Zillow’s New Home Buying Model
The Internet has turned modern home buying on its head. As things have shifted, certain companies have changed the market. One such company is Zillow. We’re sure you have encountered this website in your home buying and selling journey. While it isn’t always an accurate representation of available homes, it has established itself as a formidable real estate database.
Zillow has recently embarked on a different venture that appears helpful, but promises to harm homeowners. They are entering the game of buying and flipping houses through their Instant Offers Marketplace. The web giant has announced plans to remotely purchase then sell homes in less than 90 days. Zillow hopes their new business model will turn real estate on its head once again. Currently, they are only offering this service in certain areas of the country with hopes of expanding in the future.
But there’s a huge catch.
Plainly said, this model is not good for homeowners. Zillow is working to address the irrational fears of sellers. Fears that a home won’t sell and that the listing will become stagnant, costing the owner additional money. The problem for homeowners is that Zillow doesn’t have the seller’s best interests in mind. Zillow’s branded home value estimate tool, known as the “Zestimate,” already undervalues homes dramatically in many instances. In addition to low sale prices, the new model features exorbitantly higher fees for sellers without offering the valuable services of a traditional agent.
When you choose to sell your home with a trusted agent, you are able to benefit in ways that Zillow cannot promise. As both the buyer and the agent for Instant Offers, Zillow has unfairly weighted the scales in their favor. They will offer a low selling price and higher fees. This will cost homeowners real money.
A major fear that homeowners have is not being able to sell their home in a timely manner. This fear is not well founded. Homes are selling faster than ever before! The average home is selling 5% faster than it did a year ago. Many find themselves with multiple offers within hours of listing their home. Zillow is building on an irrelevant fear.
In the rare case a home does not sell quickly, the fear of “wasting” money on living expenses is addressed. It’s a myth that a homeowner will squander money on their mortgage while living in their home. Paying towards a mortgage is never wasted money and earns equity each month. In some cases, Zillow will require a family to move into temporary housing before they can find their next home, truly wasting money on a rental.
Another unfounded fear is not being able to sell. In the current market, homes are being sold quicker than ever. There is a dramatic shortage of available homes. With the help of an agent, you have a greater chance of selling. A local agent will work in your best interest and will help you with staging, listing, and marketing. In many cases, asking price or above-asking offers are the norm. In fact, sales prices have risen in the past year by a staggering 8% nationally.
The ill effects of this model are even further reaching. If you plan to stay in your area, you may notice that the Instant Offers model will negatively affect area home prices. By making lowball offers on homes or turning homes into rentals, this new service will hurt communities. The long-term effects will drive property values down and harm the local economy.
Zillow will pay low, charge high, and flip homes to profit a non-local company. Finding a local Realtor who knows the area and is a fellow neighbor will help you to have the best outcome for you and your community. A real estate agent acts as your friend and guide. They have more at stake than a large company has and will act accordingly. A local real estate agent wants your repeat business in the future and treats you as a human, not another sale. They are your advocate and companion throughout the journey of selling your home.
It’s not difficult to see why the model of Zillow’s new real estate venture is detrimental to both sellers and local economies. While the internet has changed home buying for the better in lots of ways, face-to-face will always win. For the largest investment most people will ever own, selling yourself and your home short is a bad idea for many reasons. If you are tempted by the promise of a quick and simple process from a company looking to serve only their best interests, think again.