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4 Top Alternatives to Zillow and Trulia

Zillow Group, Inc. (NASDAQ: Z), is a popular online real estate company founded in 2006. Zillow operates as a real estate search engine that lists more than 110 million homes across the United States. It also offers a value estimate known as the "Zestimate," along with comparables for each of the homes listed on the site. Zillow is considered by many analysts to truly be a media company that makes its money from its ad placements.

Trulia, Inc., like Zillow, is another online residential real estate website that connects home sellers with buyers, renters, and real estate professionals in the United States. With a business model similar to Zillow’s, Trulia was acquired by Zillow Group in 2015 for $3.5 billion.

Key Takeaways

  • Zillow Group, which includes Zillow and Trulia, is the biggest online real estate company in the U.S.
  • HomeSnap is known for its user-friendly mobile app, while NeighborhoodScout provides additional information about an area, such as crime rates and school data.
  • One of the best ways to conduct a search for a new home is to use several real estate websites to cull information.

The resulting entity is considered the largest online real estate company operating in the United States with the most popular website, measured by the number of unique monthly visits it racks up—59 million, as of January 2020. While an entity as large as Zillow Group provides its users with benefits of scale, its market domination means it hasn't felt the need to adopt some features of some of the smaller competitors in the space.

Many online real estate websites have cropped up to try to dethrone Zillow Group as an industry leader. The following are four options that provide alternatives to Zillow and its subsidiary, Trulia.

1. Redfin

Redfin is a large online real estate company that seeks to redesign the way people buy homes. It offers several benefits that make it a viable alternative to Zillow and Trulia. The Redfin app, available on iOS and Android, claims to update its data every five minutes.

On Oct. 29, 2020, several fair housing organizations filed suit against Redfin, accusing the company of systematic racial discrimination. The complaint says the online real estate broker offers fewer services to homebuyers and sellers in minority communities. Housing discrimination is illegal, but it does persist today and you can fight against it.

First, the user interface and site design are very similar to Zillow's and Trulia's, allowing users can search for properties through a map-based function. After searching the site with a city or zip code, Redfin displays information—home value, home appreciation, square footage, year built, homeowner’s association fees, construction components, sewage system specifics, and other housing data points—that a home buyer might want to know. Also, users who are browsing for homes can find favorite units for a side-by-side comparison.

Second, Redfin offers additional features that Zillow and Trulia do not. The company, which began as a real estate broker, employs a team of real estate agents who are rated by Redfin users. The compensation of these real estate agents is directly correlated to the ratings they receive. To help home buyers, the company also rebates part of the real estate commission back to the purchaser.

However, users should be aware that in some cities Redfin does not disclose exact addresses if sellers prefer to keep them hidden, and the site does not automatically provide home value data if the listing agent chooses not to have it displayed. In other cities, Redfin does automatically provides complete sales and listing data.

Finally, while the full data might not always be there, the company integrates with the multiple listing services (MLS) and has homes listed within 15 minutes of the unit going into MLS.

2. Homesnap

Homesnap is an online real estate platform that includes features such as an intuitive map-based search function and a robust amount of property information. Much like Zillow and Trulia, its real estate browse function is easy to use.

What sets Homesnap apart from the competition is its mobile app. With the app, it is possible to take a real-time picture of a house that is for sale with a mobile device and have the app query all the necessary listing information about the property.

The mobile app even works on unlisted homes, apartments, and condos, giving users property values of places currently off the market. The app is available for Android, iPhone, Apple Watch, and Apple TV users.

Many online real estate websites are portals that get their information from databases of properties shared by agents and brokers. As a brokerage, Redfin is an exception.

3. NeighborhoodScout

NeighborhoodScout provides users with information regarding neighborhoods in the United States. Users can access the company’s neighborhood information using the search function by entering a city or specific address. Once the search criteria are entered, NeighborhoodScout provides average house values, local school information, demographic data, crime rates, traffic data, and more.

While most of this information is free for users, a subscription is needed for some of the more robust data. With plans starting at $39.99 per month, users are provided with detailed school reports, crime rates, and housing appreciation rates.

The information given to users through NeighborhoodScout’s subscription service is currently not offered by either Zillow or Trulia, making it a viable alternative to either company.

4. Realtor.com

Realtor.com is an online real estate website owned by News Corp. (It licenses the name "realtor" from the National Association of Realtors.) While the information is current, the site is more basic and doesn't have the robust features of Zillow, Trulia, or the other companies on this list.

