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Zillow Flipping Homes4/14
Today's Wall Street Journal had an article about Zillow creating a house flipping business. They plan to launch in Phoenix and Las Vegas. The goal is acquire 1000 homes by the end of the year and hold them for 90 days before they are sold.
This is a little bit different than other Wall Street REITs that buy homes for rental purposes.
I am not sure what the ramifications are but this could have some impact on the entry level marketplace if it takes hold across the country.
Most of our less expensive projects are sold to people when they first buy a new home. We very seldom make a sale to someone who has been in their house for more than five years.
Another data point might be a billboard I saw on the way to my shop this morning.
Redfin is now offering to handle real estate transactions for a brokerage fee of 1% rather than the customary 6% fee a typical realtor might charge. The cost to sell a $200K house now will cost $2000 instead of $12000.
A $12K fee to sell a $200K house might not seem like much but if you bought the house for $150K you only have $50K worth of equity. $12K is a big percentage of $50K.
How this will play out is a lot of midlevel market home owners will first contact Redfin. Redfin will have a very good list of everybody who has a house for sale and thereby a very qualified list of people to buy flip houses from.
When they start having "programs" for flipping it is time to get out of flipping.
6% of 150k = 9000 but still a big difference. The commotions size needs to be challenged in the market place.
I think your spell-check is set to metric.
The 6% realty commission is pretty stiff. I am going to guess the rate is largely arrived by tacit collusion.
In the pre-interweb days there were a lot more costs associated with buying or selling a house. There was a lot more shoe leather involved. The realtor had to spend weekends serving cookies and coffee to complete strangers who had no intention at all to buy the house. Being nice to strangers takes work.
Today all you really need is a good videographer and a database. In the same way Amazon makes shopping easier so too will RedFin & Zillow.
I posted this because it's another datapoint that will eventually affect cabinet shops. House flippers don't exactly go all out for quality. Their criteria for cabinet selection is price-point. They know their customer has already made the decision to buy by the time they get to the front porch.
Yes it needs to be challenged, but I still think it is work and more importantly money in advertising.
I sent you a question, which would be deleted
I agree that there should be "commotions" in the marketplace.