Zillow Cash Offer - My Experience

56 Replies

Currently I have 10 homes in various locations... Ohio, Arizona, and Virginia.  I noticed Zillow was advertising to purchase my homes in Arizona for cash.  Note I believe it's only available in some markets.  I thought it was worth a shot so I began communicating with them.  The young man was a pleasure to work with and was very honest and professional, so we moved forward.  

Before the inspection, they offered an amount which was reasonable.  It would have slightly higher than what I would receive if I worked with an agent.  Of course the process would be faster also.  Again I agreed to proceed.

During the inspection a local inspector was present, and a Zillow representative.  Both were taking pictures and documenting their findings.  Both were professional.  The only issue I had is that the inspector left the air conditioning at a low setting of 70 degrees.  In Arizona, that's a big mistake.  Later we went to a local mall and returned in the evening.  We found the house was at 70 degrees!  That's going to show up on my electric bill!  It's not really Zillow's fault as the independent inspector was to blame.  

Also during the inspection, we had several repairs which were in progress.  The outside was being painted, bathroom was being updated, etc.  Because of the repairs, they decided to perform the inspection again to verify everything completed.  

When I received the inspection report and new offer, everything changed!  First they provided an offer which was based on the first inspection, not the second inspection.  I told them the problem and the realtor who gave me the offer ignored what I said.  The Zillow representative stepped in and was professional and said they would stop and investigate the issue.  One day later they said they were firm on the price.  They dropped the offer by $30k and ironically said the air conditioner didn't work.  They wanted $4000 to replace the outside unit.  The reduced price did not match the cost of repairs.  However the inspector took pictures showing temperatures and showed that the AC worked, but later documented that it didn't work.  First we have to understand that I had the thermostat set for 88 degrees (the outside temperature was 110F).  The output from the AC will only drop a percentage of the ambient temperature.  I think they were expecting an output of 50 degrees or so.  I argued with them on the condition of the AC even though pictures showed it was clearly working, but they wouldn't budge on their ruling.

So they thought I would go for it but I didn't.  They thought I wanted to quickly unload the property but I didn't.  

Original value:  $224,000

Zillow Cash Offer: $181,000

I ended up selling with a realtor and getting $224,000, minus closing costs and realtor commission.  In the beginning I was impressed with the service and professionalism, but later everything changed.  They assumed I would accept a low offer and tried to bully me about my air conditioner.  They wanted an air conditioning certification too.  I asked them what was a certification and they couldn't answer the question.  I offered to pay for an AC inspection/certification without paying for the replacement but they only wanted the replacement.

Anyway.  I like Zillow a lot but be aware that investors will be investors.  The home-buying service was a big negative!  

In the future I hope to sell properties on Zillow as FSBO. Hopefully that will work better.

Good luck!

That is the modus operandi of Zillow and OpenDoors. Final offer is nowhere near the original and they try to rip off the seller.

@Gene Hacker No I didn't pay any fees but I can't help to think it was a waste of time.  Zillow paid for both inspections.  

@Anthony No I'm not sure if they were contracted out.  They wore Zillow shirts with logos so they seemed legit.  Sorry for the slow response Anthony.

So it sounds like Zillow Cash Offer is a great way to get a free inspection. Did you get any copy of the inspection report? I wonder if they would still offer you the originally offered price if you have a perfect house or if you fix everything they complain about. I have a property in an area where they offer this service but I don't want to hassle my tenant. Most tenants immediately move out once they think you're selling the house.

@Darrell D.   -  Can't say I'm surprised.  I'm glad to hear they aren't trying to do volume with $10k margins.  We'd be a real big trouble if they ever got that desperate

I also had the same experience with Zillow. It’s funny how no where on their website can I find anywhere to post a review. So I live in Henry County GA, I was fortunate enough to be able to buy another house before selling my first one. With 3 kids- me and hubby were looking at an easier option for selling so decided to get a few quotes. First from open door who wanted to say the market value of our house was at $185k when property values put us at $195k. Minus all fees they wanted to offer us $161k and this was BEFORE they even inspected the house. They couldn’t give any good reasons why offer was so low. So once my husband heard Zillow's advertisement on the radio we gave it a shot. They came in at market value and put our house at $195k yaay! Or so we thought. Minus their fees and 8k in repairs they estimated BEFORE actually coming to the house put us at an offer of about $178k. So we thought ok once they actually come and see we don’t have 8k worth of repair the offer should be higher. All the house needed was paint and patch work to b done. We replaced the ac unit and water boiler last year so those we thought were a plus. Zillow sent two reps out who took pics and did a full inspection. Within 2 days we got this long ridiculous list of repairs we “needed” to do to sell the house. Offer was now $154k. The list didn’t break down any of the repair costs. Just gave a total of $30k worth of repairs. Long story short we put 2k into painting and patching and got a cash offer within 2 days of listing house with normal realtor and sold house for $198k two weeks ago.

