Zillow Offers: I tried it, here's what to expect
The media outlets have been shouting from the mountain tops: "Zillow is now buying homes!!"
It's true. Zillow, the world's most trafficked Real Estate website, is finally dipping their toes in the water. With a current valuation of 5.5 BILLION dollars, 1.1 BILLION in revenue, 431 million dollars of cash on hand, and armed with the world's most robust and well populated database of Real Estate information, it was only a matter of time before Zillow got their feet wet.
Zillow has been around for a while now, since 2004. But for the longest time the accuracy of their data has been their Achilles heel. The wildly inaccurate 'Z-estimates' were just the tip of the iceberg. Hiding below the surface was a mountain of inaccurate data, assumptions, and huge margins of error. In their book, Zillow Talk: The New Rules of Real Estate, published in January 2015, they even admit to a margin of error of 7%. (If you're a real estate nerd like me, I'd highly recommend reading it).
Over time though, We -- the Realtors -- slowly uploaded or otherwise syndicated listing after listing, correcting their info. Homeowners would also correct the info on their own homes, just to see their Z-estimate go up. Let me say this another way. Agents, freely, gave Zillow the rope they're using to now hang us with. That's another blog post for another time, but the takeaway here, is that Zillow's information is better than ever, and their margin of error is tighter than ever.
Now, if you've read this far, its likely because you're truly contemplating selling your home to Zillow, in which case. DO NOT start the process until you've read this, to the end.
So here's how it went: I logged into zillow.com/offers, typed in my address, and started the process. Currently, Zillow is only "testing" the program in Atlanta, Denver, Las Vegas or Phoenix; and within those cities, some neighborhoods are not included, Sloan Lake being one of them. I presume that they're excluding areas undergoing rapid gentrification, which can skew the values drastically, opening the door for Zillow to be taken advantage of by someone who knows more than they do.
Zillow first asks a barrage of rapid fire questions, one and at a time. Pretty simple stuff, especially if you're prepared. (i.e. how many bedrooms? do you have a pool or spa?). The questions take about 15 minutes. No biggie.
Next up, a "Seller Success Specialist" from Zillow is going to call you directly to chat it out with you. They're very friendly and helpful, and they also ask questions that might seem harmless, like "why are you looking to move?" "Where are you planning on moving to?" "Are you trying to have a quick closing?" Information is the most critical part of a real estate deal, and if you offer up ANY info on your personal matters, you're likely putting yourself at a disadvantage.
Zillow personnel have said to me on a few occasions that they're doing Zillow Offers because they just want "provide a service for sellers", and to "help home sellers have more options". While the statements might sound altruistic in nature, make no mistake, Zillow is for-profit company, looking to use all of the information they have.
Again, DO NOT offer up any free information about your personal situation. When asked about your motivations, simply say something like "I have a lot of options, and i'm just exploring them." Do NOT say "I need the money and I want to close as soon as possible." If (any) buyer knows your motivating factors, you're more likely to have that used against you during your transaction.
After this, they asked me to upload some pictures, of every room, so they can further assess my home. So I tidied up the house and snapped some pics, uploaded them the next morning. 24 hours later, I had an offer in hand, for 573k, and I could choose when close, between 7-90 days out.
The Z-estimate on my home was 629k, but I know full well that my house is worth 700k, if not more. That's not my biased opinion; seeing as how I built all the homes in my community, and have sold well over 30 million dollars of homes in my neighborhood, I know what its worth.
Nonetheless, Zillow claimed my home had a market value of 622k (7k less than my Z-estimate), and then they took some discounts for closing costs, future repairs, and a big one for their "service fee". 573k.....
My Seller Success Specialist called me right away to discuss the offer, and tried her best to get me to agree to it. DO NOT ACCEPT THIS FIRST OFFER... unless of course, you know something they don't. Obviously, I told Zillow that my home is worth 700k, and their offer was far from acceptable. So we discussed my next step.
The home inspection. At no cost to me, Zillow sent a 3rd party inspection company as well as a Zillow employee to do a rather thorough inspection of my home. These inspectors were all business. A 4 man team was in and out of a 4,200+ sq ft home in 75 minutes. They looked at the attic, scoped the sewer, tested each appliance, measured every room, and took plenty of pictures, as any inspector would. Very professional.
I had to wait a week to get the inspection results, which they don't actually share. But since I oversaw the entire inspection, I knew my home was in damn good shape. Certainly, Zillow had to up their offer knowing the near-perfect condition of my house, and surprisingly, they did! But only by 4k. Better than nothing. 577k now. If I were to sell my home the conventional way, I'd expect to walk with 660k all said and done, yes, even after paying commissions. that's an $83,000.00 dollar haircut.
At this point, Zillow brings in a local Real Estate Brokerage to assist them in brokering the deal. Of course, I declined the offer once more, and did my best to talk them up. They weren't budging. Knowing I had zero intention of moving forward, they still offered to send me the over the contract docs for my review, thinking I might change my mind when the deal turns "real".
No, they don't use the state approved forms and it's is a terribly one-sided contract, designed to protect the Buyer. shocking. If you get to this point and intend to move forward with Zillow, I'd suggest you at least try to get a few changes made to some contract language. It's a long shot they'd change anything, but it's worth a try.
All told, Zillow was professional and prompt, like you'd expect from a 5 billion dollar company. And honestly, this is a pretty decent option for someone is desperate to sell. But that's about it, I'd never recommend taking such a huge discount just to make the process fast, easy, and less stressful.
P.S. It's been a week since last contact with Zillow, and in that time, mysteriously, my Z-estimate has gone up, by
53k
to 682k.
To be continued........
