This week, Zillow announced it will begin both buying and selling properties directly from and to homeowners, meaning that it will purchase homes directly from sellers, then resell those properties to buyers. The program will start as a test in two markets, Las Vegas and Phoenix, this spring. The move sets Zillow Group up to compete with other cash-offer real estate companies like OpenDoor and OfferPad, but also with individual real estate investors.
Zillow said it will partner with local brokerages and agents to buy and sell homes to start as an expansion of its “Instant Offers” program. That program launched in 2017 and connected sellers with investors and provided them with a comparative market analysis from a local real estate agent. That program is presently available in Las Vegas and Orlando, Florida. It will expand to Phoenix this month.
Investor Insight: Zillow’s entry into the cash-offer space will impact many investment strategies.
Zillow chief marketing officer Jeremy Wacksman explained the move this way: “Even in today’s hot market, many sellers are stressed and searching for a more seamless way to sell their homes.” He added that Zillow expects many of the leads generated from the program to end up opting to “sell on the open market with an agent,” and Zillow will connect those sellers with its “Premier Agents.”
Interestingly, the new program will infringe on the cash-offer footprint of two Zillow partners in Instant Offers: OpenDoor and OfferPad. Both partnered with the data giant last year when Instant Offers first debuted. Redfin, another online listing and real estate data company, launched Redfin now in 2017 and also now buys homes directly from customers.
OpenDoor CEO Eric Wu responded to Zillow’s announcement this way: “Welcome Zillow. Seriously. We are genuinely excited, having invented this new category in 2014, and it’s invigorating to see a host of others in the industry recognize the importance of removing hassle and time from the transaction.” Wu went on to note his company has “serviced over 15,000 customers” and operates in “dozens of markets” while detailing a variety of “world-class pricing models” and other services.