With digital disruption, it is mostly like this: There is an idea, for example networking the world via social networks, arranging car pools and apartments or offering video telephony. Services that are supposed to make life easier and make the world a better place - that's the big promise of developers. Usually these offers are also free or at least cheaper than the existing analog offers. So why shouldn't people join in when it's more convenient and cheaper? Why shouldn't they publish their entire life? Get in the car with strangers or spend the night with them? What should happen?
Admittedly, it is very convenient if you can check the value of a house on a website and at the same time check what the neighbour's hut is worth. After all, curiosity and envy are two of the most important reasons for the success of social networks. More and more people are also finding it convenient to offer their own house on such a platform, especially since the platform operators promise a binding offer within a few days.
The provider Zillow has stored data from 110 million buildings in the United States
The real estate database Zillow, on which people could list houses and apartments for sale, has existed in the USA for twelve years, the rental market was added later, and for about a year there have also been virtual 3D tours through some buildings. Zillow collects this data, including actual purchase prices and changes in value - users provide this voluntarily. The company is now said to have information on more than 110 million buildings. Now Zillow wants to use this wealth of data himself: The company has entered the market as a buyer and seller with the "Zillow Offers" offer, which, after initial test runs in smaller regional markets, is now expanding to important regions such as Southern California. These companies are called Ibuyers - the "i" is supposed to signal the digital disruption, a tribute to Apple, which once succeeded in doing this with the iPhone. These Ibuyers promise a seller an offer within a few days - without brokers, without annoying house inspections, without tough negotiations, the entire transaction can be completed in one week. It should be quick, simplify people's lives and make the world a better place.
There are already some companies that offer this: Opendoor, Owning, Knock, Realogy, Redfin or OfferPad. The idea itself is not new either; in the analog world, brokers offer to buy a house yourself from time to time. What is new, however, are the information advantage and financial possibilities of these companies. Again: Zillow has been collecting detailed data on real estate for more than ten years and therefore knows the development of prices like no other - not just for individual houses, but for entire areas and cities. Like its competitors Realogy and Redfin, Zillow is listed on the stock exchange and is currently valued at $ 6.6 billion, with just under $ 1.6 billion available for investment. "Our database enables us to market houses before they come back on the market," says Zillow boss Spencer Rascoff.
It works like this: If you want to sell your house, enter your address, upload photos and answer a few questions about the condition of the house. Zillow uses his "Zestimate" estimation algorithm, sends a local agent over for a viewing, and makes an offer two days later. If the seller accepts the offer, he can choose a period between seven and 90 days within which the deal should be concluded. Since April of last year, more than 20,000 people in Phoenix, Las Vegas, Atlanta and Denver - only there the service was previously available - have requested an offer.
The Ibuyers do without a broker on both the buyer and seller side, so they replace the middlemen who have so far been involved in almost all real estate transactions. However, depending on the condition of the house, Zillow charges a commission of six to nine percent - normally the brokerage fee in the USA is between five and six percent and is therefore already high in an international comparison. "Zillow Offers" is an offer to all those who want to get rid of their house as quickly as possible because they may have already bought a new one, and who save themselves the time-consuming aspects such as viewings, negotiations and - whatever happens - broken deals due to broken financing want.
According to forecasts, 10 percent of all US home purchases could be made by Ibuyers by 2021
According to cautious forecasts, 10 percent of all home purchases in the US could be handled by Ibuyers by 2021. Zillow boss Rascoff says that currently more than 90 percent of the sellers would reject the Zillow offer and that his company does not want to enter into a competition with other interested parties. At the moment, Zillow cannot afford to alienate analogue brokers too much, after all the company generates around two thirds of its income through so-called "Premier Agents" - that is, brokers with premium accounts.
Zillow has only just begun to conquer the American real estate market, it may earn again when buying a house via the premium and then reselling it on its own platform (which should take place within 90 days, depending on the repair or renovation). However, the first successes in smaller markets show that there is definitely interest in the quick offers.
It is now starting in larger US markets, in Southern California, Houston and Charlotte, with more to follow. In Europe there is already the Finnish Ibuyer Kodit, which recently raised 1.7 million euros in the first financing round. The disruption has already arrived in the European real estate market as well.
Over the past twelve years, Zillow has gained an enormous information advantage in the USA by collecting data - not only against competitors, but also against possible buyers and sellers. The company can afford to take a premium from customers for getting it done quickly. So they pay a price for everything being so wonderfully convenient - but that's supposed to happen more often with digital disruption.
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