Zillow to start buying Homes

Flipper/Rehabber · Pensacola, FL · Member since 2017 · 33 posts · 24 votes

So the bellow post is an article about Zillow buying up to 1,000 homes by this years end in Las Vegas and Phoenix.

Shouldn't they be working on making their numbers somewhat accurate instead of being a value indicator and a competitor?

I can see where this gives them a competitive edge.

https://www.foxbusiness.com/markets/zillow-to-buy-and-flip-homes-in-las-vegas-and-phoenix

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Bill B.

Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes

I assume anyone that gets an offer from them will look at what a realtor says they can get them and what the website says. If the realtor promises more most will go that way. If Zillow’s website is wrong and offer too much seller will go that way. So either their website is right or sellers win. I’m good either way.

What’s the alternative? A “law” that says Zillow can’t buy houses? Offer-as and Opendoor have been doing it for more than a year here in Vegas as well as Phoenix. I assume they’ll offer the same services s other wholesalers. A quick close in current condition. That’s worth a bunch to some sellers.

Ps. There are onto 3300 houses for sale in Vegas without an offer accepted on them. How many can they buy? I hope they buy a 1,000 that should be a sweet impact on pricing. It’s their money, or ther investors money, let them decide how to use it.

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
8y
I assume anyone that gets an offer from them will look at what a realtor says they can get them and what the website says. If the realtor promises more most will go that way. If Zillow’s website is wrong and offer too much seller will go that way. So either their website is right or sellers win. I’m good either way.
What’s the alternative? A “law” that says Zillow can’t buy houses? Offer-as and Opendoor have been doing it for more than a year here in Vegas as well as Phoenix. I assume they’ll offer the same services s other wholesalers. A quick close in current condition. That’s worth a bunch to some sellers.
Ps. There are onto 3300 houses for sale in Vegas without an offer accepted on them. How many can they buy? I hope they buy a 1,000 that should be a sweet impact on pricing. It’s their money, or ther investors money, let them decide how to use it.
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Brian Ploszay
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
8y
Their stock supposedly went down today because of this announcement. A few companies created a profitable niche, with data driven analytics and promotion. Zillow is copying it.
My take is that Zillow needs to carefully guard its brand. This business model is a distraction.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Bill B.:

I assume anyone that gets an offer from them will look at what a realtor says they can get them and what the website says. If the realtor promises more most will go that way. If Zillow’s website is wrong and offer too much seller will go that way. So either their website is right or sellers win. I’m good either way.
What’s the alternative? A “law” that says Zillow can’t buy houses? Offer-as and Opendoor have been doing it for more than a year here in Vegas as well as Phoenix. I assume they’ll offer the same services s other wholesalers. A quick close in current condition. That’s worth a bunch to some sellers.
Ps. There are onto 3300 houses for sale in Vegas without an offer accepted on them. How many can they buy? I hope they buy a 1,000 that should be a sweet impact on pricing. It’s their money, or ther investors money, let them decide how to use it.
Question does Offer-as and or opendoor do they acutally close on the deals or try to just assign?
based on my run in with the state of Nevada over lending license's I got to think they are pretty tough on those trying to sell or market homes they don't own.. whats your thought or expreince on this.
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
8y
@jay hinrich
I tried an empty rental with opendoor and offerpad about a year ago. Their website asked what it was worth. Used Zillow plus $10-$20k (it was fast increasing Vegas market and I didn’t really want to sell.) they took off 6% for “commissions” and 6% for “market conditions”. I tried to get an explanation how one he nations hottest markets could have a minus 6% adjustment. They didn’t have an answer. I assume it was just profit.
They offered $190k and $185k net (they listed usual other costs like title and taxes and so on) on a house Zillow said was worth low $200’s and I said $220k.
I could choose 3-90 day closing. I see it as great option for job transfers, estate sales, etc. no open houses, no haggling, no contributions to buyers closing costs.
I didn’t sell but I’m not their target market. Though I just thought of this. Would make it convenient to to do a 1031 exchange from many properties to something ellse.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Bill B.:

