Buying & Selling Real Estate Discussion

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Darrell D.
  • Rental Property Investor
  • Springfield, OH
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Zillow Cash Offer - My Experience

Darrell D.
  • Rental Property Investor
  • Springfield, OH
Posted Aug 31 2018, 10:08

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!

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Randall Weatherall
  • Real Estate Agent
  • Memphis, TN
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Randall Weatherall
  • Real Estate Agent
  • Memphis, TN
Replied Feb 11 2020, 07:36

I wonder if/when this will get to Memphis?  Our property set doesn't seem to be what they're after and we've already had Roofstock assist us in raising the prices of units in areas where we didn't think it was possible anytime soon.  In any case, I think just about any investor should be against this, especially in the upcoming correction as they can often be quick to reach out and quick to close on these buildings that will inevitably popping up for sale.

Wait and see, I reckon.

  • Real Estate Agent Tennessee (#348070)

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Rob Massopust
  • Real Estate Broker
  • Santa Ana CA [South Coast Metro]
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Rob Massopust
  • Real Estate Broker
  • Santa Ana CA [South Coast Metro]
Replied Feb 24 2020, 20:58

Zillow is in a winner take all mode, its either going to be the Amazon of the real estate market or not. Hard to say. I wish I bought Amazon stock when I had an ecommerce company 10 years ago, Amazon ate up all my customers after luring me onto their platform as a 3rd party seller, OUCH. 

Here I just found a house with a Zillow for sale sign. [I cant post it because it gets removed but the zip code is 92866

Zillow just bought a house in the City of Orange CA, a nice house in a nice area. Sold data shows them paying 

Sale Date 12/31/2019
Sale Price $650,500
Buyer Name Sph One Lllp [Zillow LLC, look up address]

Now the property is back on the market, as pending and in escrow within same day for $662,000.00

And they are offering a 2.5% commission. Huh how can they do this? Maybe the charged the seller the 5-12% but closed for higher price. Property is completely rehabbed. In 2 weeks. How does this business model work?

This news article shows they are losing money on each flip, and based on the above metrics that seems to be the case. https://wolfstreet.com/2019/05/10/house-flipper-zillow-lost-109k-35-per-flip-net-loss-triples-shares-soar/

Now they say they are shifting gears and slowing expansion.
https://www.kmov.com/zillow-is-losing-millions-on-selling-homes-ceo-isn-t/article_3c33debd-fb28-53e3-b95a-23b8f679fcef.html

Someone is going to win Zillow or the Market - We shall see....

Why Steve Eisman, Famed for Betting Against Sub-Prime Mortgages, Is Betting Against Zillow

https://timandjulieharris.com/2019/08/29/why-steve-eisman-famed-for-betting-against-sub-prime-mortgages-is-betting-against-zillow.html

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Marlen Weber
  • Specialist
  • Plano, TX
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Marlen Weber
  • Specialist
  • Plano, TX
Replied Mar 12 2020, 10:31

@Darrell D. Thank you for sharing your Zillow experience with us. I have seen this as an option quite a bit and have wondered what the process of selling your home to Zillow would be like. I am glad that it worked out in the end and that you were able to sell your home for a higher price. 

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Darrell D.
  • Rental Property Investor
  • Springfield, OH
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Darrell D.
  • Rental Property Investor
  • Springfield, OH
Replied Mar 12 2020, 10:53

@Marlen Weber Thank you Marlen.

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Shelley Clements
  • Vendor
  • Ardmore, OK
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Shelley Clements
  • Vendor
  • Ardmore, OK
Replied Mar 18 2020, 19:12

I tried selling FSBO on Zillow but I did not have much luck. This was before I was a realtor. I ended completing the sell with a buyer that a realtor brought in. I don't know if it would have ever sold without a realtor in our market!

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Gregory Chadwell
  • Realtor
  • Milwaukee, WI
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Gregory Chadwell
  • Realtor
  • Milwaukee, WI
Replied Apr 1 2020, 11:25

Yes as a realtor I had a similar scenario with an out of state investor.  He did a cash offer subject to his contractor's inspection.  They came back with 40K in repairs.  The trick with him was that they put that earnest money 10K to be paid within 10 days.  They got in, inspected and lowballed before any earnest money receipted. We could have tried to keep the earnest money but we never received it.  Lesson learned , NO INSPECTION until we receive earnest money! That rule is with every deal now!  (disclaimer not a Zillow offer) 

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Santhi Mani
  • Rental Property Investor
  • Los Angeles, CA
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Santhi Mani
  • Rental Property Investor
  • Los Angeles, CA
Replied Jul 10 2021, 14:20

Basically, zillow offers are no strings attached which may be attracting the sellers to give a try as the sellers do not need to fix or prepare the house. If luckily the zillow's final price is higher than the nett price what otherwise the seller might get through the routine channel of, fixing, preparing, staging, getting into a contract with a realtor for 3 months, holding cost etc. it may look like a "give a try with zillow" scenario. Some people are lucky to succeed in this looks like.

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Patrick Hancock
  • Real Estate Broker
  • Orlando, FL
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Patrick Hancock
  • Real Estate Broker
  • Orlando, FL
Replied Sep 14 2021, 08:08

From what I have seen is that their business model is to lock the deal down and then ultimately purchase your property below market value by beating you down after the inspection and with fees. However they arrive at the final offer price it is below market value.  

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Darrell D.
  • Rental Property Investor
  • Springfield, OH
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Darrell D.
  • Rental Property Investor
  • Springfield, OH
Replied Sep 14 2021, 08:26
Originally posted by @Patrick Hancock:

From what I have seen is that their business model is to lock the deal down and then ultimately purchase your property below market value by beating you down after the inspection and with fees. However they arrive at the final offer price it is below market value.  

I agree.  Each time they haggle about repairs it's another opportunity to walk away because it's a new contract every time. If you hold your ground they walk away.  

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