the AZ market

Category: National Real Estate

  • Afternoon Bite 5/4/2020 (Video)

    Every Monday Amber Kovarik with Guild Mortgage and I spend 15 minutes talking about what is currently happening in the real estate market, title, and lending. We give a few key points to share without taking up too much time.

    Today’s Big Takeaways:

    • Physical showing requests have increased in Arizona since 4/12/2020 by 40%
    • New listings hitting the market in the southeast valley are up 5% the week of April 19th over the week of April 12th
    • New pendings in the southeast valley are up 15% the week of April 19th over the week of April 12th
    • Zillow traffic is up 13% year over year as of mid-April
    • No evidence of prices dropping
    • According to the CARES act, if a borrower calls and asks a question about forbearance then they are automatically added to the count regardless of whether or not they make their mortgage payment. The numbers are unreliable.

    copyright 2020 by Sarah Perkins

  • Phoenix Area Real Estate Update 5/1/2020

    The light at the end of the tunnel got a little brighter this week. Despite the limited data available, new trends are emerging and they are good. Please continue to share this news with your clients because consumer sentiment is everything. The week of April 19th marked a noticeable shift in the market with increased activity in nearly every state. Perhaps it is due to the pent up demand from the would-be March buyers. Nationally, March saw a 20.8% decrease in new pendings month over month. March was rough. But as we moved through April, our human nature kicked in and we got a little more used to this (short-term) new normal. This brought about new activity and some renewed consumer confidence.

    Good News:

    • Zillow’s search traffic is skyrocketing, yes it plummeted in March, but by the 2nd week of April the US traffic on Zillow was up 13% year over year and rising.
    • After the significant drop in new listings hitting the market in March; April brought increases in new listings in all markets, including in NYC.
    • Nationally, since mid-April we have seen a 33% increase in physical showing requests, which helps chip away at the 80% drop in those requests from mid-March to mid-April.
    • In Arizona, since mid-April we have also seen a 33% increase in physical showing requests, which makes up for some of the 59% decrease in requests from mid-March to mid-April.  
    • Still no indication of prices dropping. Earlier this week, Dr. Lawrence Yun, the chief economist at NAR said, “In fact, due to the ongoing housing shortage, home prices are likely to squeeze out a gain in 2020 to a new record high.”

    Arizona Market:

    Despite inventory increases, demand continues to out-pace supply, according to the Cromford Market Index (CMI).  On March 20th the CMI was 241 and yesterday it was a 153. (Balance is 100, above 100 is a seller’s market and below 100 is a buyer’s market. Prices do not drop until the CMI hits 90.) The CMI clearly has dropped drastically and in a short period of time. We did see a tiny little blip of a slowdown the week of April 19, hopefully we see a that as a trend. The 24% decrease in demand we have seen since March 20 is slowing its rate of decline.

    • Newly accepted contracts bottomed out the week of April 5th with only 1,641. As of the week of April 19th we have 1,979 newly accepted contracts. We are working our way back up towards our peak which was the week of February 23rd with 2,696 newly accepted contracts.
    • Average days on market for the week of April 19th is 21, lower than it was in all of March.
    • Average list price per square foot at contract acceptance was $182.81 on April 19th. It was $190.05 the week of March 8th.
      • Between the lending challenges and the lower priced new inventory, I believe the reason for the lower average price per square foot is due to the fact that more lower priced homes are selling, not because prices are dropping.

    Remember, new listings hitting the market is a good indicator of the health of the market. It shows seller confidence. In the southeast valley, the week of 4/19 we saw a 5% increase in new listings hitting the market over the week of 4/12.

    Even more importantly, new pendings shows demand. Right now, all buyers that are out looking are serious buyers. The week of 4/19 we saw a 15% increase in new pendings over the week of 4/12, in the southeast valley.

    Conclusion:

    As much as I would like to tell you that everything is sunshine and rainbows; it isn’t. We have a rocky road ahead, total unemployment filings is up over 30 million, but the new applications continues to drop week over week. Nationally, mortgage forbearance requests are likely spiking this week. Less than 1% of all mortgages were in forbearance on March 2. As of April 19 nearly 7% of mortgages were in forbearance, that is 3.5 million mortgages in forbearance. Opening our economy safely and quickly will be the key. People are ready to get back to work, so much so new lawsuits are being filed regularly. Signature Sotheby’s International, a Michigan brokerage, is the 5th company to sue the Governor of Michigan stating that the lock down orders are overreaching and unconstitutional.  

    My final thought is that good agents are taking market share right now. A lot of your competition is at home and afraid. Buyers and sellers are doing their homework and want to talk to you about what is actually happening in the real estate market.

    copyright 2020 by Sarah Perkins

  • Afternoon Bite 4/27/2020 (Video)

    Amber Kovarik with Guild Mortgage and I spend 15 minutes talking about what is currently happening in the market, in title, and in lending. We give a few key points to share without taking up too much time. This was our first one!

