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Zillow’s Instant Offers: Should We Be Concerned?

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Many home owners and those shopping for homes are familiar with the popular real estate website Zillow.com.  It provides information on not only homes for sale, but estimated values of homes, called “zestimates”, based on a combination of factors.  These zestimates have recently come under fire; nonetheless, Zillow has begun to introduce a new feature, “instant offers”, and some real estate professionals are sounding warning alarms.

In an article published in LinkedIn by Greg Hague, “Zillow’s Secret Plan”, concerns about Zillow’s business model are detailed.  Specifically, Hague warns that the instant offers will most likely come from real estate investors looking to purchase a home at a below market value, only to turn around and sell for a profit.  Further, the seller will have to pay a hefty service fee that does not include professional services such as appraisers, attorneys and real estate agents.

Hague summarizes that ultimately, Zillow is “…trying to commoditize real estate so that homeowners sell to online investors who then sell to retail buyers. If that happens, millions in homeowner equity will be transferred into the pockets of middleman institutional investors. The big winners will be these firms’ shareholders.”

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Photo Credit: http://401kcalculator.org

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The Best Cities for Real Estate Investments

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With the median home price on existing homes predicted to rise 6 percent over the next year, investors are turning to real estate as a steady and tangible investment option.  HomeUnion evaluated the real estate market for both investors planning to sell or “flip” the properties as well as those looking to rent out the purchased properties.

To determine which cities made the list for investors looking to flip, HomeUnion looked for cities where prices have yet to return to levels reached before the recession, compared prices from early 2015 to early 2016 and took into account the local economics of the area.

According to an article published by Realtor.com by Peter Ortiz, the top ten cities for home price appreciation are:9682523008_55447863c2_o

  1. Jacksonville, FL
  2. Tampa, FL
  3. Orlando, FL
  4. Chicago, IL
  5. Detroit, MI
  6. Las Vegas, NV
  7. Cincinnati, OH
  8. Phoenix, AZ
  9. Cleveland, OH
  10. Minneapolis, MN

With more and more households holding off on the idea of owning their own home, deciding instead to rent, investors are looking to rental properties.  Prospective landlords may want to consider one of the cities HomeUnion found to have the highest returns for rental properties. The cities were evaluated based on the annual rent growth and local economies and those that ranked in the top ten are:

  1. Cleveland, OH
  2. Columbia, SC
  3. Birmingham, AL
  4. Pittsburgh, PA
  5. Milwaukee, WI
  6. Cincinnati, OH
  7. Memphis, TN
  8. Greenville, SC
  9. Tampa, FL
  10. Philadelphia, PA

Both studies evaluated only single family homes that fall within the range of $232,500 and lower.

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Photo Credit:  Kerry Quinn

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