Scheryl McDavid
Broker with LaChapelle Properties 

 

It’s an understatement to say that internet shopping has taken over the real estate industry. Who hasn’t used Zillow, Trulia or Redfin to find their next home or investment? So, my interest was definitely piqued when my mentor offered me her copy of Zillow Talk: The New Rules of Real Estate by Spencer Rascoff and Stan Humphries, who chronicle the rise of their powerful real estate search app and all the data that went into creating it. And that, my friends, is exactly what makes Zillow so useful, it’s the data. More than 3 terabytes of it (that’s one million million).

If you’re thinking about selling a house, here’re some pricing pointers from the book that you’ll want to keep in mind:

  • On average, sellers overprice their homes by 6.9%
  • When a home is overpriced, it tends to sell for less than market value
  • Overpriced homes can almost double the time it takes to sell them (often as long as 4 months!)
  • 47% of sellers end up cutting their list price to make a sale

Here’s the good news:

  • Houses priced at fair market value tend to sell for 2% above the asking price
  • Homes with “psychological” or strategic pricing — where you place a “9” in place of the last non-zero digit — may sell up to 4 days faster and for slightly more money than those with all zeros in the price ($299,900 vs. $300,000, for example)

Published in 2015, I think a number of Zillow’s findings are still relevant for our area today:

  • Negative equity reduces the housing supply; “under water” homeowners don’t sell when there’s no down payment for their next home
  • Low mortgage rates create higher demand because of easier financing
  • Both of these conditions create a market with fast-rising prices (North Hills, Raleigh, I’m looking at you)

 All this sounds a lot like another real estate bubble might be coming, so I appreciated, especially, the authors’ refusal to offer predictions of how the real estate market will perform following the 2008-2009 crash. Instead, they use an interesting quote from Donald Rumsfeld, “There are known knowns … there are known unknowns … But there are also unknown unknowns.” Rascoff and Humphries suggest that America has the data and the understanding to avoid another devastating bubble.

The main takeaway is this, read the data, understand the data, and get to know your area really, really well. And yes, even with Zillow, Trulia and Redfin in your pocket, this can be overwhelming. So, if you’re going to buy, sell or invest in real estate, get some help from a professional who can guide you and there will be a lot fewer unknown unknowns to hurt you.