    Today’s Big Takeways:

    • Cash out refis are still available
    • Down payment assistance programs are still available
    • Employment verification is being done the day of funding
    • Physical showing requests have increased in Arizona since 4/12/2020 by 31%
    • New listings hitting the market in the southeast valley are up 5% the week of April 19th over the week of April 12th
    • New pendings in the southeast valley are up 15% the week of April 19th over the week of April 12th
    • Good things are happening!

    copyright 2020 by Sarah Perkins

  • Phoenix Area Real Estate Update 4/24/2020

    The real estate market continues to move forward at varying speeds across the country. The lack of current data continues to make it difficult to draw a complete picture of our market. Again, I encourage everyone to be very mindful about their news consumption; a lot of it is very negative and very skewed. Remember consumer sentiment drives our economy and fear stops forward progress. We are starting to see a light at the end of the tunnel; so be sure to share the good news with your clients.

    As I mentioned last week, the severity of each market’s new listing slow down is directly correlated with the severity of the lock down for that city. A general trend has emerged as we look at the first cities effected by the virus; Seattle, LA, Bay area, and NYC. In the first week of the virus really spreading in each city, there was an almost immediate response with a slow down in new listings coming to the market. They dropped anywhere from 50%-80% of where they were at the beginning of March. Yes, drops of 50-80% in a week! Immediate response. They hung out at the bottom for 3-4 weeks and then started a slow recovery. We are seeing increases in new listings in all areas across the country except for New York City. Aside from in New York, we are now seeing new listing volumes increasing at a rate of 20-30% a week since they bottomed out. At that rate we could reach 2019 new listing levels in about 2 to 4 months. Based on this information many leading economists and real estate analysts believe we will have a check mark recovery or something that looks like the Nike Swoosh. The national data for new pending listings for March will be released next week, and I will share it next Friday. February’s national data for new pendings shows an increase of 2.4% month over month. That info is for BC, before corona virus, though. Pendings illustrate demand and that will show us the true health of the market.

    Keep in mind, new listing info is our way of tracking consumer intent and seller confidence. Buyer demand is measured by the amount of supply. Nationally, our months of supply went up from 3 months in February to 3.5 months by the end of March. Remember 6 months is considered normal. February 2020 saw an 7% increase in closings from February of 2019. March 2020 closings were only 0.8% above where they were in March of 2019. In Arizona, it during the first half of April that we saw a drop off in new listings hitting the market, since then it has been increasing. We are up 18%, from April 2019 in new listings hitting the market in April through the 22nd. Our pendings are down 30% year over year during the same time period.

    As you listen to this information please keep in mind where we were in February. We had low, very low, and extremely low inventory across the country. Even with these increases in inventory, we are still not up to normal levels. In Arizona, our inventory levels as of yesterday are 47% below normal. Our demand is about 12% below normal. Today’s demand is still greater than today’s supply. It is a good time to list. There are distinctions by price point and the luxury market has been the hardest hit.

    Showing Time has made our demand analysis more interesting. Based on their data the past 6 weeks has been a roller coaster for physical showing requests. Nationally, from March 11 through April 12 physical showings requests dropped by 80%. Since April 12th the requests have increased 23%. In Arizona, our requests also dropped off significantly. From March 8th through April 12th our showing requests dropped 59%. Since April 12th showing requests have increased 26%. And remember, the buyers that are out looking now are serious buyers.

    Finally, I want to take a moment to address price. Nationwide there are still no indicators pointing at dropping values. More people pulled their listings off of the market than reduced their price to sell. Again, this is very price point specific. The national median sales price is around $280,000 and in Arizona it is around $300,000. Properties listed around the median sales price are selling the fastest. I am hearing about listings getting multiple offers and selling for above asking. A few months ago properties in these price ranges were getting 30 offers and selling way above asking. Now they are getting 3 offers and selling at or above asking. Making it still a seller’s market. The silver lining of all of this is the slowing of the appreciation. Nationally our housing market was increasing at an unsustainable rate. First time buyers were getting shut out of the market. A healthy market cannot have giant appreciation rates. For example, if Arizona has 0% appreciation for the rest of the year, we will still have an appreciation of 6.5% in 2020. Normal appreciation is 3% a year. The one thing that will push down prices is sustained unemployment. There are expectations that some aspects of the economy will reopen in May which will be good for everyone as long as we can keep people healthy while doing so.

    copyright 2020 by Sarah Perkins

  • Phoenix Area Real Estate Update 4/17/2020

    As someone who loves to analyze real estate activity, the recent events have definitely thrown a wrench in how we analyze the data. In a day when more information is  available than ever before, we keep running into one consistent truth, there still simply isn’t enough data available to give us a decent expectation for the coming weeks and months. With that said, we can only use the information that we do have. Before I dive in too much about that data, I want to encourage everyone to stop watching the news and for you to encourage your clients to do the same. There is a lot of garbage information going around full of negativity. Consumer sentiment drives our economy, there are still good things happening and activity in all markets. The amount of that activity is directly correlated with the severity of the lock down orders. New York City’s real estate market has had the greatest decrease, nationally, in new listings hitting the market and we can all understand why that is the case.

