What is Zillow’s strategy here? (Phoenix: house, buyer, wages)

[MikeL78]

I sold my last house to Zillow a few years ago before the market went crazy. Back then houses could take a month or two to sell. The price they offered was about the same a realtor told me it should sell for. They charge fees to cover the future sales commission. Some houses they take a small loss on. They don’t show up on MLS but Zillow will show it as recently sold. No one will know you’re selling it until it closes. Normally they do some minor upgrades like changing carpet and paint. They will charge a 1-3K fee for repairs. To me their offer was good because I could sell it in weeks and choose the close date. Unless the house is horrible, I’m not sure why someone would sell to Zillow these days.

[MN-Born-n-Raised]

Originally Posted by MikeL78

I sold my last house to Zillow a few years ago before the market went crazy. Back then houses could take a month or two to sell. The price they offered was about the same a realtor told me it should sell for. They charge fees to cover the future sales commission. Some houses they take a small loss on. They don’t show up on MLS but Zillow will show it as recently sold. No one will know you’re selling it until it closes. Normally they do some minor upgrades like changing carpet and paint. They will charge a 1-3K fee for repairs. To me their offer was good because I could sell it in weeks and choose the close date. Unless the house is horrible, I’m not sure why someone would sell to Zillow these days.

Did Zillow contact you or did you call them? Did you check out any other buyers like OfferPad?

[asufan]

Originally Posted by rtloucks

Let rephrase this... Appraisers are not SUPPOSED to use those sales.....
They usually do not hit the MLS, however, if the home does hit the MLS then they might use it if they do not do their diligence.

Yes these artificially inflate the market sometimes, but the number of homes acquired is not enough to offset the whole market. They will however be noticed.

If one of these companies buys a house that was listed on MLS, that property had market exposure so that might be a sale that they would use as a comp. This is very, very rare, however. Zillow and the others typically do not purchase houses listed on MLS and their purchases are much like when I buy a property from a wholesaler, they don't show up on MLS and appraisers won't use the sale. I don't see how these inflate home prices since 99% of the time they buy it for slightly under market value anyway. That's a non issue.

[MikeL78]

Originally Posted by MN-Born-n-Raised

Did Zillow contact you or did you call them? Did you check out any other buyers like OfferPad?

I contacted them after getting estimates from OpenDoor and OfferPad. Zillow was the best offer and it takes them a couple of days to complete the offer. They do an actual analysis and will also refer you to a realtor to sell your house if you think their offer is too low. It is very low pressure. Opendoor and OfferPad were 10-20k lower. This was 2018 tho. Not sure if it is the same.

[john3232]

Originally Posted by MikeL78

I contacted them after getting estimates from OpenDoor and OfferPad. Zillow was the best offer and it takes them a couple of days to complete the offer. They do an actual analysis and will also refer you to a realtor to sell your house if you think their offer is too low. It is very low pressure. Opendoor and OfferPad were 10-20k lower. This was 2018 tho. Not sure if it is the same.

And that's what people like. Reminds of the car I bought in 2019. I went through Costco and the price was set before I walked in the local auto dealership.
https://www.costco.com/auto-program-services.html


Although with a house you really have to do your own homework. I'm fairly confident if an Ibuyer offered me 400k for my house (which is what Zilliow has it estimated at...) I would have made a good deal.

[ajonesaz]

Originally Posted by phx1205

So just guessing here since we don’t know all the details but they bought it for $540k, and then charged a $40k fee. So as long as they sell it for more than $500k they come out ahead. Which also means the sales price is artificially inflated by $40k.

Aren't all sale prices similar. Almost every home sale is less 6% commission at least?

Zillow also rents back to customers, so someone might live there currently paying $3k a month for 3 months. That is another $9k.

Margins are a little close for comfort, but I assuming they wouldn't lose money.

[AndroidAZ]

Looks like they bit off more than they can chew and put a pause to this whole thing.

[phx1205]

Originally Posted by ajonesaz

Aren't all sale prices similar. Almost every home sale is less 6% commission at least?

Zillow also rents back to customers, so someone might live there currently paying $3k a month for 3 months. That is another $9k.

Margins are a little close for comfort, but I assuming they wouldn't lose money.

I was talking specifically about the house I had linked. They bought it then turned around and put it on the market to sell for less than what they paid.

[bobsell]

Does anyone know how many houses Zillow owns?

If they overpay on one house, wouldn't that mean comparative house values would go up, right?

So if they have 100 houses, and they're comparative to what they overpaid for that ONE house, they just profited by having those other 99 houses go up in value.

[phx1205]

Originally Posted by bobsell

Does anyone know how many houses Zillow owns?

If they overpay on one house, wouldn't that mean comparative house values would go up, right?

So if they have 100 houses, and they're comparative to what they overpaid for that ONE house, they just profited by having those other 99 houses go up in value.

That was discussed earlier. Zillow doesn’t always record the transaction in the MLS, so not likely to be used as comps for other homes.