On Thursday, the company announced a new feature to streamline the process for homeowners considering selling to Zillow.
For select homes, Zillow’s “Zestimate” – the online home valuation estimate – will now represent an initial cash offer from the company to purchase the property. That could mean an even faster timeline for homeowners looking to close a sale without going through the hassle of a formal listing, or a source of useful data for potential sellers who want to know how much money they’ll have to buy their next. House.
“This is all about taking those steps to more of that nirvana with one click,” COO Jeremy Wacksman told CNN Business. “(The point is) making the real estate transaction experience more seamless, easier and more integrated.”
Zillow Offers has been around since 2018 and is now available in 25 markets across the country, ranging from Tampa, Florida to Fort Collins, Colorado. Homeowners in those locations can typically submit a questionnaire and, in some cases, photos of their home and receives an initial cash offer from Zillow within days. With the new Zestimate cash offer feature, eligible homeowners can skip that process.
From there, the transaction works the same as with other Zillow offers – a Zillow employee inspects the home, lists needed repairs and an adjusted final offer, and the homeowner can choose a closing date. Zillow charges sellers on average about 7.5%.
Zestimate’s initial cash offers will be available in 23 markets to begin with. For a growing number of properties in those markets, Zillow has enough home data and other similar data that it is confident it can make the Zestimate its first cash offer, Wacksman said. For example, if you live in a neighborhood where all homes are similar and many have been sold recently, Zillow can more easily determine an accurate Zestimate for your home.
The real estate world has at times criticized Zestimates and other online home value estimation tools for failing to reflect the true market value of a home. But Zillow says the pricing algorithm is reliable. For homeowners who decline Zillow’s cash offer, the difference between Zillow’s offer and what they end up selling is typically less than 1%, Wacksman said.
“Our goal is to make market value offers and get the Zestimate just right for what your home is worth,” he said. “And then we’ll take over the sales process if you don’t want to do all that work yourself.”
Zillow’s buying and selling business has grown rapidly since it was launched just over two years ago, but it is not yet profitable. In 2020, the segment brought in $ 1.7 billion in revenue but lost more than $ 320 million. But Wacksman said the company is more focused on growing the business then make a profit at this point, try to scale it up to where Zillow can cover the fixed costs and increase profit margins on each home and its adjacent services, such as mortgages.
“We are still in the investment and growth mode,” he said. “(Right now) we’re trying to break even on every unit … we’re trying to make market value offers for what it costs us to buy and sell homes.”