    Let’s start with what we do know. Consumer intent is very hard to measure; just because people can, doesn’t mean they will. New listings hitting the market shows intent, we know these sellers want to sell and it gives us data to work with. Nationally the hardest hit cities saw a 50%-80% drop in new listings in March. Nationally, new listings are down 23% since the beginning of March. In Arizona, we didn’t see a drop in new listings until April and since the beginning of the month we have seen a 9% drop in new listings hitting. Nationally we have had low inventory for years and extremely low inventory for about a year, today we have about 3 months of inventory. In Arizona we have had super extreme low inventory for a year. Nationally and locally, demand has dropped. In Arizona our demand has dropped by nearly 16% since mid-March. However, our supply remains far below the demand as measured by the Cromford Report. As of yesterday, our supply has increased to 49% below normal and demand has dropped to nearly 8% below normal. For the last few years our supply and demand lines have been pretty far apart, to the benefit of sellers. They have started moving closer together. We do not know what will happen next but we do know that today we have low inventory and anyone listing now is up against less competition. The longer we go, the greater the potential for increased competition, not only from pent up demand to sell but for people having to sell because they can no longer afford not to.

    The buyers that are out are being cautious, the more listing choices they have the more cautious they become, this is not the time to push the market. One thing I find to be very interesting is that our data is not showing any signs of price decreases however many of the local Realtors I talk with are telling me about reductions. They start usually with an increase in seller concessions. The price drops are very price specific, the higher the asking price the greater the reductions. In our lower price points we are still seeing contracts coming in at or above asking. Greg, you told me in the million dollar and up listings have seen the largest reductions.

    In March, locally we had huge contract fallouts. Over the past 2 weeks we have seen that get back to normal, which is good news! More good news is that nearly 54% of American homeowners have at least 50% equity and 37% of all homes are owned free and clear. When I am asked if things will be like 2008, our equity positions point to absolutely not. More equity means more regular Realtor facilitated transactions, not REOs and short sales. We do not know what will happen with the iBuyers but with them out of the markets right now, there is opportunity for you, those sellers still need to sell. The other day Opendoor announced they are laying off 35% of their employees.

    Our environment is changing faster than ever before, a week feels like a quarter. Over 20 million people have filed for unemployment. Spousal abuse is up 40%. Divorce attorneys are getting those “I cannot be with this person another minute calls.” One divorce attorney in Phoenix did a poll that showed 57% of Millennials said they are filing for divorce as soon as they can leave the house. The economic stress, unemployment, and increase in divorce filings are all likely indicators of coming inventory.

    We do not know what our recovery will look like or how they will re-open the economy. We do know that real estate it a huge part of the recovery. Many experts believe that our industry will be what pulls us out of this; real estate is 16% of our GDP.  

    Every household on the planet is reflecting on where they are now, today, and where things will go for in the coming weeks and months and they need you for guidance. Remember good Realtors can deliver good news, but great Realtors can deliver bad news. Your clients need your guidance more than ever before. Reach out to everyone right now. They want to hear from you. Be the counsellor, be the consultant, be the info source, be the strength, they need you.

    I have one last comment about our real estate industry that isn’t directly related to the virus. Remember those 3 class action lawsuits that were filed about a year ago? They are currently in the discovery phase. In one of the 3 suits the defendants filed for a 60 stay due to the virus. The courts denied the request. These cases continue to move forward and it is important to be mindful of the extreme impact they will likely bring. If the plaintiffs win, listings will become even more valuable.

    copyright 2020 by Sarah Perkins

  • Phoenix Area Real Estate Update 4/10/2020

    The other day I was talking with a national real estate analyst and he has evidence that new listings hitting the market in March in the hardest hit areas in the country like Seattle, NYC, and some metro areas in California decreased anywhere between 50-80%. The rest of the country is feeling the decrease to a lesser extent. Fortunately, Arizona didn’t see a drop in new listings in March. We had an increase of 27% of new listings hitting the market from March 1st through 30th. Given our low inventory, it still put us at 28% below where we were at the end of March 2019. In the first 10 days of April, we saw a 9% drop in new listings hitting the market.

    We continue to have a decent market in most of the Phoenix metro area and in some small pockets there remains even stronger. Price point is a main driver in this as we have had very low inventory in the lower price points. It is finally creeping up for the first time in many months as we are now seeing vacation rentals and properties that would have been purchased by iBuyers hitting the market. Most of these properties are under $350,000.

    The past 3 weeks have been chaos. Initially we saw a spike in contract cancellations. The week of March 16th our cancellations doubled week over week to 927. Since then our cancellations have decreased quickly and we are getting closer to typical escrow fallout. The number of new contracts written has decreased significantly since the first week of March. The week of March 2nd there were 2584 new contracts and the week of March 30th there were 1508.

