{"id":132765,"date":"2020-12-02T08:00:29","date_gmt":"2020-12-02T15:00:29","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=132765"},"modified":"2023-04-04T00:32:08","modified_gmt":"2023-04-04T06:32:08","slug":"zillows-ibuy-real-estate-agent-brokerage-in-house","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/zillows-ibuy-real-estate-agent-brokerage-in-house","title":{"rendered":"Zillow&#8217;s In-House Brokerage Launches Next Month\u2014Here&#8217;s What Agents &#038; Investors Need to Know"},"content":{"rendered":"<p><iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC2780040215\" width=\"100%\"><\/iframe><\/p>\n<p>Zillow is an emerging industry leader in iBuying, and other established organizations such as Opendoor and Offerpad focus solely on the iBuy model. Previously, Zillow used its iBuying potential to match sellers with agents not affiliated with their company. But now, after years of denying plans to do so, the online real estate behemoth has announced it will further its iBuying operation by employing salaried agents.<\/p>\n<p>Zillow will <a href=\"https:\/\/www.housingwire.com\/articles\/zillow-ibuying-program-brings-real-estate-transactions-in-house-by-licensing-zillow-homes-employees\/\" target=\"_blank\" rel=\"noopener noreferrer\">begin these in-house transactions<\/a> in three cities in January 2021, adding more locations throughout the rest of the year.<\/p>\n<p>This launch means that Zillow is looking to capture a larger part of the residential home sales sector. As a company, they have stated that they only plan to use their in-house brokers for the iBuying process as opposed to in the traditional sense.<\/p>\n<p>So, what does this look like for the real estate investor community?<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-ibuyers-versus-agents\" target=\"_blank\">Considering an iBuyer? Prepare to Pay Up<\/a><\/em><\/p>\n<h2>Why Zillow Shifted Focus So Quickly<\/h2>\n<p>iBuying has quickly revolutionized the way residential properties are listed and sold over the internet. Short for \u201cinstant buying,\u201d iBuying uses proprietary algorithms to make offers on homes that clients can buy or sell directly over a platform, rather than through a traditional agent. While it lacks the in-person chemistry that the traditional listing process entails, there\u2019s a reason it\u2019s becoming popular. iBuying has proven to be extremely convenient for buyers and sellers by skirting negotiation headaches and offering flexibility in the status of the deal. As a real estate investor, this is attractive.<\/p>\n<p>Companies profiting from iBuying only work with a small portion of the total residential housing market. Yet, over the past few years, iBuying has helped generate a growing amount of Zillow\u2019s total revenue. In 2019 alone, iBuying <a href=\"https:\/\/therealdeal.com\/2020\/02\/19\/zillow-revenue-doubled-to-2-7b-on-ibuying-bet\/\" target=\"_blank\" rel=\"noopener noreferrer\">accounted for around half of Zillow\u2019s total income<\/a> ($2.7 billion). As such, technology investors are beginning to realize the monetary capacity associated with iBuying and the role it will play within the industry going forward.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-132768\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/12\/pexels-ketut-subiyanto-4245926.jpg\" alt=\"couple in living room amid moving boxes looking at laptop together\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/12\/pexels-ketut-subiyanto-4245926.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/12\/pexels-ketut-subiyanto-4245926-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<p>However, traditional agents still stand to gain business from Zillow if the seller is not interested in using iBuying. For now. The emergence of COVID-19 and growing dependence on technology put Zillow and other industry leaders in a position to forever disrupt the \u201cold school\u201d listing and selling experience.<\/p>\n<h2>What Agents and Investors Should Do in Response<\/h2>\n<p>As it stands, the traditional real estate purchase model is still thriving. It\u2019s the majority of the inventory and thus demand will flock. Real estate investors are still looking for someone they trust to help with their investment, as it\u2019s not an emotional decision but one that requires validation on the numbers.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/2016-01-16-investigate-this-before-buy-from-zillow\" target=\"_blank\" rel=\"noopener noreferrer\">5 Factors to Investigate BEFORE You Buy That Property You Found on Zillow<\/a><\/em><\/p>\n<p>But that doesn\u2019t mean the real estate investment community shouldn\u2019t diversify their skills to remain relevant and competitive.<\/p>\n<p>Here are some ways how:<\/p>\n<ol>\n<li><strong>Become familiar with iBuying technology. <\/strong>Even though Zillow has become a brokerage and can handle the full offering lifecycle with in-house agents, they have stated they will only use their own agents for iBuying offers. It is common for sellers to receive an iBuy estimate and then seek the help of a traditional agent for guidance. Having a detailed knowledge of the process will help agents position iBuying as an ally, rather than a competitor.