WHAT HAPPENED TO THAT SMUG ATTITUDE???
Its been about 8 months now since I first took note of the change in the market here in the "Hamptons".
Today, it is just as slow as it was 8 months ago and it is changing the face of the place that some call the "Playground of the Rich and Famous".
Where we once had affordable properties of $1--$2million, we now have $5--$6 million dollar houses that will never get that same amount again--at least for the foreseeable future. Prices took an upward swing in 2016-17 and didn't slow down until early 2018.
I wrote a post on the matter in the early spring of 2018--We wondered if the slowdown was because of the Mid-term elections; or perhaps it was the new tax laws instituted for 2018 that were swinging the buyers away from buying a new home.
That tax law was designed I hear, to bring prices into more rational ranges--the tax that is affecting the purchase of real estate has to do with the cap put on the deduction for SALT, or State and Local Taxes on real estate.
The cap is at $10k and the high end properties here in the "Hamptons" (ocean front and large properties) can reach hundreds of thousands of dollars annually in SALT so it has taken the wind out of the sails of high end purchases.
THE MORE LIKELY REASON FOR MARKET SHAKINESS: "PAY TO PLAY"
The impact on real estate sales in the state of New York has been significant and we are still trying to figure it all out---Could it all be about the new tax law?
One other possibility is the invasion here of the new and well established websites, offering "Leads for Sale".
We now have at least a dozen new tech companies hitting on us right now--all looking to make a "million" off each Hampton's agent. They are hovering around us like vultures--I get a dozen or so emails a day from lead companies.
This activity has dethroned the well established agent and brokerages who have been in business for 20-30 years, putting them in a position of "Pay-up" or close up shop! Their expertise and years of experience mean nothing to the average buyer or seller out there!
That is according to the websites that masterminded this game of Pay to Play! "Who needs a real estate agent anyway?" They also saw a benefit to capturing the public attention when it comes to pricing real estate and making sure to keep the property values in an upward trajectory, even when it was obvious to the average person that prices were completely "whacked" in many communities.
There was nothing to keep the lid on escalating prices; even the established appraisal system was negatively affected by all the noise generated by the infamous "Zestimates" that kept prices climbing to ridiculous highs!
THE BIG DISCONNECT BETWEEN THE AGENT WHO PAYS TO PLAY AND THE BUYING/SELLING PUBLIC
Of course there are still those agents who are paying the big Z...they still have not connected the dots to the degeneration of the real estate profession to this kind of "Pay to Play" activity.
These lead-selling sites make it easy for a new face to enter the business, pay the $2--$3k a month to get their new "Face" on Zillow and to start churning the $$$ as the leads pour in---
Except, that is NOT what is happening!
If they only knew what really happens in real estate! If they only truly knew what they were doing!
As experienced agents, we are prepared to face a shift in the wind when sales slowdown for one reason or another...
But these tech guys have no knowledge of what happens in this business when there is a slowdown! And to my knowledge there is no way of creating algorithms that will identify when the next slowdown will arrive...It just comes and you had better "be aware or beware", as the saying goes!
A BIG SHIFT IN ATTITUDES AND PLATITUDES
They are scared--these agents who are paying to play. No more smug attitude among the busy top agents. They know that it is not good to have to count on leads from a huge tech company who has no awareness about the importance of local knowledge....Or the company who just keeps demanding "Pay up" for leads or "Lose out"!
The fear is palpable and the bad attitude which is the outcome of constant stress related to how you make money in this cut-throat business has begun to surface and it is making life pretty miserable.
A paying agent is like a drug addict: "How can I stop paying them? What will happen to my business if I do stop???"
The once meaningful statement: "All Real Estate is Local" has become the most banal of platitudes. Any agent in New York State can sell real estate anywhere in New York....Brand new agent?? Just pay a listing platform for your place and play away!!
In fact, these listing websites count on the public being naive enough to think that Joe Schmo can knowledgeably show properties in Manhattan or the "Hampton's", even if they live in Poughkeepsie!
So when Joe Schmo shows up to show a house he knows nothing about, in an area he has never set foot in, it should not be surprising that the public feels swindled by said agent!
The real estate agent is now the least respected and most mistrusted individual in the field of sales, thanks to the swindlers who happily take their money and expect to get no blow-back!
THERE IS MORE TO IT THAN A PLAN TO JUST "TAKE IT DOWN!"
This misguided way to take the brokerage business down without a fight has more than a bit of irony to it:
As Zillow stated in 2006 and as they opened their new listing platform for real estate:
It is our goal to "put every real estate broker out of business", just as they did with Expedia and travel agencies!
Z's founders are the original owners of Expedia, infamously known for the take down of established travel agencies across America. They have been working on the destruction of real estate brokerage for as long as they have been in business!
Now there is real danger in the fact that this giant technology company has bought out all the listing platforms here in the Hamptons--including our very own internal data base. As brokerages, we have nothing left---they now own all the content, and as we all know here on AR, "CONTENT IS KING!"
Never give up your original content, your listings to technology experts!! If you don't have listings, you don't have a business!! (This applies to the big listing platforms as well!)
REAL ESTATE IS WHERE WE LIVE!
Now, it isn't quite working out the way these big listing platforms planned!
Why? Because real estate is just not the same as the travel business!
Real estate is where people live!--The buying of a home is also the most complicated transaction and the most expensive purchase an individual will ever make. You just can't wave a magic wand or flash a fancy, hi-resolution photograph of a house and think the deal is done! And, there is so much more to it than brilliantly executed algorithms!
What happens if the huge presence of these big lead-selling companies is diminished?
What happens if one of these big companies, seeing the apparent big profits flow in from renovated and new homes, think they can get a piece of that pie? So, they begin the process of buying real estate, renovating and putting the house back on the market to sell at twice what they paid for it!....Just to discover that the buyer is not buying at the moment!
Big capital can quickly vanish if it's use is not carefully planned and executed in real estate! These big companies are feeling the pinch now and there is no one to blame but themselves!!
If you rush in like a fool to take over an industry, you had better be prepared to also consider how it will affect the larger population associated with that industry--not just plan on big profits and gains from draining and damaging the trade itself and it's people!
There are hundreds of associated trades and licensed tradesmen that are impacted by the strength or weakness of real estate--these trades are also feeling the impact of a profession that is going off the rails!
There are no winners in the execution of these BIG plans for real estate made by technology geeks--only big-time losers!
What do you think?
Is your marketplace affected by what is going on with the lead generation business? Have the prices in your marketplace been distorted by Internet platforms who have a vested interest in higher prices as they also sell worthless leads to agents and try to sell renovated homes to the uninformed public?
Please comment below:
**ALL INFORMATION AND CONTENT IN THIS BLOG IS ORIGINAL TO PAULA I. HATHAWAY. The views expressed herein are my personal views and do not reflect the views of Douglas Elliman Real Estate
Paula I. Hathaway, Senior Broker Associate, Douglas Elliman Real Estate
Southamtpon Village Real Estate Specialist since 1995; Also Specializes in North Sea, Noyac, Water Mill and Bridgehampton, New York
Diamond , Gold and Chairman's Circle Awards; Top Producer since 2005
Click here to see my Hampton's website to see all my listings; please email me or call me for all your real estate needs in Southampton, Bridgehampton and Watermill: http://www.elliman.com/paulahathaway
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