However, it's connected to MLS with the most current listings on the market and is a good place to start searching for a home. It also has a texting option to connect to real estate professionals and a pricing feature to assess how specific home features, such as a garage, affect cost.

Once a home listing is found, a user can employ a blended strategy to search for that home on one of the three websites listed previously. This way it's possible to be the most informed about a listing, so a buyer can be the first to view the property on Redfin, Homesnap, or NeighborhoodScout, then contact the realtor quickly.

The Bottom Line

While Zillow and Trulia are popular real estate sites, excellent alternatives do exist. Buying a home is one of the biggest financial decisions you will likely make, so it’s important to pull information from a variety of reputable sources. In addition to the above-mentioned sites, Investopedia also offers a complete guide to buying a home that can help make the search easier.

Sours: https://www.investopedia.com/articles/markets/100215/5-best-alternatives-zillow-trulia.asp

Zillow vs. Trulia: What's the Difference?

Zillow vs. Trulia: An Overview

If you’ve ever done research online to rent, buy, or sell a home, or if you've just wanted to see how much your home may be worth, you’ve probably used Zillow (Z) or Trulia. Both sites are real estate databases that provide for-sale and rental listings to the general public and connect people with real estate agents, and they share some key characteristics. They are now also part of the same company: The Zillow Group acquired Trulia for $3.5 billion in February 2015.

Both sites present listings using photos, a detailed description, prices, and information about neighborhoods. Property information presented on each site is generally similar because they both draw on MLS listings. Visitors can use a specific set of criteria to search for homes on each site including price, number of bedrooms, type of structure, square footage, and lot size.

While the two are fairly similar, there are several key differences that set the two sites apart. Zillow offers what it calls Zestimates, which are estimates of home values based on publicly available information. Graphically, each site presents listings in a different way, which provides the user with a different experience. For example, when you search for listings in a city on Zillow, the search results are on the right side with a map of the area on the left. The experience is flipped on Trulia, where the search results are on the left with the map on the right.

We'll look a little more at this, and at the two sites in detail, below.

Key Takeaways

  • Zillow and Trulia are real estate databases that offer for-sale and rental listings and connect people with listing agents.
  • Zillow provides users with a highly graphic experience when searching for properties, while Trulia has a simpler website design.
  • Zillow offers Zestimates—estimated market value for an individual property—and lists properties in both the U.S. and Canada.
  • Trulia gives users a visual breakdown of the monthly costs for a property as well as crime map data.

Zillow

Zillow was founded in 2006. Based in Seattle, the company was formed by two former Microsoft executives, Rich Barton, and Lloyd Frink. According to its website, Zillow is "the leading real estate and rental marketplace" for consumers, connecting them to the information and real estate professionals they need to buy, sell, or rent a home. More than 135 million properties are listed on the site as of first quarter 2021, including those that are not currently on the market.

Zillow is free to use for both owners, listing agents, and landlords. The majority of its revenue is derived from advertising, selling space on its suite of sites—Zillow, Trulia, Hotpads, among others—to property management companies, mortgage lenders, and other businesses.

Compared to Trulia, Zillow's user experience is much more graphical. On the left side, you'll see a map of all available properties in your search area that fit the criteria selected. Scrolling over each pulls up a small thumbnail with the price, along with the number of bedrooms and bathrooms.

Individual properties are located on the right-hand side of the screen, starting with the latest listings on the market.

Property information is easily accessible in different compartments:

  • Along the left-hand side, you can scroll through photos of the property, and click to enlarge any you find interesting.
  • Key information is pooled at the top right-hand corner of the result including price, the number of bedrooms and bathrooms, square footage, and location.
  • Just underneath the key data, you'll find an overview of the property. This section includes the number of days on the site, how many views the property has had, and how many times other users have saved it. There is also a detailed description of the property provided by the realtor, features of the home, other homes in the community, and community information.
  • A "Contact" button allows you to connect instantly to the realtor or person responsible for the listing by sending a message.

Another feature Zillow offers is its Zestimates. This is the site's estimated market value for an individual property. The website emphasizes that Zestimates are only a starting point to determine the value of a home and shouldn't be taken as an official appraisal. The Zestimate is calculated on a daily basis using a series of data gathered from public sources and from users. The site also provides a Zestimate forecast, which predicts what the price of the home will be after one year. This figure is based on current home and market information.

You can also stay updated on trends and research in the real estate and housing market through Zillow's research tab. This section is divided into different sections for the latest news, data, markets, buying and selling, renting, and policies involving the market.

