Zillow Group is betting its future on directly buying and selling homes, and it is rapidly expanding the service across the U.S.
Zillow Offers, the service that lets customers go online to request cash offers directly from Zillow, debuted in Nashville today, its 15th market since launching 16 months ago. Zillow plans to launch the service in at least seven additional markets by the end of the first quarter of next year.
Since launching in Phoenix in April 2018, Zillow Offers has expanded to Las Vegas, Atlanta, Denver, Charlotte, Raleigh, Houston, Dallas, Minneapolis, Orlando, Portland, Riverside, Calif. and Colorado Springs and Fort Collins in Colorado. Future markets include Austin, San Antonio, Los Angeles, Sacramento, San Diego, Miami and Tampa.
Under the program, some homeowners in Zillow Offers markets see a button on the Zillow site 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 to list and sell the homes and pays commissions to agents on each transaction. Zillow attaches a service fee for the seller in exchange for avoiding the hassle, time commitment and uncertainty of a traditional home sale.
Zillow’s surprising pivot in February, a move that also included the return of co-founder Rich Barton to the CEO chair, came as a growing cadre of real estate companies seek to re-imagine how homes are bought and sold. Zillow’s cross-town rival Redfin crushed analyst expectations last quarter and delivered rosy future projections powered by its own home-buying business, RedfinNow.
One of the biggest players in the market is Opendoor, which is already in 20 markets and aims to get to 50 by the end of next year. Opendoor recently formed a surprising alliance with Redfin. Customers in Atlanta and Phoenix can now request an instant offer from Opendoor on Redfin’s website or mobile app to buy their houses.
Zillow’s focus until its switch has been real estate advertising and information. But the company believes it can bring in $20 billion in revenue in three to five years on home sales alone. Zillow as a whole brought in $1.3 billion in revenue for all of 2018.
Zillow will give an update on Zillow Offers when it reports its latest quarterly financials Aug. 7, after the market closes.