At the end of May, Zillow dropped a major bombshell on the real estate industry by enabling “Instant Offers” in select locations. The value of the new feature is clear, but there’s plenty uncertainty and anxiety amongst Realtors® regarding the potential consequences. It’s important, though, to understand what Zillow Instant Offers actually is before you decide how you feel about it.
Initially set up as a two-city test, Zillow Instant Offers launched in Las Vegas and Orlando to allow sellers a choice between an all cash transaction with investors or to work with an agent to sell their home. A group of 15 private investors who are either brokers themselves or work with a third-party broker, will have the opportunity to make cash offers on homes that sellers submit to the Instant Offers program. At the same time, a Zillow Premier Agent will have the opportunity to submit a CMA and share the value they can provide. Sellers will choose between the two.
Like every other company in the real estate space, Zillow is looking for ways to make more money and help consumers. In this case, they’ve created an option to streamline the selling process for some homeowners. They also connect agents with more sellers. This may be at the crux of why Zillow began this program – if agents who advertise on Zillow realize there’s another way to gain credible leads, more agents may sign up to be a Zillow Premier Agent. Considering agents make up 70 percent of Zillow’s revenue, this is a fairly safe bet.
The other question asked “Is Zillow getting in the middle of the transaction?” With Zillow testing Instant Offers in Nevada and Florida, by those state laws, Zillow is not acting as a broker. Because the company (currently) receives no compensation from the sale of real estate, they aren’t required to have a brokerage license. The other key point is that during this test, Zillow actively encourages sellers to work with an agent.
The process for a seller to accept an offer leaves them with three choices:
Notice that two of those options include a real estate professional. During the entire process, Zillow says that will email and call sellers to encourage them to use an agent. How that works out, and if sellers choose to use an agent, still remains to be seen.
The process is designed to be quick and practically painless, but it does involve a few steps, according to Inman News.
Zillow Instant Offers is controversial for many real estate professionals while others are learning all they can and hoping it comes to their city. Ultimately, whether Zillow expands Instant Offers or some other company brings a different disruption to the market, what matters is the relationships agents build with their clients. Some of the most successful real estate professionals build their business on happy clients and plenty of referrals, regardless of what new thing enters the market.
Former Communications Director for a local Realtor Association and a big cheerleader for all things real estate related, Michaela is now a full-time freelance writer specializing in real estate and other business industries. When she's not writing the serious business-y stuff, she's likely to be found writing about the hilarity of being a Mom to two rowdy boys.