An Expert Review Of Zillow Offers For Home Sellers
What You Will Read In This Article
- How Does Zillow Offers Work?
- Where Is Zillow Offers Available?
- What People Are Saying About Zillow Offers
- You Will Get Harassed by Zillow Premier Agents
- Will They Make A Lowball Offer?
- Zillow Offers Competitors (overview & comparison)
- Zillow Offers Alternatives
- Final Thoughts About Our Zillow Offers Review
Although common sense would suggest that Zillow themselves might be the best source of information regarding “Zillow Instant Offers”, this is not the case.
You see, Zillow makes most of their revenue from real estate agents. Around 70% to be exact. A review of Zillow Instant Offers reveals a new shift in the company’s normally “pro agent” stance.
Because of this, Zillow isn’t exactly shouting from the rooftops about their new program. In fact, many home sellers aren’t even aware that it exists.
But don’t worry. In this guide, we’ll break down the good, the bad and the ugly about Zillow Instant Offers and whether or not it might be a good fit for you as a home seller.Click here to request a cash offer before selling to Zillow.
How Does Zillow Offers Work?
Zillow has been (somewhat quietly) buying homes as far back as April of 2018. This began with the launch of “Zillow Offers”, and was in large part a response to the growing demand for iBuyer type real estate marketplaces.’
For those of you unacquainted with the term “iBuyer”, these businesses use big data and analysis tools to establish a fair market offer for your property without ever having visited it. Because of this, they can provide near-instantaneous cash offers for homes, allowing them to scale fast and do tremendous volume.
In just a few short years since launch, Zillow Offers has grown to become the second largest iBuyer by transaction volume, coming in second place only to “Opendoor” (the company credited with founding the iBuyer business model in 2014).
Zillow Offers Business Model
- Consumers sign up on the site and submit their home’s details along with pictures
- Zillow utilizes technology and data to determine a ‘fair’ cash offer for the home
- A Zillow representative will inspect the home to verify condition (the initial offer may be adjusted based on findings)
- Revised offer – this is the final offer price for purchase
- If accepted by the owner, Zillow purchases the property, invests in minor upgrades and aesthetics to improve the appeal
- Closing dates can be chosen from between 7-90 days after contract signature
- Zillow re-lists the homes (usually within 90-days) and flips them for a small profit
PRO TIP: Zillow is only interested in buying specific types of homes. They look for homes that are relatively new, in good condition, and that are within what they consider to be “high opportunity” markets where the chance of a quick re-sale is possible.
If you have a “fixer-upper”, your home likely won’t qualify. Unlike traditional “flippers”, Zillow and other iBuyers are not looking to renovate and remodel homes. They are looking for houses in good condition that just need a little TLC or cosmetic work to make marketable again. They operate on slim margins, but do greater volume than a traditional home investor would.
How Zillow Makes its Money with Zillow Offers
- Short term market appreciation of purchased properties
- Service fees charged to those who use this and other services
- Selling “leads” to real estate agents
Where Is Zillow Offers Available?
Although this list is subject to change, a review of Zillow Offers shows that the service is currently available in 24 United States metro areas where the company both buys and sells property.
Current Service Areas Include
|Atlanta, GA||Houston, TX||Portland, OR|
|Austin, TX||Las Vegas, NV||Raleigh, NC|
|Charlotte, NC||Los Angeles, CA||Riverside, CA / Inland Empire|
|Cincinnati, OH||Miami, FL||Sacramento, CA|
|Colorado Springs, CO||Minneapolis / St. Paul, MN||San Antonio, TX|
|Dallas, TX||Nashville, TN||San Diego, CA|
|Denver, CO||Orlando, FL||Tampa, FL|
|Fort Collins, CO||Phoenix, AZ||Tucson, AZ|
Click here to request a cash offer before selling to Zillow.
What People Are Saying About Zillow Offers
There’s no better feedback than from those home sellers who have already given Zillow Offers a try. So we put on our investigative hat, fired up the coffee pot, and went to work.
What we found was interesting, and not necessarily in a good way.
But before we did into the bad, let’s look at the good:
- The process was fast and efficient
- Initial offers were high
We’d like to keep going but this is where the good tidings ended. Unfortunately, after digging into reviews from around the web we found a very similar pattern of unhappy customers all with similar complaints.
