Zillow Instant Offers is now in Denver, making us the 4th US market to get this new service. What is Zillow Instant offers and what can this mean for you as a home seller? Zillow Instant Offers is an iBuyer program, a new way to conduct a real estate transaction that has been gaining attention, if not traction, across the country. It is comical, in a tragic comedy sort of way, how up in arms many real estate agents are about this new program.
iBuyers are instant buyers. In the Zillow program, a home seller can go to Zillow Instant Offers and say that they are wanting to sell their home and request an “instant offer.” Within a few days, the seller will receive an offer from a Zillow iBuyer, guaranteeing a quick close and a cash offer. No need to make any repairs, clean, have showings, just a good clean offer. Common sense tells us that the offer will be nowhere near market value, and the previous markets (Phoenix, Las Vegas, and Atlanta) show that the offer is usually around 80% of market value. So why would a seller do this?
- Sure close…no need to wait and hope that the inspection and appraisal go well
- Quick close…you can move on your timeline.
- Cash…no need for an appraisal or loan conditions
- As-is…you won’t need to make any repairs
Let’s say you are under contract to purchase your dream home, but it is contingent upon you selling your current house first. If you have a ton of equity and timing and convenience are more important to you than top dollar, this could be a great deal for you. Or maybe you are tasked with selling a deceased relative’s home in Denver, and you live in New York. Is it worth 20% of your home’s value to sell it right away, as is? Maybe.
So what’s the catch? It’s important to understand how Zillow makes money. Zillow sells leads–you–to real estate agents. Traditionally a home buyer’s tool, Zillow is intentionally inaccurate. When you search for homes on Zillow, you don’t get to see all of the homes for sale. Many homes you see for sale actually sold months ago. Zestimates are inaccurate. This is all intentional. If Zillow gave you good information, you wouldn’t need an agent, and therefore no agents would pay Zillow so they’d go under. By intentionally giving you bad information, potential buyers call the Zillow preferred agent (who paid thousands of dollars each month for that spot) to get the real information.
This is the same concept for sellers. A home seller requests an Instant Offer from Zillow. They get the offer back and think, “There’s no way I’d sell my house for that! It’s worth way more!” So they reject the offer. You’ve already entered your name, address, email, and probably phone number, and that information is now sold to a Zillow agent who knows you are at least thinking of selling your home, and you’ve implicitly given them information to call, email, even stop by your home to try and earn your business. It’s nothing more than a lead generation tool, and it’s a good one.
If you want to know what your home is worth, please give me a call and I’d be happy to provide that information to you for free. If you are considering a iBuyer program and want to know more about the benefits and risks, I’ll be happy to buy you a coffee and chat about it. This isn’t going to change the real estate industry, it is simply offering a new option to home sellers with certain needs which I believe is a good thing!