of this 100-percent commission brokerage race will be the one that creates a brand that is recognizable by both consumer and the agent. A brand that doesn’t work in concert with its agents is not sustainable.”

Whoa. This is so true. Well, to an extent.

I’m looking here at the word consumer. What brand do consumers have in their face all the time when it comes to real estate? Right, HGTV. Okay, but seriously after that, Zillow.

The brokerage side of the real estate industry loves to fear Zillow and everyone always talks about what would happen if Zillow became a brokerage. I’m not concerned about what would happen if Zillow decided to open up a brokerage because here is what would happen. Brokerages that can’t compete against them (for several reasons) would probably fold, just as they do now when Joe’s Realty opens next door. Brokerages that are doing well will probably continue to do well.

My view on this is that if there was ever a door opening to make it easy for Zillow to become a broker, it’s the 100% commission split model. Agents at brokerages with this model are used to paying up front fees for services that support their business, much in the way they are used to paying Zillow fees to support their lead generation. If a strong agent has established their personal brand gets an offer to be an agent with Zillow, one of the most recognizable real estate brands among consumers, and the company provides similar à la carte offerings as their current brokerage, why wouldn’t they jump ship?

That’s it for today. Think about this and feel free to share your thoughts if you like. Have an awesome day!