- Actual “final” offers regularly came in tens of thousands below initial offers
- Inspectors were neither thorough nor reliable
- The reasoning for reductions in price were unsubstantiated in many cases
- Some final offers were made based on comparative LISTING prices not SOLD prices
- Zillow representatives were not very helpful
- Zillow provides NOWHERE to leave a review on their site (a possible indication of customer dissatisfaction)
Actual Consumer Reports of Their Experience
*Paraphrased for space and to protect the identity of sellers
“Prior to the on-site inspection they offered a reasonable purchase offer for our home. It was less than that which we would have received working with an agent but still not half bad. The process was fast and pretty straightforward. That’s where it all went downhill. Post-inspection the actual offer came in at an abysmal $30k less. Original value: $224,000. Zillow Cash Offer: $181,000”.
“I had a very similar experience to everyone else. Nowhere on the site can I find where to leave a review. The original market value offer came in at $195k and we were quite happy. But that was short-lived. Once they substracted their “fees” and $8000 in repair costs (BEFORE THEY EVEN INSPECTED OUR HOUSE IN PERSON) the deal was off. All our home needed was a bit of paint and a couple patches of drywall.”
“The original offer which was similar to the “Zestimate” on the site, came in at 297k. After subtracting a commission rate of 7.5% we would have done ok with a net of around 285k. Or so I thought lol. What did the final offer come back at you ask? Get ready….$40,000 LESS!!!. After questioning Zillow they told me the offer was reduced based on “nearby listing prices” lol…LISTING PRICES. NOT SOLD PRICES. What?!? Everyone knows listing prices mean nothing. It’s the sales price that determines the actual value of homes.”Click here to request a cash offer before selling to Zillow.
You Will Get Harassed by Zillow Premier Agents
Look, we hate having to call out any company. It’s not how we do business. On the other hand, we have an ethical obligation to provide our clients, customers and visitors with reliable information to protect their best interests.
With that in mind, we hate to report that anyone working with (or who has submitted their information to Zillow, even for just a quote) will likely get hounded to death by real estate agents.
Asa previously discussed, Zillow makes most of their money selling leads and ad space to over 800,000 real estate agents. Anyone who declines to accept the “Zillow Offers” purchase price will have their information sold to real estate agents, specifically those enrolled and paying Zillow to be part of the “Zillow Premier Agents” program.
These agents then email and call those homeowners in order to solicit them as a client. Many individuals report RELENTLESS CALLS that just don’t stop.Click here to request a cash offer before selling to Zillow.
Will They Make A Lowball Offer?
According to their website, the company strives to “present an offer that reflects the current market value of your home.” Although it appears that the “initial offer” (the one made before a Zillow rep inspects your home) does in fact align (mostly) with what would be considered “fair market value” according to most customers.
However, post-inspection is where things seem to go wrong, with Zillow offering substantially less than a fair market value and seemingly looking to low ball offers.
This makes sense. If Zillow can make money on the front end by offering a low price they stand to “win”. If the homeowner declines, they still win because then this “lead” is sold to real estate agents that pay Zillow.
In either case, Zillow makes money regardless.
Limited Buyers in Zillow’s Own Program (another issue)
Another issue contributing to “lowball” offers on homes is that Zillow only works with 15 institutional real estate investors nationwide.
These institutional investors look for:
- Houses they can get cheap (well below market value) to flip for a profit
- Homes that have good potential as a rental property for residual cashflow
This program is intended to appeal to home sellers who value speed, convenience and cash in hand fast over the final sales price.
Can You Negotiate With Zillow?
Similar to the CarMax business model, Zillow states that they provide their “best offer upfront”, eliminating the need for negotiation and helping make the process more streamlined and hassle-free for sellers.
Although there is no official channel for “negotiation”, if you feel like the offer made was based on inaccurate information or that important aspects of the home were not accounted for, you can make your case to a “Zillow Offers Advisor”. However, in the majority of cases, it seems that Zillow is unwilling to budge on their offer.Click here to request a cash offer before selling to Zillow.
Zillow Offers Competitors (overview & comparison)
Considered the pioneer in the iBuyer space, Opendoor has served over 75,000 US customers since inception.
- Service available in 20 metropolitan service areas
- Free offer within 24 hours
- No showings, listings or open houses
- Choose your own closing date
- Cancel the sale at any time without penalty
- Offer valid for 5 days
- Nations largest “trade-in” program
- Boasts the largest network of partnerships
- 14-day late checkout / rent-back program
Founded in 2015, Offerpad is an iBuyer paring innovative real estate valuation technology with a platform on which sellers can receive cash offers for their home.
