Zillow: Killing the Golden Goose?

Question

There is a lot of talk in the real estate sphere this week about Zillow's entry into the wholesale market with their Instant Offer program starting its trial run in Las Vegas & Orlando.

"The industry is up in arms about Zillow displacing agents and brokerages, but the data doesn't support it. Instant Offers is about giving consumers choice, expanding the existing lead marketplace and providing a new source of revenue with seller leads. Zillow is not well-positioned to make a big move against the industry. Its revenue is not diversified and there is a strong No. 2 on the market."

What are your thoughts??

Account Closed · Answer

lets keep our fingers crossed   Am i allowed to handicap bets on bigger pockets ?

@Mike Cumbie

Russell Brazil · Answer

I disagree a bit with Zillow causing serious damage to Realtors.  Zillow's main source of revenue is selling leads to Realtors.  So without Realtors/Agents Zillow can not be a profitable company. Conversely the main source of data that Zillow uses is data provided to them from Realtors. It is a symbiotic relationship.  Realtors give data for free to Zillow, then Zillow turns that data into leads and sells it back to Realtors.

Andrew Johnson · Answer

@Foster Algier I guess I just looked at this as the next logical step of their "Make Me Move" product already. If homeowners can easily state their "Make Me Move" price, isn't the next logical step for all-cash buyers to state their "Will You Move For?" price? How this gets monetized over the long-term, if others will see these listings and try to go around Zillow, etc. all remains to be seen. The bottom line is that the population is getting more and more tech savvy. How long did anyone think blasting out yellow letters through snail mail is going to be the optimal lead generation methodology? It will likely end up like most things: absolutely horrible in the beginning (bad offers, slow responses, "boycott Zillow" rallying cries) and slowly get better over time.

It doesn't strike me as concerning if I'm in the shoes of a realtor. It would strike me as concerning if I owned a business selling yellow-letter-marketing-services to wholesalers or made all of my money is producing bandit signs.

It doesn't strike me as concerning if I'm in the shoes of a realtor.  It would strike me as concerning if I owned a business selling yellow-letter-marketing-services to wholesalers or made all of my money is producing bandit signs.

Russell Brazil · Answer

Every time I have a client bring up the Zestimate, I just point out that the Zestimate for the CEO of Zillow's house was off by $700,000/40%.

Andrew Johnson · Answer

@Mike Cumbie It's going to be really fun when this hits California.  The Zillow algorithm doesn't take into account "ocean front" versus "across the street".  Estimates (unless the property has sold) are literally off my millions of dollars.  Makes my $220K over-market Zestimate seem like chump change...

Mike Cumbie · Answer

I honestly don't think sending people an instant offer from an investor for 60% of Zestimate minus repairs is going to make a bunch of people jump up and fall in love with Zillow. Currently I spend a decent amount of time explaining how market value is really 100K when Zillow says it is 115K for their house. Now Zillow itself is going to be sending them an instant offer of 65K. Sure they will get some bites but I think as people start to realize that they got 70% of what they could have gotten they will shop around.

I could be wrong, if so I will start buying with "Guaranteed 2% more than your Zillow instant offer"

:)

Account Closed · Answer

I dont know where you got those numbers from @Mike Cumbie but I just sent out an instant offer on a home in Vegas. Zestimate is reporting at $143000 which is pretty accurate I will update the topic when  recieved

Account Closed · Answer

https://chicagoagentmagazine.com/2017/06/06/zillow...

There a a bunch of companies moving into this space and it is going to be a game changer in the industry just like Uber

There is already a nationwide backlash among realtors  zillow is the 800 pound gorilla  and can cause some serious damage to realtors

Mike Cumbie · Answer

Account Closed,

If your offer is in the 130's I would have concerns. If it is in the 100K range, I'm not too concerned about Zillow going nationwide with it.

Andrew Holmes · Answer

@Foster Algier

@Mike Cumbie

Foster I think with what Mike said that 60 or 70% of zillow price minus repairs will not make most folks jump.

On the other hand the whole Zillow move makes me think that at some point someone will compete with agents and go far the commissions for a smaller price. I was a agent for years and if I was still on the sales side of things this would have bothered me. Not that all agents will go out of business but there will be a downward pressure for most agents. The real good one will do good for a while but the industry is bound to come under attack. The Uber for Taxis will come in some shape or form to the real estate industry.

I am curious how the powerful Realtor lobby reacts to it in a political manner. I feel this is bound to happen and will affect a lot of folk in terms of making a living. Real estate is still local so not sure how it would come but over time it is bound to happen.

Technology and access to info is double edged sword and cuts both ways. MLS used to be the holy grail of info not accessible to the public. Now every MLS around the country sells access including Realtor.com I think it will come back to bite them in the long run.

Zillow: Killing the Golden Goose?

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