On Thursday, the company announced a new feature in order to streamline the process for owners who are considering selling to Zillow.
For certain homes, Zillow’s “Zestimate” – the online estimate of the home’s value – will now represent an initial cash offer from the company to buy the property. This can mean an even faster schedule for homeowners who want to close a sale without going through the hassle of a formal listing or a useful data source for potential sellers who want to know how much money they will have to buy the next home.
“It all comes down to taking steps toward more of that one-click nirvana,” COO Jeremy Wacksman told CNN Business. “(It’s about) making the real estate transaction experience more perfect, easier, more integrated.”
Zillow Offers has existed since 2018 and is now available in 25 markets across the country, ranging from Tampa, Florida to Fort Collins, Colorado. Typically, owners of these sites can send a questionnaire and, in some cases, photos of their homes, and receive an initial cash offer from Zillow within a few days. With Zestimate’s new cash offer feature, eligible owners can skip this process.
From there, the transaction works the same as with other Zillow Offers – a Zillow employee inspects the home, provides a list of necessary repairs and an adjusted final offer, and the owner can choose a closing date. Zillow charges sellers a fee of around 7.5% on average.
Initial Zestimate cash offers will be available in 23 markets to get started. For a growing set of properties in these markets, Zillow has enough data about the house and the like to feel confident about making Zestimate their initial cash offering, Wacksman said. For example, if you live in a neighborhood where all the houses are similar and many have been sold recently, Zillow would have an easier time determining an accurate Zillow estimate for your home.
The real estate world has sometimes criticized Zestimates and other online home value estimation tools for not representing the true market value of a property. But Zillow says its pricing algorithm is reliable. For owners who refuse Zillow’s cash offer, the difference between Zillow’s offer and the amount at which they end up selling is usually less than 1%, Wacksman said.
“Our goal is to make market value offers and get Zestimate exactly right for your home’s value,” he said. “And then we take over the sales process, if you don’t want to do all that work yourself.”
Zillow’s home buying and selling business has grown rapidly since it was launched just over two years ago, but it is still unprofitable. In 2020, the segment generated revenue of US $ 1.7 billion, but recorded a loss of more than US $ 320 million. But Wacksman said the company is more focused on growing the business than making a profit at this point, trying to scale it up so that Zillow can cover fixed costs and increase profit margins on each home and adjacent services, such as mortgages.
“We are still in investment and growth mode,” he said. “(At the moment), we are trying to balance the expenses of each unit … we are trying to make offers at market value for what it costs us to buy and sell houses.”