- Offer provided within 24 hours
- No open houses or showings necessary
- Choose the close date
- Cannot cancel at any time without a penalty
- Offer expires within 4 days or less
- Rent back program available
Knock is a hybrid platform, combining the sale of your current home with the purchase of your next home into a singular process with the “Knock Home Swap”.
- Includes the underwriting for a new home mortgage
- Knock covers the old mortgage on your current home when you move into the new one
- Pre-pays up to $25k to invest in getting your old home ready to sell fast for top dollar
- Charges a 1.25% convenience fee
- Must pay back any funds advanced to you by Knock at closing
- The home sales price is set by inspection and a 200+ point algorithm
Once exclusively working with Offerpad, Keller has (of June 2020) expanded their program to work with an increasing number of partners for their “Keller Offers” iBuyer program.
There isn’t a lot of public information about this program.
- Formerly exclusive with Offerpad
- Currently taking on more buying and funding partners
- Operates in 21 markets with plans for expansion
- Within 6 months the service will be available in Nashville, Denver and Oklahoma City
Touted as “A home sale without the headache”, Redfin now is yet another competitor in the iBuyer space, offering a similar assortment of services.
- Sellers request an offer
- Initial purchase offers are followed up by an in-person inspection
- Sellers can choose a close date (must be within 10-30 days)
- Charges a service fee of 6-12% on average
Orchard’s mantra is “The Modern Way to Buy”. They aim to make the buying and subsequent selling process stress-free.
- Find a home to purchase with Orchard
- Once moved out of the old home, Orchard handles cleaning, staging, listing and selling your house.
- Boasts that 80% of listings sell within 90-days
- Provides a “back up” cash offer in the event that they can’t sell your home within the designated timeframe
- The client does NOT pay the mortgage on their new home until the old one sells
- The typical fee is 6%
Zillow Offers Alternatives
Need To Sell Your Home But Want To Save On Commissions?
Did you know that we can help you save a lot of money when selling your house? Money that you can use to pay for your big move? ISoldMyHouse.com has 3 ways for you to sell your house and NOT pay high commissions.
- Sell It Yourself With Our Flat Fee MLS Listings
- Sell With Top Local Agents With Negotiated Discounts on Commissions
- Sell To A Pre-Qualified Cash Buyer
Traditional Real Estate Agent
The old standard when buying and selling a home, working with a traditional real estate agent is still a preferred (familiar) path for many homeowners. Despite the high commission fees, and dealing with showings and open houses, a real estate listing agent will largely do all of the heavy lifting for you. Be sure to ask the right questions before hiring a Realtor to ensure you know what you are getting.
Low Commission Real Estate Agent
Low commission agents (such as 1% Realtors) offer many of the same services that a traditional agent offers, but in a streamlined manner that may leave you picking up the slack or filling in any gaps in service. Each provider is different, so do your homework and always get the low down on what is (or is not) included. In many cases, they can be a solid option to consider.
Flat Fee MLS Listing
When it comes to marketing your property, nothing is as powerful as an MLS listing (multiple listing service). Nowadays you can pay a flat rate to get listed and have your property in front of thousands of eager agents, investors, and homebuyers in a snap.
For Sale By Owner
Sure, you’ll have to put in some work here and take time to familiarize yourself with the process, but you’ll also save big. If you have a background in real estate or law, or have sold multiple properties in the past, this may be a good option to consider, especially if you have the time and resources needed to put in the work when listing your house for sale.
We Buy Houses For Cash Companies
Could your home use a little TLC? Perhaps it is in need of costly repairs you don’t have the time, energy or resources to deal with? In either case, selling your home “as is” to a cash buyer or investor is an option worth exploring. They can often put cash in hand within days, eliminating the need to deal with banks and red tape.Click here to request a cash offer before selling to Zillow.
Final Thoughts About Our Zillow Offers Review
Zillow Offers leaves a lot to be desired for many would-be home sellers. However, if you value convenience, speed and simplicity over the sales price, it could be just what you’ve been looking for.
About the Author: Kris Lippi is the owner of ISoldMyHouse.com, the broker of Get LISTED Realty and an official member of the Forbes Real Estate Council. He actively writes about real estate related topics such as buying and selling homes, how-to guides for around the house and home product recommendations. He has been featured in Inman, Readers Digest, Fox News, American Express, Fit Small Business, Policy Genius, Lending Tree, GoDaddy, Manta as well as other major websites. Read more about us here.