Buying in One Click?
Editors Note: I wrote this post months ago and simply hadn’t published it yet. Prescient news that Zillow is pulling back on its home buying program appears to validate many of my thoughts on their approach. That said, we haven’t seen the last of large corporations engaged in home buying arbitrage.
One of the major trends in real estate is the number of companies working to make buying property as easy as shopping online. There’s a vision out there that someday you’ll casually scroll houses on your phone, see one you want to buy, click a button and the house will be yours. While commendable, this vision of the future of real estate may not be in the best interest of consumers.
Cars are essentially a commodity; that is to say, that for the same make, model, and trim, one unit is interchangeable with another. There’s also a matter of substitution, where you might be easily persuaded to accept a different year or even a different make within the same class. I recently bought a car online via a nationally known service where you can buy a car with a single click and the car will be shipped to your doorstep — or so it seemed. It took weeks of phone calls and emails after clicking buy to coordinate all the steps in the transaction. I’m sure the car will eventually arrive, but on a much different timeline and with a lot more work on my part than expected.
Cars make for an important comparison with houses, as they are both big ticket items. Unlike cars though, houses are not fungible. You might be willing to select a different house, but no two are exactly alike — even in planned housing developments. As an agent, I’m asked on a daily basis about everything from zoning, water rights, property taxes, appliances, fencing, cap rates, average days on market, and a whole lot of things in between. I struggle to imagine a world where a website has the level of hyperlocal knowledge that individual agents can provide and that can orchestrate all the project management duties performed by agents. Likewise, while both a car and home sale involve financing, inspections, and title transfer, with a home there’s simply more steps, regulation, and information exchange at play. If the online car buying world is still in such a nascent stage, I can’t even fathom how anyone thinks home buying is going to be transformed into a one-click transaction in my lifetime.
More to the point, I believe that it isn’t in home buyers and sellers best interests, especially in those cases where online sites are acting not only as information brokers, but as financing, title, escrow, and even as direct buyers and sellers of properties. At that point, much like betting against the house in Vegas, the odds are stacked against you, especially in regard to asynchronous information: they know and control more than you. On the other hand, real human real estate agents, title and escrow officers, as well as mortgage lenders are all acting with statutory and fiduciary responsibilities to you as a client. They only get paid when you are well-served.