<\/li>\n<li><strong>Be a local market expert. <\/strong>One of the shortcomings of iBuying is that sellers will be working with online agents who have limited knowledge of the area they are servicing. There are also cities where iBuying has proven to not be effective, such as New York. It is valuable to know detailed information about the local area to demonstrate your value to clients.<\/li>\n<li><strong>Prioritize relationships. <\/strong>A relationship can get you a better price, more knowledge into a market, or an opinion you may not have considered. Continue to build relationships as the iBuy model tries to improve algorithms and local expertise.<\/li>\n<\/ol>\n<h2>Why iBuy May Have Little Impact on Agents Working With Investors<\/h2>\n<p>Over the next decade, the traditional real estate industry will continue to be taken over by technology through proprietary algorithms and remote transactions. However, there is still a need for licensed agents!<\/p>\n<p>When I\u2019m purchasing an investment property, it\u2019s more attractive to look out-of-state rather than in my backyard, San Francisco, where cap rates are low. I <em>physically<\/em> need someone there who has the inside knowledge to understand neighborhood trends, seeing beyond the numbers, and more. And, because I\u2019m not there to look at the property in person, I need someone to be that connector.<\/p>\n<p><strong><em>Related:<\/em><\/strong><em> <a href=\"https:\/\/www.biggerpockets.com\/blog\/2016-04-09-6-reasons-shouldnt-real-estate-license\" target=\"_blank\" rel=\"noopener noreferrer\">6 Reasons You Should NOT Get Your Real Estate License<\/a><\/em><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-129065\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/08\/corona-covid-work-from-home.jpg\" alt=\"\" width=\"702\" height=\"336\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/08\/corona-covid-work-from-home.jpg 702w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/08\/corona-covid-work-from-home-300x144.jpg 300w\" sizes=\"auto, (max-width: 702px) 100vw, 702px\" \/><\/p>\n<p>What does the real estate investor need after purchase? Leasing and management.<\/p>\n<p>To me, it\u2019s very attractive to have an agent who can serve as this resource. I primarily need them to be on-the-ground for leasing and annual inspections, but their referrals for service professionals and other local experts is an added perk.<\/p>\n<p>With this in mind, agents are still necessary in my model and can differentiate by offering additional real estate services. But what about the liability of management, requiring trust accounts, and being available 24\/7 for repair coordination? Surely an agent doesn\u2019t want to do all of that. Of course not.<\/p>\n<p>That\u2019s why <a href=\"https:\/\/www.hemlane.com\/all-in-one-property-management?utm_source=biggerpockets&amp;utm_medium=affiilate&amp;utm_campaign=landlord-resources\" target=\"_blank\" rel=\"noopener noreferrer\">Hemlane<\/a> provides an option for an agent to serve as a leasing agent and local support, without having the increased liability of property management for their clients. With this in mind, the iBuy model is not as attractive as a real estate agent with a focus on investor clients.<\/p>\n<p>By becoming a brokerage, Zillow has positioned itself to become a huge competitor in the space. But, the industry is built on human connection, and traditional agents can utilize online tools and their local expertise to differentiate.<\/p>\n<p>While it is necessary for agents to take steps in order to adapt to changing market forces, rest assured that the role of a local, on-the-ground partner will not be replaced for the foreseeable future.<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/real-estate-companies\/find-real-estate-agent-directory?utm_source=blog&amp;utm_campaign=agent_directory\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-114269\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/7.jpg\" alt=\"ad-agent-directory\" width=\"706\" height=\"125\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/7.jpg 706w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/7-300x53.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2019\/08\/7-702x125.jpg 702w\" sizes=\"auto, (max-width: 706px) 100vw, 706px\" \/><\/a><\/p>\n<p><em>Questions? Comments?<\/em><\/p>\n<p><strong>Join the discussion below.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Previously, Zillow used its iBuying potential to match sellers with agents not affiliated with the company. But now it will further its iBuying operation by employing salaried agents.<\/p>\n","protected":false},"author":113915,"featured_media":132767,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5528,7119],"tags":[],"class_list":["post-132765","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-news","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/132765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/113915"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=132765"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/132765\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/132767"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=132765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=132765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=132765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}