    We do not know how long this will last but we do know it will be months and not years. This will end and there will be pent up demand. There will also be many sellers who waited to list. It is easy to believe that when the economy opens back up we will see a lot of listings flooding the market. If you are a seller and need to sell now, it is a good time to list in just about every part of the country. Today’s sellers are up against a lot less competition. Each week there will be more and more people out of work which will reduce the total number of buyers. The unemployment will push more people to list their properties who otherwise were not planning on selling.

    There is no reason to believe that we will have large price depreciation in all price points. Price is a lagging indicator that often takes years to show up. For example, home sales started dipping at the end of 2005 but prices didn’t start dropping until late 2007. There will likely be an increase in seller concessions though. We have already seen early price depreciation in the upper end markets. Between the stock market shifts and jumbo loan liquidity challenges which Ryan has mentioned on the past couple of calls, that market has had an extreme slow down. We are optimistic that the loan challenges will be worked out soon! Nationally in the past 4 of 5 recessions we saw modest price increases in overall the real estate market.

    One thing that is important to point out in all of this is that consumer sentiment is the leading market indicator. When there is fear, people don’t buy houses. These massive unemployment numbers are very upsetting. We have to remember though, this is the first time ever that unemployment benefits have been offered to 1099 independent contractors. You cannot compare today’s numbers with the past numbers. We also have to keep in mind that the National Association of Home builders put Phoenix in the affordable range and we are one of the cheapest big cities in the country. People were making more money today than ever before. Wages were up year over year. Homeowners across the country have, on average, more than 50% equity. Before the virus consumer sentiment was very positive. I am very optimistic that we will bounce back as soon as everyone is out of the house and back to work.

    copyright 2020 by Sarah Perkins

  • Housing Affordability (video)

    Lydia Wietsma with Revelation Real Estate invited me to join her on her regular podcast to discuss housing affordability and what is going on with all of the incredible appreciation we are experiencing. Check out our 30 minute discussion.

    Key Takeaways:

    In order to understand affordability, we have to look at what is happening across the country and locally. Affordability is measured nationally but felt locally. Here in Arizona, we are in a very strong seller’s market.

    • AZ is a top destination
    • 250-300 new residents a day moving to Phoenix metro area
    • Majority of people coming to greater Phoenix Metro area are leaving southern California, mostly Los Angeles County and San Diego County. People are leaving NYC, Chicago, Southern CA, Seattle for cheaper living and sunshine.
    • Over 50% of the people moving here are over 55
    • People moving here can afford more expensive homes
    • 52% of incoming people make over $100K a year
    https://www.unitedvanlines.com/newsroom/movers-study-2019

    Arizona is running advertising campaigns inviting more and more people to leave the west coast for Arizona and it is working. Our job growth is nearly 2.5 times the rest of the country over the past 20 years.

    The demand is pushing sales prices up. After the 15 year roller coaster we have been on, many homeowners are not sure about selling right away. The average homeowner stays in their house about 7-8 years. It has increased. As people stay, inventory is locked up. We have incredibly low inventory right now. We have the same amount of homes from sale today as we did in early 2005, when we had half the population and half the housing stock. For Phoenix to be a healthy market with inventory to supply the consumers needs we would need 3x the amount of listings that we have today. With inventory this low, it would not be outrageous to believe we will have a 10% appreciation in 2020. Places like Chandler and Gilbert have seen a 50% appreciation over the past 3 years. This is putting our affordability in the spot light. Not only do we have people moving here, we have a severe shortage of single family  new home building. We have hardly surpassed where we were in the early 90s. Nationally we are being by 5 million new homes based on population growth and demand. This lack of building continues to push property values up, across the country and very much so here in Phoenix. The Arizona real estate market tends to run 8-12 months ahead of the rest of the country. Whatever is happening elsewhere already happened here.

    When people cannot afford to buy homes or to move up when they need a bigger home, we run into some big problems. One of the coolest things about home ownership is the path to wealth. Nothing creates wealth the way home ownership does.

    If our home ownership rates continue dropping as they have over the past 10 years, we have the potential of causing some massive changes to the US economy. The national homeownership rate is around 63%. It is a tough number to move because they are so many Americans. However, when you look at that number, a couple drops puts us close to the 50% mark. When we as a country hit 50% home ownership rates then it is likely that some of the extra perks of home ownership could go away. When you have a country that is made up of 50% renters, which means the voters will be 50% renters and likely many of the congressman will be renters. This could affect new policy and adjustments of current policy benefiting home ownership. As homeowners we love having our values rise but in order for real estate to continue to be 13% of GDP, we need to make it an option for renters to become home owners, and affordability is the biggest hurdle.

