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Real Estate Corporate

STOP giving Zillow your ad money, listing data – today, they’re a competing brokerage

(REAL ESTATE) We’ve warned of this for years, the industry funded it, and Zillow Homes brokerage has launched, and there are serious questions at hand.

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Zillow Homes was announced today, a Zillow licensed brokerage that will be fully operational in 2021 in Phoenix, Tucson, and Atlanta.

Whoa, big huge yawn-inducing shocker, y’all.

We’ve been warning for more than a decade that this was the end game, and the company blackballed us for our screams (and other criticisms, despite praise when merited here and there).

Blog posts were penned in fiery effigy calling naysayers like us stupid and paranoid.

Well color me unsurprised that the clarity of the gameplan was clear as day all along over here, and the paid talking heads sent out to astroturf, gaslight, and threaten us are now all quiet.

They figuratively swore on their collective dead grandmothers’ graves that they’d never ever EVER ever ever practice real estate, but they’ve openly inched closer and closer to that status, with today marking the official date that no human can make that pinkie promise ever again.

Years ago, they began acquiring startups that pointed to this end game. Then they promised they were seeking brokers licenses across the nation so their operations and referral partnerships were more legit and they could do more than just soak up your ad budgets like an unworthy, moldy sponge, they could panhandle for your referral fees and inhale MLS feeds created by Realtors.

Fast forward to today, and they’re literally a traditional real estate brokerage.

Your ad dollars funded this.

Yawn. BUT…

How can anyone defend sending their listing data to Zillow? I mean they did swear on their dead grammy that they’d remain an entertainment media/search site in perpetuity.

How can any broker defend pouring ad money into a competitor? If you’re a KW broker, do you spend $10K to advertise on Coldwell Bankers’ main site or C21’s portal? OF COURSE NOT BECAUSE YOU HAVE A BRAIN. One that can read, write, and reason.

So why then would Zillow remain part of your marketing strategy now that they’ve pulled the final band aid off of the mound of band aids masking their subterfuge of your business?

Let’s say I haven’t convinced you because you like their logo, you think their leadership is geeky chic and you want to be like them. Okay, let’s watch the launch video together:

Such script. Much wow.

If you had “reimagine,” “innovation,” “streamline,” and “raising the bar” on your Real Estate Bullshit Buzzwords Bingo card, you win the chance to do one whole eyeroll, and I mean a really dramatic one. Go ahead, I’ll wait…

I want to be upset by this, but we’ve watched this ultimate trainwreck in super slow motion, so their explanation of the “hand off” being “confusing” as their inspiration is just laugh worthy. And sadly, expected.

What if your worry is that these big boys will use your data to find the “best” agents? Don’t worry, they swear again on their grammys’ graves that they won’t use their massive data to pinpoint talent and recruit agents from other brokerages, they’ll only use current employees and get ’em licensed up to stand “shoulder to shoulder” with you in your business. They can’t even come up with their own model, they’ve lifted yours and Redfin’s model. Oooh, innovative.

There’s no surprise in today’s news, but the excuses and delivery are overwhelmingly nauseating.

But hey, at least they no longer have to pretend that they took your money and data all of these years to benefit their eventual brokerage launch.

Next up, we’ll explain what this has to do with Zillow’s patent spree and how it will inevitably and irreversibly damage the real estate industry (these people really are evil geniuses, you’ve gotta give it to ’em).

Real Estate Corporate

Zillow stops their home buying, but you shouldn’t get excited about it

(CORPORATE) Zillow has put the kibosh on their home buying program, and real estate practitioners are buzzing, but no one should get excited…

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Zillow has halted purchases of homes for their iBuyer home buying program, and many real estate practitioners are buzzing on social networks to gloat and analysts are saying the company is on the rocks, but that sentiment is missing the forest for the trees.

In Q2 of last year, they only bought 86 homes to flip. Their purchase rates then rose to 808 in Q3, then 1789 in Q4, and 1856 in the first quarter of this year. Fast forward to Q2 of 2021 and they invested in 3805 properties.

That’s one serious surge in inventory they’ve invested in, which means a major upswing in their backlog to get through.

The reason for the purchasing pace change is unclear, but no one is currently immune to the supply chain crisis which is making raw materials expensive or impossible to obtain, while labor shortages in the industry are creating a scenario where hiring to finish this many flips is extremely difficult.

Current market conditions are such that housing starts and permits have slipped a bit as the nation faces the same challenges as Zillow must now endure.

Further, with their average purchase price in the second quarter hitting $322,432, average renovations, holding, and selling costs reaching $26,334, their average return is $19,636. That’s a decent return on a flip, but professional flippers can reap larger returns than $20k – but not at the scale Zillow is accomplishing.

Spencer Rascoff, Zillow co-founder and former CEO told CNBC he suspects buying will resume early next year. That seems like a reasonable supposition.

On the note of what they’re accomplishing, Nevada Realtor, Sean Gotcher, posted a wildly viral video last month on social media about Zillow manipulating the housing market and consumers finally realized the possibilities of what a power like Zillow could accomplish. Whether they do the evil thing or not is yet to be seen.

