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April 12, 2018

Gamechanger: Zillow to begin buying and selling houses

HousingWire--Ben Lane

Nearly one year ago, Zillow shook up the real estate industry when it announced that it was getting into the home selling business by launching “Zillow Instant Offers.”

In the program, homeowners looking to sell their home in the test markets of Las Vegas and Orlando are able to get cash offers for their home from selected investors interested in buying it, all within Zillow’s platform.

As it turns out, that was just the beginning.

Zillow announced Thursday that it will begin buying and selling homes directly to and from homeowners.

To repeat, Zillow itself will soon be buying homes directly from sellers, then turning around and reselling them.

According to Zillow, the program will start small and test in two markets, Las Vegas and Phoenix.

But the program represents a huge change in the business model for Zillow. Back in 2015, Zillow CEO Spencer Rascoff said that the company views itself as a media company, not a real estate company.

“We sell ads, not houses,” Rascoff said at the time. “We’re all about providing consumers with access to information and then connecting them with local professionals. And we do a great job of giving those local professional high-quality lead, they’ll covert those leads to at a high rate and then want more media impressions from us. So we’re not actually in the transaction, we’re in the media business.”

But that’s not the case anymore.

Now, Zillow will be selling houses too.

According to Zillow, its homebuying program will roll out “this spring” in Phoenix and Las Vegas.

The company said that home sellers in those markets will be able to compare an agent’s comparative market analysis to offers directly from Zillow or from other investors.

Zillow says that it when it buys a home, it will make the “necessary repairs and updates” and list the home “as quickly as possible.”

Now, what appears to make Zillow’s direct buying program different from companies like Opendoor and OfferPad is that it does not cut real estate agents out of the process.

According to Zillow, a local agent will represent Zillow in the purchase and sale of each home, which will enable agents to earn commission on the purchase and sale.

Zillow said that it has hired Arik Prawer as chief business development officer to oversee the company’s participation in the Instant Offers marketplace.

Prior to joining Zillow, Prawer was chief integration officer at Invitation Homes, the massive single-family rental owner and operator.

In conjunction with the announcement of the expansion into homebuying and selling, Zillow is also expanding the Instant Offers program into Phoenix as well.

Previously, Instant Offers was available in Las Vegas and Orlando.

Zillow’s direct buying will not be available initially in Orlando.

According to Zillow, the expansion into Phoenix will happen this month.

Zillow said in its testing of Instant Offers thus far, the “vast majority” of sellers end up using a real estate agent to sell their home instead, which turns into an “excellent source” of leads for agents.

“The program gives real estate agents the opportunity to acquire new listings by connecting them with motivated sellers who have taken a direct action to sell their home,” Zillow said in a release. “Across all testing, Zillow found the vast majority of sellers who requested an Instant Offer ended up selling their home with an agent, making Instant Offers an excellent source of seller leads for Premier Agents and brokerage partners.”

Zillow said that as part of the expansion, it plans on partnering with three brokerages in Phoenix and Las Vegas: West USA (Phoenix), Berkshire Hathaway HomeServices Arizona& Nevada Properties (Phoenix and Las Vegas), and Coldwell Banker Premier Realty (Las Vegas).

According to Zillow, the partnerships will provide the brokerages with the ability to create new seller lead opportunities for their agents.

“Even in today's hot market, many sellers are stressed and searching for a more seamless way to sell their homes,” Zillow Chief Marketing Officer Jeremy Wacksman said.

“They want help, and while most prefer to sell their home on the open market with an agent, some value convenience and time over price. This expansion of Instant Offers, and Zillow's entrance into the marketplace, will help us better serve both types of consumers as well as provide an opportunity for Premier Agents to connect with sellers,” Wacksman continued. “This is expected to be a vibrant line of business for us and for our partners in the real estate industry, while providing homeowners with more choices and information.”

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