    If a renter expects to stay in the same place for 3-5 years, it is in their best interest to buy. Even if they have to pay a little more than what they could spend on a renting, they will come out ahead. Using the example below, if a renter pays about $200 more per month to buy the median home today in Maricopa County, without any increase in value, after 5 years the owner will have $40,000 in equity, and that is based on 0 appreciation. If there is modest appreciation, like 2%, after 5 years that same home owner now has $70,000 in equity!

    copyright 2020 by Sarah Perkins

  • Jaded: A Real Estate Story

    Jaded: A Real Estate Story

    As I fly home after a trip to see the in-laws in Iowa, I think about real estate. I suppose I always think about real estate, but that is besides the point. I hope that my sister-in-law’s house sale in New Jersey goes through sometime soon.

    My entire real estate experience is in Arizona. I am so grateful for how we do real estate in AZ because it is so much more efficient than it is just about anywhere else. In NJ they have 2 attorneys, one for the buyer and one for the seller, they have two Realtors, each for the same party, and they have the title company. No wonder she is so confused. There is always a delay in any request and at any given time she has no idea what is happening with the sale. In Arizona transactions everyone has options. I told her that either side can push the transaction forward or cancel for breach of contract.

    In Arizona, we do not have attorneys working on the files. We have two Realtors and one escrow officer (who also takes care of title). Things so much more efficient and, sure, there can be delays, but at least there is communication. In Arizona, the escrow officer is a non-biased third party who works for both the buyer and seller and executives the fully ratified contract. Realtors in Arizona are part of the entire transaction from start to finish. They walk their sellers through the listing process, negotiate the contract, and guide them through the escrow process.

    Hearing about my sister-in-law’s experience makes me truly understand the significance of the current law suit(s) and the 4 year old NAR Danger Report. The Danger Report, commissioned by the National Association of Realtors (NAR), is found here: https://www.dangerreport.com/usa/, outlines the biggest dangers facing the residential real estate industry. The #1 biggest danger is bad Realtors. Sure, there are sub-par “professionals” in every industry and weeding them out is a good thing. However, a job description as well known as “Realtor” comes with some expectations.

    In Arizona the extent of a Realtor’s role is very different than that in New Jersey. As I listened to her ordeal, I thought to myself, “if your transaction was taking place in Arizona, you wouldn’t be facing any of this.” We are days past her contracted closing date and she has no idea why it hasn’t closed. Her Realtor doesn’t know anything, her attorney doesn’t know anything. All she knows is that she moved into her new rental and is still on the hook for her house for who knows how long. I would like to guide her through the process, just to make her feel better but I cannot.

    As an outsider, all I can do is be thankful that I live and work in Arizona where the process makes sense. The commissions earned are just that, earned. The lawsuits shaking up the industry make more sense in other states. The most complicated part of a residential property transaction is the escrow period. Professional Realtors who guide their clients through the ENTIRE process very important. No matter what direction our industry goes in the coming years, we all need advisers to guide us through it.

    I hope my sister-in-law’s sale closes soon. Then she, her husband and daughters can move on. Hopefully they are not too jaded to refrain from once again becoming home owners.

  • Inman Industry Update

    Inman Industry Update

    Information from the Inman Connect conference in Las Vegas in July 2019.

    iBuyer:

    • https://zavvie.com/ provides iBuyer estimates to homeowners
    • https://exitnest.com/ offers transparency to sellers. Is connected to iBuyers and walks the seller/Realtor through offer submission. Provides real numbers in side by side layout. Often pushes sellers back to the Realtor. Request a snapshot for all your listing presentations.
    • Right now Opendoor is winning the iBuyer game. Their goal is to get to 7% profit, but are currently not profitable
    • All work within a similar buy-box. Offerpad has the most flexible buy-box
    • The following slide does not include BINSR items and seller paid repairs
    • This is for Q2 2019, Phoenix metro area

    Zillow:

    • Zillow is not making a profit on things, they do not need to
    • Zillow is not a disruptor
    • It is said that Zillow has the nicest iBuyer properties
    • Zillow purchases 2% of the homes requesting an offer
    • Starting 10/1/19 iBuyer turn-down seller leads will be available to Premier Agents for a 35% referral fee
    • Customer service scores (CSAT) will define who is able to “buy” these leads
    • Agents must have a 92% or higher to get the iBuyer turn-down seller leads
    • Score keeping started in April, done by Zillow

    “Sustained Unprofitability”

    • Mike Delprete’s 20-minute presentation from Inman Connect: “iBuying Disrupted: Battle of the Behemoths.”
    • He points out the only profitable public real estate companies are RE/MAX and Realogy
    • “Red is the new black.”

