New Home-Flipping Program From Zillow Launches
Zillow Group Inc. (NASDAQ: ZG) has announced that it will start buying houses directly from sellers. Zillow will start investing in the properties itself, beginning with bidding on homes in Las Vegas and Phoenix. The company will use cash from its balance sheet to finance acquisitions. The first purchases will be made later this month.
The company is seeing if it will be able to make money flipping real estate. After the purchase, Zillow will get the home ready to list on the open market and sell it with a local brokerage. The company says it isn’t planning to do drastic renovations, like you might see on a home-flipping show on TV.
Zillow plans to profit by charging sellers a fee in addition to agent commissions. The homes resold by the company will be listed in the local MLS and on Zillow. Zillow has deals in place to partner with two local brokerages in each region to help it buy and sell the homes. Chief Marketing Officer Jeremy Wacksman projected the company will own 300 to 1,000 homes by the end of the year.
The new initiative is being launched as part of a currently available program called Zillow Instant Offers. Instant Offers allows sellers to upload their home’s information and receive offers from local investors within 48 hours. The program also includes an assessment of the home’s market value from an agent, allowing the sellers to choose between selling their property the traditional way and a fast sale.
Instant Offers launched this past May in Las Vegas and Orlando, Fla. The program will expand to Phoenix later this month. It’s unclear whether the program will ultimately expand to other markets. According to the company, most owners who have used Instant Offers end up selling their homes the old-fashioned way.
Zillow said the new business will provide more options to sellers. Wacksman said in a statement, “This is expected to be a vibrant line of business for us and for our partners in the real estate industry, while providing homeowners with more choices and information.” Arik Prawer, a former executive at Colony Starwood Homes and Invitation Homes, has been tapped to run the new operation.
Zillow will be joining several competitors in the space. Opendoor and OfferPad have similar business models. Redfin has RedfinNow, which lets the online real estate brokerage buy homes directly from customers.