@jay hinrich
I tried an empty rental with opendoor and offerpad about a year ago. Their website asked what it was worth. Used Zillow plus $10-$20k (it was fast increasing Vegas market and I didn’t really want to sell.) they took off 6% for “commissions” and 6% for “market conditions”. I tried to get an explanation how one he nations hottest markets could have a minus 6% adjustment. They didn’t have an answer. I assume it was just profit.
They offered $190k and $185k net (they listed usual other costs like title and taxes and so on) on a house Zillow said was worth low $200’s and I said $220k.
I could choose 3-90 day closing. I see it as great option for job transfers, estate sales, etc. no open houses, no haggling, no contributions to buyers closing costs.
I didn’t sell but I’m not their target market. Though I just thought of this. Would make it convenient to to do a 1031 exchange from many properties to something ellse.
do you think they actually close on the deals or are wholesalers on steroids and just assigning to a buyers list they have somewhere.. Like I said I have my suspicions that NV is as tough on unlicensed wholesalers.. I mean I made one offer to do a loan on BP and got a nasty gram from the state of NV where they said Hey we see your licensed lender in Oregon but not our state you need a license. I suspect someone filed a complaint against me.. So just curious now that I will be spending 7 months a year there .. want to get the lay of the land we have been doing half a dozen flips a year there .. but want to move that number up.
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Rachel H.
San Antonio, TX · Member since 2009 · 3k+ posts · 1k+ votes
8y
@Tim B. Oh this should be interesting. ;)
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
8y
@Jay Hinrichs
You know vegas. They’re going to have their hand out to make/take a little something off every transaction in the valley. The press release I saw talked about passing deals off to realtors for listing on the mls or to their investors for purchasing. So maybe they don’t assign the contract but rather act as an agent for those buyers? Or “sell them leads”?
“Zillow claims that most of the customers who ended up making a deal through Instant Offers actually partnered up with a realtor anyway,”
“Homeowners who want to sell receive offers from investors”
Ps. “Offer -as” was spellcheck’s guess at “offerpad”
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Bill B.:

@Jay Hinrichs
You know vegas. They’re going to have their hand out to make/take a little something off every transaction in the valley. The press release I saw talked about passing deals off to realtors for listing on the mls or to their investors for purchasing. So maybe they don’t assign the contract but rather act as an agent for those buyers? Or “sell them leads”?
“Zillow claims that most of the customers who ended up making a deal through Instant Offers actually partnered up with a realtor anyway,”
“Homeowners who want to sell receive offers from investors”
Ps. “Offer -as” was spellcheck’s guess at “offerpad”
well as out there in the open as they are I am sure they are not selling RE without being properly licensed like most wholesalers do.
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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
8y
Yeah. Probably more likely to close nearly every deal, less likely to screw someone over, it wouldn’t be worth the bad press.
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Mark Hughes
Rental Property Investor · Aurora, CO · Member since 2018 · 288 posts · 117 votes
8y
Very interesting to say the least!!
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Tim B.
OP
Flipper/Rehabber · Pensacola, FL · Member since 2017 · 33 posts · 24 votes
8y
Well the market didn't like it as their stock dropped.
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Brian Davis
Flipper / Wholesaler · Farmington, CT · Member since 2012 · 189 posts · 89 votes
7y
How can these institutional flippers make it at the prices they are paying? They have a gross margin of 5% while most of the guys who know what they are doing are at 40%+. Here are their numbers and a link to the article. I dont understand how these companies can survive. It seems like smoke and mirrors.
https://wolfstreet.com/2019/05/10/house-flipper-zillow-lost-109k-35-per-flip-net-loss-triples-shares-soar/
- Sold 414 homes.
- Sales proceeds added $128.5 million to revenues, for an average selling price of $310,400 per home.
- The purchase cost of these homes added $122.4 million to cost of sales, for an average purchase price of $295,700 per home.
- This amounts to an average gross profit (selling price minus purchase cost) of a meager $14,700, or 4.9% per flip.
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