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Should you really care that Zillow’s CEO overpaid for his own home according to Zestimate?

(BUSINESS NEWS) Zillow’s CEO overpaid significantly for his new home, proving the Zestimate tool may not be all it’s cracked up to be. Should you care?

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In April of this year, Zillow CEO, Spencer Rascoff, purchased one of the most expensive homes in California. Rascoff purchased a large six-bedroom mansion in Brentwood.

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The home had recently been remodeled and was situated on a half-acre lot with a full complement of amenities. As nice as it sounds though, it does come with a good dose of irony as the cherry on top.

An uneducated Zestimate

According to Zillow’s own pricing tool, Zestimate, Rascoff overpaid for his California mansion by more than one million dollars. If that wasn’t enough to make you question the validity of the Zestimate tool, The Real Deal adds more fuel to the fire, reporting, when Rascoff sold his home in Seattle, it sold for $650,000 less than the nearly $1.7 million Zestimate.

In all fairness, however, he did make quite a profit, considering he originally paid $768,500 for the Seattle home.

Sadly, it’s happened before

This isn’t the first time the “Zestimate” tool and other similar tools, have been under fire. When you Google “Zillow” along with “entertainment purposes” you’re met with a bevy of results regarding the tool’s inaccuracy. Unfortunately, this is not the first time an aggregator founder has been called out.

Founder and former CEO of ForSalebyOwner.com, Colby Sambrotto, listed his 2,000 square foot New York condominium on FSBO and other online classified sites, but after six months of no luck, he opted to hire a real estate broker.

Once he decided to stop DIY-ing it, his home sold for more than the asking price.

To read more about Sambrotto’s ordeal, we covered it here. Proving that sometimes, DIY-ing it is harder than it seems.

Realtors ring in a win

More than anything else, what this proves is that these estimating tools have flaws. They are not carved-in-stone, 100% accurate. They are meant to be a ballpark figure to determine a starting place and in some cases, they aren’t even in the ballpark.

This again validates the need for Realtors to navigate pricing, listing, and all the other issues that can arise. There is nothing wrong with DIY-ing it, but when it comes to real estate, consumers could wind up losing a significant portion of their investment if it’s just ballparked.

This is why Realtors loved the story.

So should you give two hoots that Rascoff overpaid for his house? Nope, it’s just a salacious story that was spread around by those who hate Zillow, and defended by those who love it. We doubt anyone was converted to the other side by this news.

But it will be a perpetual talking point for those seeking to promote the Realtor brand. Brokers will cite it in marketing, agents will cite it on listing appointments, practitioners will note it at networking events for years.

#UnedcuatedZestimate

Senior Staff Writer at The Real Daily, Jennifer Walpole holds a Master of English from the University of Oklahoma. She has long been a dedicated business and technology writer, and she holds real estate close to her heart, as she comes from a family of brokers.

Real Estate Corporate

How big box stores are stalling Whole Foods expansions using leasing contracts

(CORPORATE NEWS) As Amazon begins its Whole Foods expansions, other big box competitors are trying to put the wabash on them using their leasing contracts.

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Over the summer it was made known that Amazon was buying Whole Foods then a few months later we learned that the new owners were revamping store pricing and poaching competitor’s customers.

Despite only having 450 locations, Whole Foods is slowly turning the supermarket market in their favor. However, some of the older, bigger players aren’t having it and have figured out that they can use their own real estate contracts to level the field with Whole Foods.

Apparently it is common practice for bigger retailers in commercial real estate to sign leases with conditions that prevent their landlord from renting to other businesses that would create competition.

For instance if a Starbucks is renting in one location they might include a term that says no other coffee shop can be adjacent so if an Dunkin’ Donuts wanted in next door they couldn’t.

For Whole Foods that means because they are now selling Amazon electronics like Echos or AmazonFire TV, their usually docile neighbor Best Buy could go track down the fine print of their leasing contract and forbid Whole Foods from selling those products.

It’s like they always say — All is fair in love in retail. Well, you know what I mean.

If we’re being honest an Amazon + Whole Foods team is pretty enticing. It makes a whole lot of sense that other retailers that can only offer half of that package would resort to any means necessary to impede their progress.

Even Target is getting in on the defense reportedly not allowing Amazon Lockers to be installed. I get it, you want people there to shop at your store, not to pick up merch they bought elsewhere.

