Zillow Enters the Buyer and Seller Market in Denver with Cash Offers

While some claim Zillow is a disruptor on the real estate scene with their Zestimate (of note I composed a blog about this: The Internet Says My House is Worth) now the firm is launching Zillow Offers where Zillow will begin buying and selling homes with their own money.

While I personally tried the option with a few addresses and told the system does not yet participate with those addresses, the following is how the system is supposed to work:

A prospective seller would enter their address onto the Zillow website;  Zillow comes back with an initial offer approximating the home’s worth (similar to how one can obtain a Zestimate as present). If the seller likes the valuation, the company sends an estimator out to the home to calculate a more precise value and make a formal offer.

The seller can pick a closing date between two weeks and 90 days out. Zillow said its research has found that timing the sale of a home with the purchase of a new one is a top concern for sellers, and said the program will let sellers avoid “the extra work and time associated with a traditional sale.”

After buying a home, Zillow will list it for sale. Of note Zillow hired Denver’s Atlas Real Estate Group to provide agents that will represent the company in its purchases and sales.

As an experienced real estate broker while I am intrigued by the spin placed on the concept by some very astute public relations and marketing employees (and of note I am an alum of Edelman Worldwide), guess what the concept is far from innovative or disruptive.

  • If you have ever received a mailer advising you can sell your home for cash, no inspections, as-is and so forth, not too dissimilar.
  • Nationally a franchise titled “We Buy Ugly Houses” has been in the market niche for years.
  • Fix and flippers, investors and so forth have been doing this type of prospecting since real estate became a tangible investment and money-making opportunity.

Granted Zillow may make the process easier i.e. input and address and receive an approximate value and if interested an estimator will come out and review, confirm and so forth. I would assume the estimator will like most real estate brokers review comps, look at the condition of the home and so forth to ascertain a valuation.

Yet my concern for prospective sellers; are they taking less capital in return for convenience? True one does not have to list, stage, have showings and so forth. However as brokers we do this for our sellers and our fiduciary duty is to our client to achieve the highest and best offer(s) for their home.

If a seller advises they are in dire straights, desires a delayed closing, wishes to cash out and so forth as licensed real estate brokers we usually have options for our clients to make their sales transaction as seamless and profitable as possible. The reality is Zillow Offer participants are NOT offering their home to the overall market and thus may not realize the true market demand and value and thus accept less than the house is worth on the open market.

There are circumstances when Zillow Offers and similar opportunities makes sense including but but not limited to estate sales, sellers who may be in financial distress, those needing to move or relocate quickly and so forth. However again most licensed real estate brokers will meet with their clients, ascertain their motivations and formulate options and opportunities to secure the highest and best payout.

Granted by selling via Zillow Offers or similar outfits there is no commission. Yet again is the seller getting the highest and best for their transaction (and of note, commissions paid go against one’s basis in the property and thus a tax advantage).

I do believe Zillow Offers is correct on timing and markets i.e. mid-size. With Denver moving towards more equilibrium between a sellers market and a buyers markets and eventually may move into a Buyer’s market Zillow Offers may offer the correct alternative for those wishing to sell quickly, avoid a commission and desiring flexibility concerning closing dates. Yet for every convenience and potential savings i.e. commissions and time is the seller being short-sighted concerning values and potential capital gains?

 

 

 

 

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s