    Venture Capital Money in Real Estate:

    • Residential real estate is 13% of the US GDP
    • $66B in commissions are earned each year
    • FINTECH (financial tech) and PROPTECH (property tech)
    • $12,200,000,000 invested in 2018 in real estate tech
    • $2.2B in 2011
    • $12.6B invested in the first half of 2019

    Broker Tech (main place for VC funding)

    • CRMs and productivity systems
    • automating the transaction = a huge market opportunity
    • End to end platform includes?
    • search listings to work with Realtor
    • home viewing to financing to close & title
    • signing
    • recording
    • and more
    • Who is working on this?
    • Realogy (zap end to end platform)
    • RE/MAX (booj end to end platform) booj: be original or jealous
    • KW (command end to end platform)
    • end to end platforms are not one size fits all
    • Newcomers:
    • Homie (FSBO help, cheap)
    • Reali (low fee, uses tech)
    • Reasi (built on blockchain, uses smart contracts, handles transactions electronically without escrow)
    • Compass
    • Claims to be a tech company but operates like a traditional brokerage
    • now valued at $6.4B, more than Zillow
    • Showing massive valuation increase due to “hockey stick” growth
    • Has spent $300M on purchasing brokerages and recruiting agents
    • they are spending on average of $200,000 per agent
    • using newly acquired Realtor’s stats to show growth in market share
    • Compass is valued as a tech company, but is it?
    • Roadblocks for big tech during expansion across the country
    • data access & congruence (biggest hindrance for these companies)
    • state laws and regulations (title vs title/escrow states/dual agency)
    • multiple vendors (security issues)
    • complexity of deals
    • Many MLSs cost more than ARMLS and they aren’t as big so companies love coming here.
    • we are a lot further away from this working because there are so many moving parts
    • Vertical Integration:
    • employees
    • they have to build to make money across platforms
    • W2 employees to incentivize them to use internal companies: mortgage/title
    • tech is integrating with own companies
    • Last 15 years (without vertical integration) big tech had $2-3B in revenue, with a $10B market cap
    • Next 15 years:
    • adding Mortgage origination $17B revenue
    • Title $16B revenue
    • leading to big opportunity $100B in market cap

    What will we be talking about in 2020? Adam Contos, CEO of RE/MAX: “I think in 2020 we will find out what end to end platforms really means.” End to End Platform:

    • Law in AZ is changing on 1/20/20 allowing documents to be notarized via streaming video camera
    • end to end platforms are being forced
    • what is the min viable product? it will come out in the next couple of years
    • we are in a waiting game. we can use tech but get too distracted by it. watching to see what is the best option? we need to see other experiences
    • White Label end to end platforms
    • CINC, https://www.cincpro.com/, (maybe also broker mint to get 90% of the transaction)
    • Property Base, https://www.propertybase.com/, (about $80,000 to set up, through Sales Force)
    • Realvolve, https://www.realvolve.com/, (drag and drop workflows, triggers texts/emails/reminders. includes client follow up)
    • Kvcore, https://insiderealestate.com/kvcore/, (previously Kunversion. great for internet leads, good for some referral based business)
    • Liondesk, www.liondesk.com, & Real Geeks, https://www.realgeeks.com/, (dashboard for clients)
    • Brivity, www.brivity.com (shares updates with clients)
    • Amazon referral partnership with Realogy. Amazon will likely not go into real estate, it’s too complicated

    New brokerage models:

    • Rex: Real Estate Exchange, 2% only to company, does not pay co-broke. they do lots of marketing, they do not put listings on MLS
    • Knock.com: buy/sell same day. Cash offer with no contingency. knock pays for the buyer to move the house. Knock owns the new house, moves the sellers out, clean up the house. Owner old house and new house sell on the same day. includes all of the challenges of pre & post possession. (VC companies do not understand pre & post possession) lease backs and the 6% fee
    • all these companies care about is the consumer feels they want simple.
    • “if you cannot explain it simply then you don’t understand it” Einstein
    • these companies want to be simple and sell it.
    • old school Realtors made the transaction seem complicated to maintain the consumer’s reliance. Realtors have to change the marketing to show the simplicity
    • remember these companies do not need to make money, VC funding is funny money.
    • It took Zillow 12 years to cover their own costs, it took that time to get the eyeballs.
    • they want the mindshare, once they have it, they can sell it. must hit critical mass in order to sell
    • Homie
    • Purplebricks (left the Australian market in May 2019 and the US market in July 2019)
    • Side: brand new, new funding. all goes back to marketing. brokerage paid advertising as a white label technology solution. brokerage behind the scenes. they have a robust tech platform that is great for big teams, teams plugin and go with it. only in NYC
    • Roosted, https://roosted.io/, referral based model, for people who don’t sell houses

    Vacation Homes #2 for all of VC spending

    • 5.5-6M properties sell every year in the year
    • 1.8M are investment properties
    • about 700K are used as short term rentals
    • that is about $7-$8M in commissions, every year
    • Scottsdale is the best place to buy a vacation rental. most expensive is $6,000 a night because of the experience
    • occupancy rate is 81% in our area
    • average daily rate in AZ is $301 a night (info from airDNA)
    • HOA can legally tell you what to do, city and state cannot regulate. there are new rules coming that allow flexibility. Many HOAs require at least 30 day rentals. Allowed to have houseguests, owner can live in one bedroom and rent out the rest of the house
    • about 20% of realtors have sold vacation rentals, it is a niche market
    • in order to thrive in this niche market, agents need:
    • show value in the transfer of business assets
    • valuations on vacation rentals/how income impacts sales price
    • landlords vs host mindset/options for owner-hosts who don’t live here. hospitality industry
    • business opportunity for Realtors. Have a host mindset and manage the AirBNB. Garner good reviews, all about educating owners/buyers
    • Judy Lowe said that if you manage an airbnb you have to have a real estate license

