As things cool off in the housing market, many companies will be affected to the downside. It goes without saying that major corporations like the home builders, home improvement centers, and others will see the bottom line affected to the downside. At the same time, there are a few companies and individuals out there who should benefit. Foreclosure investors are really starting to get excited as foreclosure rates climb across the nation. Others like online discount real estate companies are ecstatic, reports Red Herring.
“We think as the market goes on to become a buyer’s market, we have a huge advantage over anyone else as 80 percent of our business comes from buyers,” said Pat Lashinsky, senior vice president of new product development at online real estate service ZipRealty.”
ZipRealty “hooks home buyers up with real estate agents, while giving customers back 30 percent of the typical buyer agent’s commission.”
“Redfin, a startup serving the Seattle and San Francisco Bay Area markets, is also looking to tweak the traditional home-buying process. Last March it launched a program where people can buy or sell homes without a real estate agent. In turn, buyers get two-thirds of a buyer’s agent commission. Sellers get $2,000. Redfin spokesman Bahn Lee said sales have been doubling every month since March and that the company doesn’t expect to see a slowdown in the business.”
If the online discount brokerages are benefiting, who stands to suffer?
There are hundreds of FSBO sites, classified sites, and every other kind of real estate site in between. We get hundreds of submissions for new site additions here at BiggerPockets, and most of these disappear within months. As the market softens, we expect this trend to accelerate.
“‘I think the softness in the housing market is going to challenge these online sites because they are relying on customer demand to drive advertising revenue and there are a lot of competitors in the market and the cooling will affect some of them,’ said Greg Sterling, founder of Sterling Market Intelligence. Many of these sites will bite the dust—and only the ones that have the highest amount of traffic and good backing such as Move.com, Zillow, ZipRealty, and AOL Real Estate will survive the downturn, Mr. Sterling said.”