Trulia

Trulia is another popular real estate website. The company was founded in 2005 and still has its headquarters in San Francisco.

Just like Zillow, Trulia offers real estate listings for prospective home buyers, sellers, and renters. Just like Zillow, Trulia makes most of its money from advertising.

Even though the company is now owned by Zillow, it provides users with a different experience online. Search results yield a map on the right-hand side and listings on the left. Once you click on a particular listing, the key information—price, address, number of bedrooms and bathrooms, square footage—is listed on the top, along with an estimate of the monthly mortgage payment. Property photos and listing information including realtor contacts are listed below. This is followed by a detailed description of the property provided by the listing agent, features, and similar homes in the area.

Trulia claims its 34 neighborhood map overlays give consumers more insight into what it's like to live in a home and the neighborhood. Trulia also provides a visual breakdown of the monthly costs for the property, including your mortgage payment, property taxes, home insurance, any association fees, and mortgage insurance. This gives prospective buyers an idea of whether they can afford a particular residence.

Another one of Trulia's distinct features is its crime map data. The site pools crime data for neighborhoods from both local law enforcement and news reports, allowing users to determine safety in the community.

Special Considerations

Zillow, unlike Trulia, goes beyond the U.S. in its listings. In 2018, Zillow announced a partnership with a number of Canadian brokerages and real estate companies to list properties on the site. According to the site, properties are listed for a variety of Canadian cities including Toronto, Vancouver, Ottawa, Calgary, Edmonton, and Kelowna.

Sours: https://www.investopedia.com/articles/personal-finance/021815/zillow-vs-trulia.asp
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Real Estate Comps: How to Find Comparables for Real Estate

Comparable home sales help sellers and their agents identify an accurate listing price for a home — one that captures more buyers, minimizes time on the market and clears the path for a smooth transaction. Read on for more info on comparables, the most important factors and how to identify the most accurate comps for your home.

What are comps in real estate?

A comp, which is an abbreviation for comparable sale, is a recently sold home in your area that’s similar to your home in location, size, condition and features.

How sellers use real estate comps

Sellers, especially those selling for sale by owner (FSBO), use comps to determine the right listing price for their home. Even if you’re selling your home with the help of a real estate agent, you’ll want to be familiar with comps so you can make sure you’re comfortable with the listing price your agent recommends.

How buyers use real estate comps

Buyers reference comparables to decide how much to offer on a home. More specifically, they want to make sure they don’t overpay for the home they’re buying.

How appraisers use real estate comps

When an appraiser comes to your home, they will source their own comps to help accurately assess how much your home is worth. Appraisals can happen for a couple reasons. Usually, a buyer’s lender will require an appraisal before closing, but sometimes sellers get an appraisal to help them accurately price their home.

How real estate agents use MLS comps

Real estate agents use comps from the local multiple listing service (MLS) to create a comparative market analysis (CMA). It’s a collection of nearby comps, put together to help an agent and seller decide on a good listing price. Savvy real estate agents regularly run comps (even when not tied to one particular deal) to keep an eye on their local market and gauge overall trends.

How to find real estate comps

Sellers have two options for finding comps: hire an agent to guide them through the research and pricing process or find comps on their own. Here is how the process works for both options.

Real estate agents and MLS comps

The local MLS is usually the best source of comparable home sales, because the information tends to be the most accurate. Zillow’s agent directory can help you find an experienced real estate agent who is well-versed in navigating the MLS and finding appropriate comps for your property. And since they’re familiar with your area, they can interpret comps with an eye for area trends, home value appreciation and price per square foot.

Many will provide potential clients with a free CMA in hopes of landing your business. It gives a rough idea of what your home might sell for in today’s market, in your neighborhood.

Can I find house comps in my area without the MLS?

There are several additional resources for finding comps:

  • Public property records: If you want to find the sale price of a specific comparable, the county usually keeps those records. In some counties you can search online, but in others, you may have to go to the courthouse. One thing to note is that county records don’t show seller concessions. So if a seller lowered the price as a credit on some needed repairs, you’ll see the final lowered price — not the original asking price.
  • Zillow: Search on Zillow using the Recently Sold filter. You can also filter by ZIP code, square footage and other home features. Zillow also typically includes FSBO listings, which you won’t find on the MLS.
  • Zillow pricing tool: Try this pricing tool to find comps in your area. Simply enter your home address to view recent sales. You can narrow the results based on the ones that are most similar to your home, and then we’ll calculate a home value for you.

