The Post-Zillow Fallout
In Tampa, Fla., Gary Byrd, 59, a campus facility supervisor at a community college, had recently gotten engaged and was looking to sell his 1,200-square foot, three-bedroom, two-bathroom house, so he could move in with his fiancée, who had a larger home.
Mr. Byrd wanted a transaction that was quick and easy, and “didn’t want people traipsing through my house,” he said. In August, he went online and got an instant estimate from Zillow. Within a few weeks, he had a scheduled home evaluation, and a Zillow employee confirmed that the company would match the online offer of $235,000. Zillow took 3 percent in fees, and an additional $2,000 for minor repairs, and by October the transaction was completed.
“It worked with my busy schedule,” Mr. Byrd said, “and you’re cutting the middleman out.”
He used the proceeds to pay off debt, invest in his 401(k) and buy a new truck. His experience — a seamless sale, with none of the hassle of a conventional real estate transaction — took place just weeks before the demise of Zillow’s iBuying operation.
Before its abrupt withdrawal from the iBuying market, the online real estate marketplace was taking a sizable bite out of the housing supply of several American cities, including Atlanta, Phoenix and Dallas. But Zillow was facing massive losses and has since acknowledged that it erred in forecasting prices, making offers that were too high and failing to adjust to a cooling housing market. It is now working to offload thousands of homes to institutional renters.
This would seem to be a cautionary tale of the dangers of investing in iBuying. Nevertheless, representatives from Opendoor and Offerpad have said that they are ramping up their own iBuying efforts.
Why iBuying Isn’t for Everyone
Conventional brokerages are watching iBuyers closely, and some are responding by rolling out their own versions of the service. Keller Williams, for example, has Keller Offers. And there are websites like QuickBuy that allow brokers to offer clients services that mimic those of iBuying.
But while iBuying has flourished in big cities, especially across the Sun Belt, it has yet to gain a foothold in smaller towns, particularly among more affluent buyers.