Zillow Offers Atlanta | Zillow Is Buying Homes. Is it good news for Sellers though? | Review

Good News For Sellers: Zillow Is Buying Homes. Is it good news though?

As someone who has been in a sales role for most of my adult life, I have developed a 'sixth sense' over the years and feel the 'hairs on my neck get tingly' when someone is selling me something. In April of this year Forbes published an article entitled, Good News For Sellers: Zillow Is Buying Homes, Offering Fast Cash. You see, Zillow is getting into the same business as Open Door, Offerpad, and others who want to buy your home with 'no fuss, no showings, and offering you the ability to start packing today!' 

The Forbes article quoted Jeremy Wacksman, Zillow Chief Marketing Officer: "When Zillow started testing Zillow Instant Offers last summer we saw it as a way to help sellers who were struggling. They needed to consider options and alternatives by making a quick clean cash sale where they control the timing and the terms. Zillow buying directly from sellers offers additional opportunities for both Zillow and sellers."

Okay, for starters, this is a "Seller's market" and at least in the Atlanta Metro area, which encompasses much of NE Georgia, we don't see struggling sellers.

In 2018, due to low inventory, I have seen homes going under contract in hours to a few days and according to Georgia MLS, the average sales price to original list price on home sales in Atlanta, the next stop for Zillow Offers in the Fall, is 100.87%. If we take a radius of 50 miles around Atlanta, per Georgia MLS, the average listing from list to close has taken 35 days on market. These types of business models therefore attempt at selling a service based on a premise that does not exist today.Zillow

The article continues, "When pressed Wacksman did confide the discount the seller may take could be anywhere between 10-15% or even higher. It depends on the home, market conditions and other factors. For some people it’s worth taking less, not worrying if the sale will close and being able to move quickly."

So what they are talking about is if your home is worth $300,000 that they think it "may" be worth it to you to sell to Zillow's investors without having to show or do anything to your home and they'll take $30,000-$45,000 for their troubles. This has been my premise with Offerpad and all the rest. They are not charitable organizations that exist to help you or do you a favor as the Seller. They are going to take a sizable amount of equity the market has put in your home over the past decade as a 'convenience fee' to sell quickly. (Once again this idea of "selling quickly" is a bit of a misnomer because we are in a "Sellers market" and homes are moving briskly from Active to Under Contract!!)

The Forbes article continues, "This works best for a home where there is not a lot of work needed and the property is near market ready. If we need to paint and carpet then that gets figured into the fee and the amount we will pay," Wacksman continued. "We see consumer demand expanding. Certain sellers are open to taking less so they can get a cash deal, without showings and can control the timing of the sale, terms and closing dates which they can do with Zillow as the buyer," he adds."

See I disagree wholeheartedly. If a home does not need a lot of work and is "near market ready," those are the homes that sell the fastest and for top dollar! Also, with 'every sale' you have the ability to control and negotiate the timing and closing dates. Once again, this business model from Zillow Offers to Offerpad and the like is built on the premise that you 'can't sell quickly' in the traditional market and that you 'might consider taking less on your home' not to show it or deal with the 'trouble' of being inconvenienced. For me, to be able to walk away with an additional 10%-15% on my home personally at closing, 'trouble me all you like!'

Today I received an agent email from Zillow on a press release entitled, "Zillow to Expand Buying and Selling Homes to Atlanta. Zillow Offers expanding to its third market in the fall of 2018, its first in the Eastern U.S.”

They go on to say, “Similar to Phoenix and Las Vegas, Zillow will partner with local brokerages and Premier Agents in Atlanta, allowing them to acquire new seller lead opportunities as part of Zillow Offers. The two brokerages partnering with Zillow for the Atlanta launch are Berkshire Hathaway HomeServices (BHHS) Georgia Properties and Better Homes and Gardens Real Estate Metro Brokers. The program gives real estate agents the opportunity to acquire new listings by connecting them with motivated sellers who have taken a direct action to sell their home. Consumers who request a Zillow Offer, but decide to instead sell their house traditionally with an agent or do not receive a Zillow Offer, will be connected with a local brokerage or Premier Agent. Finally, Zillow pays a commission to agents when it buys and sells each home, and agents remain at the center of every transaction Zillow is a part of.”

What does this mean for sellers from Atlanta to other markets where Zillow Offers are being used? You go to Zillow and ask for that Instant Offer and multiple agents will contact you. You may not be ready, you may not even want it, but you will get solicited for your listing. If you sell using a Zillow Offers price, and take that 10-15% discount, you will pay 1.5% in a fee so it’s not free. What's interesting is that Zillow is even telling agents that only about 1 in 10 will accept the Instant Offer. So why do it? To sell "seller leads" to agents. If you end up working with the Premier Agent that gets your ‘lead’ then you will pay them whatever the commission rate and the 1.5% fee to Zillow for your ‘lead.’ PLEASE keep in mind, this is 1.5% to Zillow PLUS whatever the brokerage commission is to list your home with that Premier Agent as well.

As an agent, there is no way I would forego any of the same process that every other consumer goes through in the selling of my home to get top dollar. I would show my home and make any repairs or do deferred maintenance to maximize the value of my biggest investment. I would bet that you would too.

Once again, I ask the question whether or not Zillow Offers is good news for Sellers? Will let you decide for yourself.  **UPDATE** REAL LIFE COMPARISON between Zillow Offers and an actual Agent Sale.

*iBuyer Trends Report for Metro Atlanta (Includes Zillow Offers, Offerpad, and Opendoor)

Metro Atlanta Home Search

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