What to consider when finding real estate comps

Aim to find at least three similar homes that meet the following criteria:

  • Location: Limit your search to a quarter- to half-mile from your home.
  • Time frame: Only include homes that have sold within the past three to six months — or less if your market is changing quickly.
  • Size: Try to stay within about 300 square feet of your home’s size.
  • Bedrooms/bathrooms: Include homes with the same number of bedrooms and bathrooms as yours.
  • Condition of home: Factor in things like recent renovations, updated interiors or outdated features.
  • Age of home: Homes built around the same time as yours will be the most accurate comps, because major systems like roofs, HVAC and plumbing should be in similar condition.
  • Nearby features: Find homes that align with yours in terms of walkability, shopping/retail, waterfront proximity, views, public transportation access and school ratings.
  • Price per square foot: Real estate agents use price per square foot to identify comparables. Divide the sale price of a home by its square footage, then compare that number to your own desired price per square foot.

Tips when looking for the best real estate comps

Unless you live in a subdivision where a home builder used similar finishes, layouts and materials in all of the homes, no two housing comps in your neighborhood are exactly alike — and even when homes are very similar, no comp is perfect.

So how do you identify the best comps? Stay as unbiased as possible. Try to set aside your emotional connection to your home and focus on the facts.

Only use sold homes

Ignore homes that are currently for sale or pending. Why? Sellers can overprice the home and then end up settling for much lower. Or, sellers can price below market value in hopes of drumming up multiple offers. Until a home sale closes, you’ll never get an accurate read on its value in your local market — it’s only worth what someone ends up paying for it.

Pay attention to the type of home

If your home is a single-family home, don’t compare it to townhouses or condos. If you’re pricing a condo to sell, don’t compare it to anything but other condos.

Look closely at photos

Carefully scan the listing’s pictures. Does the home have finishes similar to yours? Look closely at things like appliances, fixtures and flooring. Even seemingly small discrepancies (like stainless steel appliances versus older white appliances) can add up.

Read the listing description

In addition to looking at the pictures, you should always read the listing description. Not every improvement or upgrade is visible in pictures. For example, a recently sold home could have a new roof that would make its value higher than yours, and you wouldn’t know just by looking at listing photos.

See it in person

If possible, drive or walk by the house to get a good feel for the exterior’s condition. Note things like cracks in the driveway or missing shingles. The condition of the exterior should give you some insights into the condition of the interior.

Scan the area

Make sure you understand the nuances of a home’s location. Is it on a cul-de-sac instead of a busy road? Is it near a bus or train line?

Write everything down

When researching comps, take careful notes. After homes are sold, photos sometimes go missing or listing descriptions are removed, and all you’ll be left with is the size, address and sales price — not enough to formulate a good comp. Capture as much information as you can, as soon as you find a promising comp.

Formulate your price

When you’re ready to decide on a listing price, the most important thing to do is to consider multiple data points from multiple sources. Combine MLS comps from recently sold homes with online data from sites like Zillow and insights from your real estate agent, if you have one.

Compare with the Zestimate

Once you’ve narrowed down your desired sale price based on comps, check your work against your home’s Zillow Zestimate. It’s updated regularly based on market conditions and can show you the longer price trends in your area.

How accurate is your Zestimate? Zillow has a nationwide median error rate of 1.9 percent for on-market homes and 6.9 percent for off-market homes. Where your Zestimate falls on this spectrum highly depends on what public data about your home and comparable homes in your area is available. This data includes your home’s features, like square footage, number of bedrooms and bathrooms, and recent updates, as well as local real estate market trends, tax assessments, and prior sales. Some counties and cities have more detailed public information available compared to others.

Just like you’d highlight your home’s best features to a buyer, you can provide more thorough data by claiming your home. Doing so can even influence your Zestimate and make it even more accurate.

Hire an appraiser

Not sure you’ve found the right listing price? Consider hiring a professional appraiser to give you an unbiased appraisal of your home’s value. The cost is usually between $400-$500, which can be money well-spent for an accurate listing price, especially if you live in a competitive market or you’ve made many renovations and aren’t sure how they should affect your price.

Avoid shortcuts

You can’t just double the price if your home is double the size of the comp. There are many factors that go into home pricing, so don’t be tempted to take shortcuts by using poorly matched comps and guessing.

Adjust for seasonality

We already mentioned that for accuracy, you should only reference comps from the last few months. Another reason this is important is seasonality.

Whether prices vary dramatically by season depends on your local real estate market, but in general, homes sell more quickly in spring and early summer, and they take longer to sell in the winter. Sellers often try to motivate buyers in slower seasons with a lower sale price, so keep seasonality in mind as you price your home.

