Starting this fall, homeowners in Atlanta will be able to request an offer from Seattle real estate giant Zillow Group to buy their house.
Zillow is expanding its Zillow Offers program, which has brought the company into the business of buying and selling homes directly, to Atlanta, its third market overall. Zillow debuted the surprising evolution of its business in Phoenix in April and expanded to Las Vegas in June.
When the program formerly known as Instant Offers kicks off this fall in Atlanta, some homes will have a big button on Zillow that says “get an offer.” The seller fills out a short questionnaire and sends in a couple photos. About 48 hours later, Zillow comes back with an offer and an agent to work with. The seller and Zillow set up a call to walk through the offer and schedule an inspection. Then Zillow sends a revised offer after seeing the house. If both sides are happy with the situation, the seller signs forms digitally and picks a closing date. Zillow takes care of the rest.
Contractors working for Zillow undertake small renovations to prepare the home for sale. Zillow works with local agents — in Atlanta the partners will be Berkshire Hathaway HomeServices Georgia Properties and Better Homes and Gardens Real Estate Metro Brokers — to list and sell the homes.
The move into direct home sales marks a risky bet, but one that CEO Spencer Rascoff says could be especially lucrative. Rascoff explained the company’s pricing strategy in Zillow’s most recent earnings call, saying that right now, the focus is on volume rather than making a bundle on each sale. At the beginning, the company just wants to come out ahead on homes with the expectation that the margin on each sale will rise as the business grows.
For 2018, Zillow has said it expects to hold an inventory of 300 to 1,000 houses related to the new Homes financial reporting segment, from which it expects $125 million to $255 million in new revenue. Zillow appears to be ramping up slowly, with about seven active listings for homes and a dozen more that are “coming soon,” the company said. Zillow has yet to complete a sale, but a spokesman said the company has several homes under contract to be sold.
GeekWire profiled the first home purchased and offered for sale by Zillow, a four-bedroom, two-bathroom house in the Phoenix suburb of Chandler. The original asking price of $425,000 has dropped to $418,500, and the house is still listed as for sale on Zillow’s website.
Zillow’s entrance into direct buying and selling of homes makes what was already a competitive market even more crowded. Another Seattle real estate heavyweight, Redfin, jumped into the market last year. Opendoor last month reeled in $325 million in fresh funding, a few weeks after Offerpad landed a $150 million debt and equity round.