Real estate practitioners have spent the last 24 hours proclaiming the death of Zillow, which is wildly off. The company simply has a backlog and is struggling with labor and materials like everyone else in America.

And even if their iBuyer program shuts down and they stopped getting every listings feed on the planet, they’ve created a scenario where they’ve basically applied for (and yuck, been granted by the federal government) every conceivable generic patent on real estate online.

Instead of reading a headline and gloating on Facebook, practitioners need to start paying attention to the possibility of Zillow patent trolling the world – the rest is all just chump change. They really are evil geniuses, and they’re definitely going to survive this small iBuyer blip.

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Real Estate Corporate

REX Homes has second round of layoffs, closes NY and CHI markets, plans to join MLSs

(CORPORATE) REX Homes has just concluded a second round of layoffs and has indicated they will be joining MLSs as part of their restructure.

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REX Homes yesterday initiated a second round of layoffs in the past two months, has now shut down operations in Chicago and all of New York as part of a company restructuring, and intends on testing out joining local MLSs.

Layoffs are a common part of startup life, and REX Co-Founder, President, and COO, Lynley Sides assured remaining employees in a company-wide call that they are “done with downsizing efforts,” which they say they did their best to do “respectfully,” and the new goal is to move forward, focusing on the customer experience, on profitable markets, and on “winning” now that the company has “the right plan.”

The first round of layoffs was in late August and eliminated roughly 60 positions (a number which has not yet been verified by REX). No severance was paid, but the company offered resume coaching and allowed impacted staff to retain all company technology as a “creative” move, Sides said on the call.

The company has earned several rounds of private equity funding and is not publicly traded. They had not closed their Series D round of funding in August, but did shortly thereafter.

The second round of layoffs was Thursday, October 7th and impacted 34 employees who did receive severance and were also allowed to keep company technology.

Because of the timing of the Series D closing, Sides told staff on the call that they would be revisiting severance with employees cut in the first round.

She also noted that they would have preferred one round of layoffs and had hoped that would suffice, but instead took measures to cut “all costs,” including reducing marketing spends “notably,” addressing overhead, negotiating with vendors, and even subleasing some of their space to “reduce the impact of the second wave.”

It is unclear what markets they continue to serve as their website still allows users to select New York, but not Chicago, and several past and current staff say the number of areas they service have been drastically reduced in this calendar year but none agree on the actual number. Sides noted a shift toward focusing exclusively on the most profitable markets.

Sides also said on the call that REX would be “trying to join a few MLSs which is the right thing to do for our business and our customers” as they focus on the “customer experience.”

The pilot test is notable given the company’s lawsuit against NAR and Zillow, alleging a cartel surrounding MLSs and commission structures. Although a recent court ruling urged the company to not use the term ‘cartel,” the lawsuit stands.

Also fascinating is that the real estate tech startup was able to avoid all news coverage of the layoffs, market closings, or a shift toward joining any MLS.

Regardless, Sides concluded her portion of the call by assuring her teams that she remains “incredibly optimistic about REX’s future,” a sentiment others on the call echoed.

We have reached out to REX Homes for comment, as we don’t know the precise number of employees dismissed in August, the size or date of their Series D round of funding, or what markets they still serve.

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Real Estate Corporate

Viva – the startup that gives renters equity as they rent

(TECHNOLOGY) Viva launched as a pretty brilliant model – give renters back equity as they rent, foster future buyers, and build a property portfolio.

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Renting often feels like a necessary evil, one which is compounded by the fact that renters are unable to build equity – through no fault of their own. A company called Viva thinks they have a solution for this systemic issue: third-party equity.

Viva is a startup with the main goal of allowing renters to earn a certain amount of equity per month.

The process itself is fairly straightforward: Renters in Viva-managed properties have the opportunity to earn up to eight percent of their rent back in equity per month. This equity is stored in the form of a rebate that can be reclaimed once the renter’s lease is up.

I say “up to” eight percent because, according to Viva, certain tasks–mild, “unskilled” maintenance and general upkeep of the property–are assumed to be the renter’s responsibility (unless otherwise dictated elsewhere); failure to maintain a presentable property can result in a lower percentage of rent going to your equity.

While that sounds like it opens the door for picky landlords to dock renters for arbitrary issues, Viva assures them that they “expect the vast majority of all tenants to earn the full 8% every month.”

That equity can be tracked via Viva’s online portal and payment receipts from each month of rent.

Once a renter’s lease expires, they can request their equity in the form of a rebate; it can also come in the form of a housing credit should the renter want to put it toward their next property.

On the landlord side, Viva charges a relatively high 16 percent for management: eight percent for renter equity, and eight percent for general management fees.

While this sum is higher than the average 10 percent cited on Viva’s FAQ, they point out that their eight percent covers more things (maintenance and “community engagement”) than a usual maintenance fee.

Viva also posits that people who live in properties they manage will be more dedicated to maintaining those properties, thus cutting down on long-term costs.

Viva’s goal of creating a third viable option that nestles between renting and buying couldn’t come at a better time in terms of the housing market. Both renters and landlords will want to keep an eye on this venture as they develop.

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