Zillow is buying homes in Charlotte, offering fast cash to sellers.
The online real estate juggernaut continues to ramp up its Charlotte team as the company shifts strategic focus to its newly created “Zillow Offers” product which debuted in Charlotte about two months ago.
Charlotte is one of only seven markets across the United States in which Zillow is now buying homes. And Zillow Offers is taking off, fast.
Even though it’s a new program and only in seven markets, 40,000 homeowners have requested an offer from Zillow to buy their home. The company bought 499 homes and sold 141 homes in Q4 2018.
Until now, Zillow hasn’t done paid advertising, but that’ll change as they’re buying TV and radio ads in markets right now.
“We hope to be purchasing 5,000 homes per month in the next three to five years,” a Zillow spokesperson told the Agenda.
Catch up: Zillow Offers is a new program where the internet company buys houses for cash.
Limited availability: It’s not available in all Charlotte zip codes. For example, I live in 28209 and when I typed my address into the tool, I got this response,” Zillow Offers isn’t available for this home.”
How it works: Homeowners plug in their address and a few details about their property, snap a smartphone photos, and then within a few days, the homeowner receives a cash offer price from Zillow. It’s a free no-obligation offer, so you can always get an offer and then decide to go the traditional route or the for-sale-by-owner route. If the homeowner accepts the offer, Zillow will send an inspector to your house and you choose your closing date. Zillow buys your home and then handles renovations and showings and ultimately sells the house to a new owner.
Zillow’s pitch: “Selling a home can be extremely stressful – it’s one of the largest financial transactions many people will make in their lifetime. Zillow Offers alleviates some of that stress and uncertainty so home sellers can move onto the next stage of their life,” said Zillow Brand President Jeremy Wacksman.
Making money: Zillow makes money from charging customers a 6 to 8 percent fee (a typically brokerage model charges customers 6 percent).
From a seller’s perspective, what’s it like to have Zillow buy your home?
I spoke with Sarah Chambers who recently sold her home to Zillow. Sarah and her husband have three children and after evaluating their home, they realized that it was going to need fresh paint and new carpet before a sale. They wanted to sell the home for a good price without the stress.
They put their address into Zillow Offers. “They got right back to us the next day,” Sarah told me. “We closed within two weeks.” The offer was higher than others they had received from investment companies that buy up homes.
“We paid a convenience fee equivalent to what you give realtors,” said Sarah. “It’s not for everybody, but it was great for us.”
Zillow’s Charlotte operations are based in the CoCoTiv coworking space in Montford Park. Charlotte was Zillow’s first North Carolina market for the program and the fifth overall. The program currently exists in the following cities: Houston, Raleigh, Charlotte, Phoenix, Denver, Atlanta and Las Vegas.
Zillow is hiring in Charlotte.
The company currently has about a dozen local employees focused on Zillow Offers led by GM Jeff Gibel, previously VP of acquisitions for River Rock Capital Partners in Huntersville.
Job openings: They’re hiring for four open positions right now: Renovation Estimator, Seller Success Specialist, Renovation Field Manager and Renovation Superintendent.
Rather than completely disrupt the real estate broker model, Zillow uses it.
The company is using local agents on both sides of the transaction and has chosen The Redbud Group at Keller Williams SouthPark as its Charlotte real estate partner.
“Getting the chance to work with Zillow as they begin buying and selling homes in Charlotte was an opportunity we didn’t want to miss,” said Trent Corbin, founder of The Redbud Group. “The real estate market is constantly changing.”
How Redbud makes money: Zillow pays a negotiated commission to Redbud when it buys and sells each home, and the company says that “agents remain at the center of every transaction Zillow is a part of.”
Further, Zillow has passed along leads to four other brokerages when a seller decides not to go with Zillow to list their home. Those four are the Premier Team at RE/MAX Executive, Century 21 Vanguard, Stephen Cooley Real Estate Group – Keller Williams and IDEAL Realty.
Competition: That’s a different approach than startup competitors like Knock.com, Opendoor and Offerpad. Those three companies also make cash offers on homes, helping people move without the hassle of hosting buyers.
Why it matters
Zillow is the 800-pound gorilla in the real estate industry. As an $8 billion publicly traded company and already dominant on the buying side, Zillow has the capital and consumer-buying demand that gives it an advantage over their competition.
If Zillow Offers becomes a popular mainstream way to sell your home, it has the potential to upend the traditional selling process.
And for sellers, more optionality is better. It also provides liquidity. The question remains: How much will sellers value convenience versus an extra 2 or 3 percent? Basically, how many people want fast cash for their house versus how many people want to go through the home selling process? We’ll see.
Written by: Ted Williams for Charlotte Agenda