Zillow's footprint on the real estate scene in the Twin Cities is about to get a whole lot bigger. This fall, the company plans to launch Zillow Offers, which aims to streamline the selling process by making sight-unseen cash offers to sellers who want to avoid the hassle of getting their house ready to sell.
The Twin Cities is among five markets that will launch this fall, including Miami, Portland, Ore., Nashville and Orlando. Zillow Offers first launched in Phoenix last year, and has since opened up shop in Las Vegas, Atlanta, Denver, Charlotte, N.C., and Raleigh, N.C.
"Since launching Zillow Offers just nine short months ago, we have been continually excited by the strong demand from homeowners throughout the country and are constantly getting asked when Zillow Offers will come to their market," said Jeremy Wacksman, Zillow Brand president, in a statement.
The company, which is known for its online home value "Zestimates," is part of a growing network of "iBuyers" that has developed internal valuation models based on public records that enable them to make offers on houses sight unseen. That includes Knock, OfferPad, Redfin and Opendoor, which launched in the Twin Cities in September by sending thousands of unsolicited offers to homeowners across the Twin Cities.
Homeowners who are interested in receiving an offer from Zillow will be asked to fill out an online form, answer questions about their house and upload photos. Within a couple of days, they will get a no-obligation offer from Zillow. If it's appealing, the seller will be asked to schedule a time to do an on-site evaluation to finalize the price.
The homeowner then decides if they want to accept the offer. If so, Zillow completes the sale and then relists the house after making moderate repairs, if necessary.
Viet Shelton, a Zillow spokesman, said the company pays the local agents a commission, then it buys and sells a home; the seller's "service fee" is competitive with what they might pay in closing costs and commissions on a traditional transaction, he said.
The company will immediately interview local "agent reps" who already work for a local broker, and those reps will hire local contractors and stagers to prepare to sell the houses it has bought. Initial plans call for a local staff of about dozen, Shelton said.
Since Opendoor launched in the Twin Cities, it has been buying homes at a rate of one to two per day, said Jim Lesinski, general manager for Opendoor in the Twin Cities. Lesinski said the company, which is licensed to buy and sell directly in Minnesota, has nearly 50 homes on the market.
"We're seeing that selling a home directly to Opendoor, on the buyer's schedule and without the hassle of showings, is a no-brainer for many sellers," Lesinski said. "Fast, frictionless buying and selling is especially valuable in a market like the Twin Cities when the ideal season to move is shortened by the weather."
Lesinski and others say that Zillow's approach probably wouldn't be viewed as a threat to the traditional brokerage model because it isn't licensed to buy or sell; it will have to partner with local agents to facilitate any transactions.
Brenda Tushaus, CEO at ReMax Results, said that traditional brokerages offer another level of service for buyers and sellers, and while Zillow hasn't yet said who will represent the company in its purchases, she expects that ReMax agents will end up partnering on some level with Zillow.
"Zillow Instant Offers is simply another option for consumers," she said. "Overall, I don't see it having a big impact on the traditional real estate model."
Because of the complexity of using software to establish real estate values in a new market, Zillow and other iBuyers have some limitations on the price and location of a home. Shelton said that Zillow will focus on single-family houses, townhouses and condominiums, and that in other markets most of its purchases tend to be valued at around the median sale price. Initially, as the company develops a better valuating model, there will be some geographic parameters.
If Zillow doesn't end up buying the property, it refers it to a local Zillow "premier agent," who would help sell the house.
Like Opendoor and others, Zillow said it isn't getting into the business of house flipping.
"We're not normally looking for distressed homes, we're not looking to buy distressed and sell high," Shelton said. "We're looking at homes we can purchase for market value and re-list at pretty near the price we paid."