Let Zillow Offers find the comps for you

Rather than investing a lot of time in researching comps and trying to figure out a fair listing price for your home, consider selling your house to Zillow. Simply tell us a few facts about your home, and we’ll analyze your home’s condition and area comps. Then, we’ll provide you with our estimate of your home’s value and may offer to buy it for cash — allowing you to completely bypass the listing process.

Sours: https://www.zillow.com/sellers-guide/real-estate-comps/
Zillow could restart buying homes early next year: Former CEO guesses

Real Estate’s Latest Bid: Zillow Wants to Buy Your House

A Phoenix house that Zillow bought for resale. By offering “instant buying,” Zillow and other companies say, they are bringing efficiency and convenience to home sales.

In today’s on-demand digital world, buying and selling a home remains stubbornly, painfully analog. Most sales still begin with a real estate agent (and a 6 percent commission). Most still end in an office, with the two sides signing page after page of legalese.

Silicon Valley wants to change that. Tech companies have begun to nibble away at the edges of the residential real estate industry, offering virtual open houses, digital closings and other services. Now they are coming straight for the real estate transaction itself through “instant buying,” in which companies buy homes, perform some light maintenance and put them back on the market.

Established companies like Zillow and venture-backed upstarts like Opendoor and Offerpad have raised billions of dollars on the promise that they can use sophisticated algorithms to predict the value of individual homes. They contend that those predictions, combined with old-fashioned economies of scale, will allow them to be far more efficient than traditional home flippers.

The companies and their backers say they are doing what tech is best at: bringing efficiency and convenience to a process not known for either. Silicon Valley has already upended the way we hail a cab and order takeout, they argue. Why not improve a transaction that even well-educated professionals find intimidating?

“You should be able to sell a home within a handful of clicks,” said Eric Wu, Opendoor’s chief executive.

But houses are not taxicabs. A bad Uber ride might set a user back $20 and make her late for a meeting. A house is the largest asset for most Americans and the most expensive purchase they will ever make.

At best, skeptics see instant buying, also known as “iBuying,” as an overhyped, capital-intensive business whose explosive growth will fizzle once investors tire of profit margins that Zillow itself calls “razor thin.” At worst, they worry that it could bring volatility and risk to an industry that has already brought down the American economy once this century.

[Read more: Fueled by venture capital investments, technology advances are transforming the commercial real estate industry as well, with New York as a center of innovation.]

Glenn Kelman, the chief executive of Redfin, the online brokerage firm, said there was a danger in pouring huge sums into buying up homes “without having a clear idea of how you’re going to make money on almost every single home.” If that happens, he said, “you’re just putting the housing markets, the capital markets, at some degree of risk.”

Instant buying is a small part of the market, but it is growing at breakneck speed. Zillow bought fewer than 700 homes in 2018; it expects to be buying 5,000 homes per month in three to five years. Opendoor, the first big iBuyer, bought more than 11,000 homes last year and in the past year has raised more than $1 billion to step up its pace.

The companies typically aim to hold homes for 90 days or less before selling them, typically to an individual buyer. For the eventual owner, little changes about the process.

In Phoenix, instant buying accounts for 6 percent of all real estate transactions, according to Mike DelPrete, an industry analyst. And in a sign of how iBuying is reshaping the housing market, Mr. Kelman’s own company is getting into the game, buying homes in California, Colorado and Texas through a program it calls RedfinNow.

Even traditional brokerage firms like Keller Williams and Realogy, which owns Coldwell Banker, Century 21 and other brands, have announced plans for instant-buying programs. The trend is a threat to the brokers’ business model — but if it is going to happen regardless, they would rather get a piece of the action.

There have always been people who need to sell their homes quickly because of a lost job or a sudden move. But selling fast has come at a price, usually a steep discount. Instant buyers promise a much smaller discount, perhaps shaving only 1 or 2 percent off what a homeowner might get in a conventional sale.

For the right seller, that trade-off might be worth it.

When Dora Cagnetto decided to sell her townhouse in Phoenix this year, a real estate agent told her that she could get around $375,000 for it. Maybe $390,000. But she would have to replace the carpet and paint the walls. At 68 years old and recently retired, she thought it sounded like a lot of work.

One evening, after the carpet had been ripped up, Ms. Cagnetto saw an online ad for Zillow Offers. Zillow, better known for telling people what their homes are worth, would buy her home itself. She uploaded some photos and got back an offer: $382,000, minus a fee for Zillow. No repair work or open houses necessary. And Zillow paid cash.

