Zillow iBuyer program shutting down due to many factors announced by the company. The most glaring is they lost $422 million in the 3rd quarter of this year with expected future losses of $240-265 million in losses just from 4th quarter purchases.
It turns out scaling an iBuying business isn’t easy as easy as they predicted, and mistakes were made. 2/3 of homes listed by Zillow are listed at prices below what they paid for the homes they bought. That is not a sustainable business model. Realtors have complained that the Zillow Zestimate was not always a good judge of value, and it certainly wasn’t a good judge of future values.
Zillow announced it is laying off 25% of its workforce as a result. Rich Barton CEO of Zillow commented that an unintended consequence of buying homes directly from buyers was the fact that 90% of buyers turned them down. It wasn’t a pleasant experience angering customers, and that wasn’t the reason they went into this business.
So, what does Zillow leaving the iBuyer space mean to the rest of the market? We have seen other companies attempt to duplicate Zillow and go on buying sprees. With Zillow ending this program, will other iBuyers follow suit?
Locally we have worked with iBuyer companies, and not all of them performed by the contract. Some have forfeited escrow deposits because they did not comply and refused to close. As a seller, it is scary to think you go to contract and expect the buyer to perform, only to find out the buyer no longer wants the property because their analytics have changed.
Some sellers were willing to sacrifice price for certainty, and now that certainty is gone, how many sellers will be willing to sell at a reduced price?
Top Dollar Realtors
We always encouraged sellers to check with us before accepting an offer. The Ellis Team is known as the Top Dollar Realtors, so if you are contemplating a sale with an investor or institutional buyer you want to know how much you are giving up for a quick sale. The problem was for many sellers, they would go to contract at a certain price. Investor would come back and change the price due to inspection items. That signed contract no longer seemed like a good deal anymore.
We believe it is important to talk to us no matter who the buyer is. Some agents are known for fast sales, but not necessarily Top Dollar. In this market, you can have both, but you must be a skilled negotiator and smart about it. Accepting an offer the same day may make some sense in certain situations, and not in others.
Each seller has different needs and objections. Some want or need a fast sale while other want or need Top Dollar. Like we said, in this market, both are possible, but it is a constant balancing act in some situations.
The Ellis Team Works Differently Than Most Realtors
Brett and Sande work differently than moist Realtors. We take a counseling approach. We seek to understand our clients needs and ask questions. After learning what is most important to our clients, we can offer suggestions based on what we see happening in the streets.
This approach is not used by all, and certainly not in the iBuyer world. In the iBuyer world, the buyer is your foe. They want what you have at the least price they can get it for. The less they pay the more profit when they flip.
Sande and Brett can guide you through the maze of options and discuss what is best for you. Additionally, new real estate sales contracts went into effect November 1st, and there are some big changes. Working with a full-time Realtor is important, not only for getting Top Dollar, but for all the changes too.
Zillow made drastic changes to their business model, and they are a multi-billion-dollar company. Don’t you think you need experts looking out for you in changing times? Always Call the Ellis team 239-310-6500 to get your home sold fast and for Top Dollar, or visit www.SWFLhomevalues.com for the most accurate only price estimates.
Good luck, and Happy Selling!