    Emerging Companies:

    • Vacasa (www.vacasa.com): manages 14K rentals across the country. buy a bigger house and rent one bedroom, for 2 years. they keep the income. did well enough to buy their own properties, managing and owning
    • AirDNA (www.airdna.co): provides investor data for vacation rentals from AirBNB
    • Vrolio (https://www.vrolio.com/): vacation rental real estate marketplace. offers investor snapshot of portfolios in 1 minute. provides investor leads, place to buy and sell rental properties
    • Pillow (https://www.pillow.com/): added income for residents. housing more transient. (good for NYC) long term rentals and not actually subletting. building manager can allow unit visitors to stay in an house while renter is out of town
    • Swimply (https://www.swimply.com/), this company allows you to rent your pool out. pool party host, people traveling, people who want to relax by a pool. This is so new, they have no idea if it is legal or not.

    Over the past 6 years people are moving way more often. Evidence shows people would move even more often if it were not such a hassle to do so.
    AI, Chatbots, Automation

    • Nurture your database and have better conversations with your clients, all about relationships
    • 61% of conversations with clients is on the chat on websites (for bots)
    • Automation Tools:
    • Eva Bot, https://www.evabot.ai/, highly recognized at Inman. closing gifts, talks to them finds out what clients like and orders it and takes care of everything
    • Botsify, https://botsify.com/, teach it how to interact with clients. at any point you can come in and have conversation
    • Disclosures, https://disclosures.io/, helps with the disclosures required for each property. air pollution, traffic noise. packages the disclosure package and share the info. homes sell faster when the disclosures are provided up front. disclosing early is good. can email to other agent
    • Call Action, https://callaction.co/, ($200 monthly) great solution if you can’t answer the phone. routes the caller through a workflow, lots of different numbers
    • Homebot, https://homebot.titlepro247.com/: based on wealth building, provides an estimated valuation.
    • Bytegain, https://bytegain.com/: predictive analytics/AI plugin for home searches. watches search behavior. integrates with website, learning consumer behavior. figures out who is most likely to transact in the next 3 months
    • Shyft Moving, https://shyftmoving.com/: app. take a picture of room and creates quotes for moving services. allows you to hire what you need
    • KeyMe, https://www.key.me/: been around for a while but is making a comeback, app on phone to save key info. kiosks in Phoenix available, instant keys
    • Dash CMA, https://dashcma.com/: with a heatmap, lines up comps, very visual to see pricing, $20 monthly

    What will we be talking about in 2020? Glenn Sanford, CEO of eXp Realty: “Blockchain.”
    Blockchain: “a safer place to store real estate transactional data”

    • it is millions and millions of independent computers all getting the same info.
    • cryptocurrency (anyone can verify transaction)
    • tokens (piece of code cannot be changed. cannot be hacked) title insurance, verifying ownership
    • company is creating tokens for every single residential property. currently already has done it for all vacant lots in the US
    • smart contracts (reasi) walk through steps and meets conditions. if this then that. stuff doesn’t happen unless requirements are all met
    • using smart contracts, once all terms are met, money is released. we as consumers are not comfortable with this yet.
    • this will change a lot of things about our culture, community, world, but we are nervous about it.
    • Propy, www.propy.com: handles financial transactions. Good for luxury, helps with marketing, global advertising

    Commission Transparency

    • Bombshell Lawsuit: Realogy, KW, RE/MAX, NAR, ARMLS and others are being sued. alleging anti-trust laws were broken, steering based on co-broke offered
    • asks why seller pays for the buyer agent commission? seller is paying for own representation
    • Corelogic, FBS & other MLS data providers allows searches by co-broke offered.
    • Co-broke effects average days on market
    • home sits longer on the market when offered 2.5% co-broke vs 3%
    • lawsuit is scary because we know the evidence is damning
    • Federal government doesn’t want to destroy 13% of GDP, they may require more data sharing
    • commission amounts disclosures
    • closed properties info
    • who paid what and how much will be shown
    • Northwest MLS are now publishing co-broke and publicly
    • iBuyer is 6% of our market, putting pressure on commissions
    • Consumers are demanding more transparency, agents can show their strengths
    • lawsuits in CA for 1099 vs W2
    • Realogy suing Compass for unethical recruiting practices

