More Americans are selling their homes online to real-estate companies Opendoor and Zillow
More Americans are turning to online real-estate companies like San Francisco-based startup Opendoor and Zillow to quickly sell their homes; no open houses, considering multiple bids, or waiting on a buyer to work out financing, it is reported.
Zillow Offers is already available in seven US markets, including Phoenix, Las Vegas, Atlanta, and Denver, and will soon be launching in Riverside, California, Zillow announced on Tuesday.
The service radically simplifies the selling process for homeowners: They enter their address online, answer questions about the home, send in photos, and wait for Zillow to consult a local real estate agent and come up with a home value estimate. It takes only about two business days.
Then Zillow sets up an in-person walkthrough before handing over a confirmed offer. If the homeowner accepts the offer, they choose a closing date between seven and 90 days from signing.
Zillow spokeswoman Jordyn Lee said they have closed on a house in as little as five days because they wanted to help the seller who was in a time crunch. In Riverside, the company’s newest market, Zillow says it’s focusing on homes in the $200,000 to $600,000 price range, which it aims to resell within three months.
But there’s a catch for homeowners. A typical real estate agent may charge a commission fee of 5% to 6% of the purchase price, whereas Zillow commands 6% to 9%. Plus, the homeowner is on the hook for any repairs or necessary adjustments made to the home after closing.
Likewise, Opendoor, which launched its direct-to-buyer service in 2014 and now operates in over a dozen markets, charges a fee between 6.7% and 13% of the purchase price, according to a report. The closing period for sales on Opendoor can range from 10 to 60 days, according to the website. It was reported in June 2018 that the company was valued at more than $2 billion and buys homes with an average price of $250,000.
A senior research analyst with Craig-Hallum Capital Group, Brad Berning said that i-buyers are here to stay. Berning estimates that by 2021, virtual buyers could account for 10% of the existing home-sale market.
Cofounder of Prevu, a New York-based real-estate startup, Chase Marsh said in a contributor article in June that the convenience of selling online to a company rather than dealing with people is a huge draw, but the high fees aren’t worth it – at least not yet.
Marsh wrote, while iBuyers provide the convenience of selling quickly, matching expert investors against consumers isn’t always the best thing for the consumer. Choice is good, but a home is generally one’s largest asset, so the owner may want to consult an expert before ‘iSelling.