Solano Real Estate Scene: Zillow shares take a beating

Zillow was trading in February at an all-time high of $208 per share but as of Wednesday was $67 per share. The market cap nine moths ago was $41 billion and is now $16 billion. The good news for local real estate professionals is that Zillow and Wall Street learned a $25 billion lesson: that buying and selling houses isn’t as easy as it looks. Main Street investors and Realtors are more effective than Wall Street players when it comes to neighborhood single-family home sales, especially flipping houses. Wall Street may want to stick to huge apartment complexes and high-rise condos like the Millennium leaning tower of Frisco, and Zillow may want to stick with selling advertising and internet leads to Main Street Realtors. Incoming Northern Solano County Association of Realtors President Edwin Legaspi recently received an offer on a house he had listed from an out-of-town Realtor and the buyer was a corporation. Legaspi’s seller did some sleuthing and traced the buyer to Black Rock. I don’t know if this was a buy, hold and rent investor or a flipper. I wrote last year about Wall Street companies that now own tens of thousands of single-family homes in California as rentals and the investors that got into this five to 10 years ago have made out like bandits because of the Great Recession and the Wall Street-caused home price crash of 2008. Finding houses to flip in Solano County is near impossible these days if a seller fully exposes the home to the full force of the market with a local Realtor. “We buy houses for CASH” signs on the street, TV and internet ads are everywhere today. Professional flippers make money on unknowing and desperate homeowners. They can also make money on homes that are so trashed, the average buyer couldn’t get a mortgage on the home. Flipping houses is a full-time job and requires a huge amount of work to find opportunities and then once a flip is found, a ton of money and time to clean and remodel. Local broker-owner Brian Stumbaugh had a client call him within the past year after her dad suggested she call Stumbaugh. This client had accepted an offer to sell her home from a company called Sundae but after 30 days, Sundae rescinded the offer. This seller listed her home with Stumbaugh, he exposed the home to the full force of the market and his client ended up with $50,000 more in her pocket than the original offer. I don’t know what Zillow is going to do with these 7,000 homes they now own but it appears they may sell all of them to another company in a bulk purchase at a discount to get them off their balance sheet and take the loss. I hope these 7,000 homes are listed for sale by the huge investor, creating more inventory and affordable housing, rather than holding and renting. The reason a seller may need to take a quick cash offer is because they found the perfect dream home and the seller of that house will not take an offer from a buyer contingent on a sale. No one wants to sell their home first for the downpayment and then hope to find a home, but local mortgage and Realtor professionals deal with this every day and there are many solutions that in most cases are better than selling your house at a substantially discounted price. In all fairness to these investors and these new innovative real estate companies, I have seen many cases over the past 32 years where corporate relocation companies and even regular real estate companies buy houses at a fair price from sellers to make the new home purchase a reality.