Ms. Cagnetto estimated she effectively paid $10,000 to $15,000 for the privilege of turning over to Zillow the job of replacing the carpet and the bathroom countertops and doing other light repair work.

“My son, he’s like, ‘Well, oh, I could have done that,’ and maybe he would have saved a little money,” Ms. Cagnetto said. “But to me it was like, I don’t want to do that. I don’t want to hire somebody to do that, I don’t want to put carpeting in, I don’t want to paint these walls.”

The Phoenix area has become a hub of the iBuying phenomenon. With its relatively new housing stock and miles of buff-colored subdivisions, the market is affordable, uniform in look and steadily growing.

Whether iBuying works outside markets like Phoenix and Las Vegas is an open question. The model has yet to break into the Northeast, where the housing stock is older, the weather drives up maintenance costs and there are fewer of the kind of cookie-cutter subdivisions that the industry’s algorithms assess best. Prices are higher, too, making mistakes costlier for the companies.

Companies say they will be able to wring more efficiency out of the system as they gain scale and experience. But experts are doubtful. Chris Mayer, a real estate economist at Columbia University, said the things that made housing transactions expensive wouldn’t change.

“This isn’t like selling a mortgage, where everyone is selling the same mortgage, or seats on a flight,” Mr. Mayer said.

Indeed, Mr. Wu’s vision of selling a house with a few taps on a smartphone remains far off. For now, algorithms help determine iBuyers’ preliminary bids, but those offers don’t become final until an inspector has had a look around. It still mostly falls on humans to determine whether a foundation is cracked or a kitchen needs remodeling.

Even the back-office functions remain labor intensive. Zillow Offers has close to 200 employees in Phoenix working in rows of cubicles to scale and streamline the decades-old process of working with a real estate agent to price, stage and show a home in hopes of getting the best price in the market. One row of cubicles has analysts working to create indexes of comparable prices. Another row has people taking calls from potential sellers and helping them close the deal. Others are working to get crews to paint, carpet and landscape recently purchased homes so Zillow can quickly get them back on the market.

Zillow essentially acknowledges that it doesn’t expect to make much money per home on its instant-offers program. Instead, it sees selling homes as a way to generate business for its mortgage-lending arm, which it developed after acquiring Mortgage Lenders of America last year, and for other services. It is the rough equivalent of the car dealership that sells cars at a loss but makes money by offering financing.

“Where you are able to make money is through mortgage origination,” said Svenja Gudell, Zillow’s chief economist. “That’s why we own a mortgage company.”

The question no one can yet answer is what will happen to iBuyers — and iBuying — when the housing market inevitably cools, leaving companies holding thousands of homes that are worth less than they thought.

Mr. Kelman said a micro version of that situation played out late last year when rising interest rates led to a slowdown that iBuyers’ algorithms didn’t anticipate. Redfin sold homes at a loss; others held on, hoping for a rebound. The optimists proved right, and the market quickly rebounded. But Mr. Kelman said the experience was a warning sign.

“If rates had continued going up and the housing market had continued going down, it would have been a squeeze,” he said.

Zillow and Opendoor say their products could be even more valuable when the real estate market slows. The housing market often seizes up during periods of rapid change, as buyers and sellers struggle to agree on prices. Instant buyers, with their emotionless algorithms, could get the market moving again by accepting lower prices for houses held in inventory and thus setting benchmarks for other sellers.

That disagreement highlights a tension at the center of the iBuying model. It aims to eliminate the frictions that slow down the real estate market: protracted negotiations, contingent offers, financing that falls apart before closing. But that very slowness contributes to real estate’s stability — it is hard to have a “flash crash” when it takes 90 days for a sale to clear escrow. And a large part of the United States economy, from the 30-year mortgage to the home-equity loan to the property taxes that fund school districts, is built on that stability.

“From a net-worth perspective, real estate is by far the biggest asset for most Americans, and historically that value has been very stable,” said Sam Khater, chief economist for the government-backed mortgage giant Freddie Mac.

That could be iBuying’s biggest challenge, Mr. DelPrete said. The process is unfamiliar, and sellers are reluctant to gamble with the biggest transaction of their lives.

“The biggest headwind to this getting mass traction is human psychology,” he said. “The bigger the potential downside, the more risk averse they are.”

Sours: https://www.nytimes.com/2019/05/07/business/economy/ibuying-real-estate.html

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