Zillow offers made it to California recently and I decided to give it a go.  It’s important to note that only certain areas are eligible including San Bernardino county, where my property resides. It’s a two stage process: the initial offer and the final offer. The initial offer is based on the Zestimate and recent sales. If you elect to proceed, Zillow sends two inspectors to the property to take pictures and look for possible repairs to arrive at a final offer. You have the option to be present but you can sign a waiver if you can’t be present. The initial offer was a couple hundred dollars less than the Zestimate, which figures. How can Zillow give an offer that’s not near the Zestimate without looking foolish? I decided to move forward and scheduled an appointment with the inspectors and made sure I was there to see it. They were on time and very professional and the inspection was done in the time Zillow said it would be done. I scheduled a follow up with our Zillow representative to receive the final offer a few days later. This is where the rubber meets the road. The call was a conference with the Zillow rep and a property evaluation specialist in the local area who provided the details of the final offer. The initial offer was 297K, which was in line with the Zestimate. Minus Zillow’s commission of 7.5% I would’ve make a decent return on the investment at about 285K. However, the final offer, after commission and “seller concessions” was 244K.  Yep, 40 thousand less. After some questioning and explanations, I was told that the offer was reduced to 287K based on nearby listings. This is just plain wrong. Nobody I know evaluates value on listings. Everyone I know evaluates on sale prices. This was a red flag. Next, the repair estimates were way too high. For example the roof is two years old, but they claimed $4800 in repairs were necessary. At this point I realized that a deal was not possible and told the rep so. In short, Zillow offers is probably right for certain owners, it is definitely wrong for investors.

@Dave Hanks Thanks for sharing Dave. It's unfortunate but it's pretty much the same as my story. It's extremely frustrating to go weeks into the process and receive the low offer. That's their business model I'm sure... they're hoping to catch sellers at a bad time and get a nice deal. I was able to sell both of my homes on the MLS without Zillow, at nearly my asking price.

Thanks so much to all of you for sharing your experiences. We just started the Zillow Offers process and I jumped on here because we were already disappointed with their initial offer. Good to know that we are likely only headed down on that offer after the inspection. Gonna peace out on the deal and save our peace of mind :)

zestimates are always lower than other estimates.  They are doing this on purpose so they can come in with a low bid.  Problem Is too many people rely on zestimate alone.

Originally posted by @Account Closed :

zestimates are always lower than other estimates.  They are doing this on purpose so they can come in with a low bid.  Problem Is too many people rely on zestimate alone.

Hi Karen.  During my process they didn't use the Zestimate and I believe it was not affected when I was trying to sell my house.  The initial offer they gave me was lower due to not having realtor commissions which made sense.  The adjusted offer came after the inspection and was far lower than the first and was based on air conditioning issues which didn't exist.  The Zestimate remained the same and worked against them... I sold the house through other means.

 

Yes, I read your post.  My point was that your experience supports my observation in the sense that I think they are trying to be "market makers" and sort of control prices.  They are a prime place consumers look to obtain market information.  I think they are sleezy in their overall behavior. 

So I’m living in a house where Zestimate is about 20% higher than what I realistically could sell for.  What are the chances that they put so much faith in their number that I still could get a good offer if I chose to sell through their services?

Originally posted by @Kris L. :

So I’m living in a house where Zestimate is about 20% higher than what I realistically could sell for.  What are the chances that they put so much faith in their number that I still could get a good offer if I chose to sell through their services?

Hi Kiss.

No it wasn't used during the process.  Of course I used it to evaluate their first offer but other than that, no it really wasn't used.

 

Thanks for sharing the process! This was certainly very helpful to know what to expect and what their steps are to get to their final price. 

I tried Zillow offers and was offered 281k that after they were going take a 8% fee and closing costs I would net 256k. I listed my home and it sold in 2 hours for 333.5k The Zillow guy told me the offer was based on comps. Kind of strange when the house next to me had sold a month earlier for 326k and was a much smaller home. I guess they use comps from 2009. This service is a total joke unless you are going to prison and need fast cash.

The problem is they are offering something they cannot deliver, none of us can.  Buy at market from the seller and resell at market, while making a profit.

It is a similar approach to the wholesale market, except the properties are not distressed and they claim to be buying at market.  Since there is not enough margin in the buy / sell they are playing games with the repairs.

I do not see how these ibuyers will make it trough a down turn.  The debt service it takes to buy and hold these properties is crazy.  While it is money from VC's and selling stock,  it is not a bottomless pool of money, investors will eventually flee if they cannot hold the margin.  They advertise, they are going to change the market and it is true, just not for the better.  It is introducing cheap money into the market that will artificially drive up housing costs.  The only saving grace is collectively they will never be large enough to move the needle nationally.  This is not to say they couldn't make a huge mess of a city or two.

If I look into my crystal ball, there will be more companies rushing into the market.  One or two players left after the shakeout and it will be the wholesale model.  I will buy your house immediately for a discounted price.

Good points @Lesley

I still don't know what their purpose was for the property.  Was it for flipping,  rental, or maybe Airbnb? I've never seen a house sold  or rented by Zillow as the owner.  I'm assuming the business name changes after the purchase.

Wait. Zillow charges 7-8% fee? Why would anybody even start the process with that high of a fee? And does anybody have a good story about dealing with them?

My neighbor just sold her house to Zillow for $309,000 which is at least 10k higher than what similar homes in the neighborhood are listed for currently. One week later, Zillow has listed it for $328,000! I got an initial cash offer from Zillow yesterday and it came back at $275,000. My house is 200 sq ft larger, has the same upgrades as my neighbor's, AND we have a small yard when my neighbor's house has no yard (just patio). Both houses were built in 2017 so there's nothing that needs fixing. I don't understand why they offered her so much. My neighbor couldn't explain it either. She said it was a great offer so she took it and ran! Will be interesting to see if it actually sells for $328,000!