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Wednesday, Oct 4, 2023

Innovative or Old Hat? Realtors Describe Newcomer as Both

An online real estate tracking company based in Seattle is starting a digital service to sell homes in San Diego County and other select cities.

Zillow Offers will buy someone’s home and then sell it for them, taking an average of 7 percent of the proceeds from the sale.

“We really are looking to help any consumer who is fed up with the traditional selling process and doesn’t want to go through the hassle of getting the house ready for open house, getting the kids and the dog out,” said Jordyn Lee, a Zillow Offers spokeswoman.

“The thing that really sticks out consistently is how stressful and time-consuming selling a home is,” Lee said.

Goal to Be in Every Major Market

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San Diego is one of six cities Zillow is adding to the Zillow Offers online service it piloted in Phoenix and is now offering in Riverside, Las Vegas, Atlanta, Denver, Charlotte, Houston and Atlanta.

The service also will be offered in Los Angeles, Sacramento, Austin, San Antonio and Tampa.

By the first quarter of 2020, the company said it will be in 20 markets across the country with a goal of ultimately offering the service in every major market.

So far, more than 100,000 sellers have requested offers from Zillow, according to the company.

Competitors Are Skeptical

San Diego was chosen for the first expansion round because “San Diego is a dynamic housing market with savvy consumers we believe will be excited for the chance to remove much of the stress and hassle from selling their home,” Lee said.

San Diego real estate agents downplay the service but aren’t sure what effect it will have on the market.

“Zillow, like many others, is trying an alternative business model to help homeowners sell their home quickly,” Kevin Burke, president of the Greater San Diego Association of Realtors, said in a prepared statement.

“Zillow Offers online direct home buying is not a new concept to the real estate industry and is a similar model to what others are currently offering,” Burke said. “The real estate industry is constantly evolving with new technology and these additional options may be great for some. However, consumers need the additional service, security, experience and professionalism a realtor provides. Selling and buying a home is a very complicated transaction with many legal issues.”

Internet home buying services like Zillow Offers “have had some success with moderately priced markets,” said David Cabot, president of the North San Diego County Association of Realtors.

“There’s a certain segment of the market that will always want to look for a different way to do it,” Cabot said. “That’s been fairly consistent over the last two or three decades. It just depends on whether potential clients are willing to take a cash offer without having it exposed to the whole market to see what the market will pay for it.”

A Quick Turnaround

Mark Goldman, a market analyst with C2 Financial Corp., said he expects the entrance of Zillow’s online service to have minimal effect on the county housing market.

“I don’t think it’s going to do particularly much of anything. It just gives home sellers the option to trade some of the value of their property for a fast transaction,” Goldman said. “I really don’t see it being a big mover of the market.”

On the other hand, Goldman said online services such as Zillow Offers could be a good alternative for someone who needs cash fast, is moving out of town to take a new job, or is buying a new house and needs to quickly tap into the equity of their old home to pay for the new one.

“Maybe they found another home someplace that they can get for a terrific price but they need to close quickly,” Goldman said. “They might get less for their residence, but it might be worth their while for the purchase of their next property.”

According to Zillow, 61 percent of sellers are buying a new home at the same time that they’re selling one.

Fees Average 7 Percent

The way it works with Zillow Offers is that a homeowner goes to Zillow’s website and keys in information on the home they’re selling, including photos.

“You’ll get an initial offer on your house within 40 hours,” Lee said.

If the owner likes the offer, Zillow will send someone to make a personal inspection.

“Depending on what we find, we’ll adjust the offer up or down,” Lee said, adding that Zillow prices homes at market rate and homes sold through Zillow are advertised on multiple listing services.

If the final offer is acceptable, the seller then picks a closing date that is one to three weeks from the time the offer is made.

Will Work With a Brokerage

Zillow works with a traditional real estate brokerage, Lee said, but has yet to select one in the San Diego market.

“We actually think real estate agents are crucial to this. In every market we go into, we partner with a real estate agent,” Lee said. “They represent us on both sides of the transaction. When we buy each house and we sell each house on an open market, an agent represents us.”

Zillow’s fee varies, depending on how much work needs to be done to make a home saleable.

For the first quarter of 2019 and the last quarter of 2018, the fee averaged 7 percent in markets where Zillow Offers is active, Lee said.


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