Zillow announced last week it would expand its direct-buyer program, Zillow Offers, into a fourth market: Denver, Colo. This is just one month after announcing it would expand its direct-buyer program to Atlanta, Ga. By the end of 2018, the program will be operational in four markets, including the two original pilot markets, Phoenix, Ariz., and Las Vegas, Nev.
Zillow Offers enables home sellers to sell properties directly to Zillow. Sellers are offered the opportunity on the Zillow website to compare an agent’s report on comps in the market to offers from Zillow and other investors. The seller can choose to sell directly to Zillow, who then repairs or updates the home before listing it again.
What Happens to the Agents?
Zillow’s retention of real estate agents is the biggest distinction between Zillow Offers and other direct-buyer programs. Homeowners who don’t take the Zillow Offer will be connected with local brokerages or one of Zillow’s “premier agents.” Zillow will be responsible for paying commission to agents when it buys and sells homes. In Denver, Zillow announced it will partner with three brokerages.
The Direct-Buy Program is a Work In Progress
According to Geekwire, the program is still a work in progress. Greekwire tracked the first home Zillow purchased and then offered for sale. That home, a four-bedroom, two-bathroom house in Chandler (a suburb of Phoenix) is still listed for sale on the Zillow website. The price has dropped twice, from $425,000 to $418,500, and then again to $415,000.
Zillow told GeekWire it expects to hold an inventory of 300 to 1,000 houses. Spencer Rascoff, the company CEO, explained that at first, Zillow will focus mainly on doing a good volume of deals rather than trying to “make a bundle on each sale.” He said the company’s goals focus on coming out ahead on each home since there is an expectation that the margin on these sales will rise as the program grows.