Granted with Target’s new collaborations with companies like Brit + Co, May Designs and Magnolia Market, I doubt they have too much to worry about.

At any rate, this sort of fine-print legalese defense seems like a pretty large indicator that other retailers are feeling the heat from this merger.

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Real Estate Corporate

Discount stores are banking on the bad days of underclasses

(CORPORATE NEWS) Despite brick and mortars closing, discount stores seem to be doing well. But that success seems to be at the expense of the downtrodden.

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Few sights are as ubiquitous in rural America as the simple yellow and black logo of Dollar General, and this is not going to change any time soon.

In a signal of the times, Dollar General’s marketing executive Jim Thorpe said that Dollar General’s best customer was the low income, government assistance recipient.

By the fact that Dollar General’s expansion strategy is to create more stores in small towns and cities, that’s a signal to many that the business world is not expecting incomes to rise in the heartland of the United States.

“Essentially what the dollar stores are betting on in a large way is that we are going to have a permanent underclass in America,” Garrick Brown, director for retail research at the commercial real estate company Cushman & Wakefield was quoted saying.

“It’s based on the concept that the jobs went away, and the jobs are never coming back, and that things aren’t going to get better in any of these places.”

Rival discount stores Dollar Tree Inc. and Family Dollar (also owned by Dollar Tree) are also operating out of the same principles to give Dollar General a run for their money.

While they do not enjoy as much market share as Dollar General, these discount stores are also trying to compete for the stretched dollar of the $35,000 salary household. These same households may find it difficult to travel out of their town to do their grocery shopping due to the cost of gas.

Dollar General, in its confidence of a permanent lower class in America, is also alleviating the problem of food deserts.

According to the Centers for Disease Control (CDC), food deserts are areas that lack access to affordable fruits, vegetables, whole grains, low-fat milk, and other foods that make up the full range of a healthy diet.

Dollar General, while not having a full and robust grocery section with many fresh fruits, are offering more than what one can get in a gas station for certain and are alleviating the lack of affordable, moderately healthy options.

With U.S. income inequality still on the rise, Dollar General’s market share is not going anywhere, and the discount store chain might just become the next small-town staple in rural America.

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Real Estate Corporate

To reinvent leasing, Airbnb is creating branded apartments

(CORPORATE NEWS) Airbnb originally set out to disrupt the leasing world but has decided now to just reinvent it.

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Airbnb doesn’t like being thought of as your friendly neighborhood disruptor and has found a new alternative to the more traditional rented house/apartment/room (or castle, a tiny house, treehouse, converted barn loft, etc…): branded apartment complexes.

San Francisco based home-sharing partner group Airbnb has formed a partnership with Newgard Development Group (known as “Niido Powered by Airbnb”) to create the space-sharing concept, which will be comprised of 324 units, starting with Kissimmee, FL (just south of Orlando) and is slated to be available for move-in sometime in 2018.

The units will have amenities of a hotel such as keyless entry and an app that will allow tenants to check-in remotely. On-demand cleaning and luggage services will also be available, making the process much more streamlined for both guests and tenants.

Upon signing an annual lease, residents may rent out their apartments through Airbnb for up to 180 days, and thus must of course, remain as full-time residents for at least half of the year.

This should help to cut down on issues where landlords were replacing tenants’ leases and rental agreements with a full-time Airbnb gig.

The setup of the branded apartment complex encourages home sharing, and offers a communal environment in which all neighbors are either hosts, or guests.

Okay, so while it kind of sounds like a hotel rather than an apartment, (a timeshare, even) Airbnb does still want to keep that “hominess” aspect that defines the brand, intact. It’s been reported that they will be providing some design assistance, though will remain hands-off in ownership interest in the building.

It’s too soon to say how lucrative a spot in one of these elusive buildings will be or how much a spot will cost, but it can’t be helped to wonder at what point does this sort of expansion stop Airbnb from being… Airbnb?

With this many parties involved, it does sort of lose its charm as being a unique travel experience people have come to expect with Airbnb. I mean, it’s not a yurt in Alaska, after all.

Expansion for the branded apartment complexes will be prioritized in Miami and the Southeast, but is expected to branch out into other cities such as Nashville, TN, Charleston, SC, and “cities in Texas.”

CEO Harvey Hernandez stated that the plan was to build over 2,000 units over the next couple years. Lookout world, The Grand Budapest Airbnbs will be hitting a city near you.

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