    Nerdy Stuff

    • Restb, https://restb.ai/: sees home features and creates tags. takes 3 seconds using AI. Realscout is using this system. search very specific options without the fields in the MLS
    • MLS are moving from RETS to web API, rets is a download and send, web API is immediate, means info will be shared faster
    • RESO web API, https://www.reso.org/reso-web-api/: oversees MLS. moving everything faster for MLS, everything is faster, cleaner, easier
    • Streetwire, https://www.streetwire.net/: heavily invested in blockchain. already tokenized vacant land, “real estate data owned by the data creator.” $1300 monthly paid to ARMLS to share the data provided. long way down the road, ownership in the hands of the people
    • Blockchain can subdivide ownership
  • Inman/Industry Update from July 2018

    Inman/Industry Update from July 2018

    Most Talked about at Inman:

    • #1 topic: Compass. A traditional brokerage spending huge amounts of money to advertise that they are a tech company. Goal is to have 20% market share in the top 20 metros nationwide by 2020. They are buying brokerages. Expect to see them in AZ by 2019.
    • #2 topic: Brad Inman’s interview with Gary Keller. Click here to see the full interview: https://www.youtube.com/watch?v=IoHwEgo7CUg
    • #3 topic: Phoenix: all eyes are on us to see how our local industry responds to the marketplace shifts, emerging models, and iBuyers

    Non-Real Estate Emerging Trends:

    • Privacy: voice activation and identity verification
    • Data: Who owns your data? How is it used? How can we protect it?

    *Let me know if you would like the steps to download the data Facebook has on you.

    • Uber & AirBNB are not just platforms anymore. Uber is buying taxis and AirBNB is buying houses and small hotels

    Where We Were:

    • Buyers agents emerged in the late 80s
    • 2005/2006 Zillow asks NAR to share data
    • Realtors moved from sales to customer service=Realtors help buyers buy homes not find homes

    *Let me know if you would like the charts Amanda showed in class

    Emerging Models:

    • Model #1: Tech or templated. Online discount brokerage, call center, selling through an app, limited support, W2 employees. Example: Homie
    • Model #2: Hybrid: great technology and traditional agents, specific services provided, lower costs, either 1099 or W2. Example: Redfin and Purplebricks
    • Model #3: Traditional: high volume, high value, high cost, must include clear value

    New Tools:

    • Glide, http://www.glide.com/, online SPDS. Integrates with Zip Forms. $25 monthly
    • Homesnap, https://www.homesnap.com/pro direct ARMLS & Showingtime integration. Client search and messaging capabilities. Free.
    • Unison, https://www.unison.com/, provides 1/2 of down payment, never paid back, owners share ½ of the equity when property sells within 30 years. no limits.
    • Loftium, https://www.loftium.com/, provides funds for down payment, requires for first 2 years one room is rented on Airbnb. They run their own data to figure out how much they will put down.
    • Propy, https://propy.com/, Sell properties through Blockchain (step by step logical process that executes a contract) Propy handles the exchange and provide the seller in USD. Good for global buyers. Agents does sales call with Propy to post listing. Charge for currency conversion incurred by buyer.
    • Kleard, https://www.kleard.com/, open house sign-in that requires dual verification for everyone

    Database:

    • Liondesk, http://liondesk.com/, CRM, automated messaging, reminders, sign riders, background info research, $25 monthly

    *Let me know if you are interested in our Lawyers Title discount to make it $20 monthly

    *Let me know if you are interested in our Lawyers Title discount to save 10%.

    All-In-One Systems:

    • Evabot, https://www.evabot.ai/, conversational artificial intelligence that chats with consumer and figures out gifts for closing. very conversational, all through text
    • Brivity, https://www.brivity.com/, all in one platform, integrates with ARMLS, Zipforms, Skyslope, CRM. starts at $199 monthly
    • Realsynch, https://www.realsynch.com/, integrates as much as possible but not everything. it is useful while we wait for a lower cost option
    • Chime, https://chime.me/, integrates marketing & client info

    Smart Home Technology:

    Photography:

    • Boxbrownie, https://www.boxbrownie.com/, virtual staging ($32) and photo editing, item removal ($4), best virtual staging. turn daytime photos to dusk photos $28. also do floorplans and 3D plans
    • Proxypics, https://proxypics.com/, stock photo specific to location. photographers compete
    • Restb, https://restb.ai/, looks at photos and is able to decipher what is in the photos. Zillow is using this info for their Zestimate to make the info more accurate. Allows people to search based on what is in the photos. available to build integration through website.

    Robots:

    Voice Automation:

    • VoiceterPro, https://www.voiceterpro.com/, shares your skill on Alexa, downloadable through Amazon apps. Partnering with restb.ai to use for searches, $349 monthly
    • Boomerang, https://www.boomerangapp.com/, use to email from phone. selects emails to respond to first. speed of voice automation

    Augmented Reality:

    • Hutch, https://www.hutch.com/, when showing vacant homes select the type of room and style, place furniture to see how they would look in the room. completely free. they make money by selling products. Zillow has invested in this system.

    Virtual Reality:

    Websites:

    Lead Conversion:

    Lead Generation: