After exiting home-buying business, Zillow Group partners with rival Opendoor – GeekWire

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The Zillow team still wants to help people sell their homes faster.

The Seattle real estate giant has announced a partnership with Opendoor that will allow home sellers on Zillow’s platform to request instant financing from Opendoor, one of the leading “iBuyer” companies looking to make real estate transactions more seamless.

Zillow last year decided to shut down its own iBuyer business, Zillow Deals, which ended a big home-flipping bet in dramatic fashion with a $405 million writedown and a 25% workforce cut. Zillow said he couldn’t accurately predict housing prices and that the business ultimately needed more capital.

Now, Zillow users can get instant financing for their home, but the transaction is facilitated by Opendoor. Zillow earns a referral fee when a customer sells to Opendoor.

Zillow CEO Rich Barton said the deal allows the company to expand its addressable market and create a suite of seller services.

“This is not just a Lead-Gen distribution deal,” Barton said on a call with analysts Thursday. “This will be a deep integration.”

Barton benefits from Zillow’s investment in developing Zillow offers. More from Barton on the call:

We have invested a lot of time and resources and IQ in figuring out how to organize the cash offer to our home listing page and user flow to attract sellers to connect with us. All of those lessons can be applied to this partnership. It’s exciting because it involves integrating Opendoor’s offering with our suite of services. That gives us the opportunity to bring the process back to the quarter and promote Opendoor financing to our clients for Premier Agents, Lending, Zillow Closing Services, and the many other things we have on hand.

Home sellers can compare financing offers from Opendoor to traditional open market sales that can be facilitated by a real estate agent through Zillow’s Premier Agent program.

Customers can “evaluate their selling options and easily package them with other Zillow services to help buy and finance their next home,” Zillow Chief Operating Officer Jeremy Waxman said in a statement.

Opendoor reached a $62 million settlement with the FTC this week, alleging the company used deceptive marketing practices and tricked customers into thinking they would “make more money by selling their home to Opendoor using the standard sales process.”

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Zillow said the partnership with Opendoor builds on its strategy to deliver a “home super app,” described by executives earlier this year, as a digital experience that “connects all the disparate workflows and brings them together in one transaction.”

“Building additional seller offerings over time opens up significant opportunities for us in agency transactions and services such as mortgage and title and brokerage,” Barton wrote in a letter to shareholders Thursday, which you can read below. “When fully rolled out, this will create another way for Zillow to serve sellers in more than 50 U.S. markets, growing our business in the capital-light way we described when we exited iBuying.”

In the year Founded in 2014, Opendoor went public in 2020 and reported revenue of $8 billion in 2021, up from $2.6 billion last year. It was one of the first to use the iBuyer model, which provides the certainty and speed of an all-cash delivery to pay home sellers. Redfin and Offerpad also have their own iBuyer businesses.

In addition to fees similar to real estate commissions, Opendoor earns money from the difference between buying and selling a home. It also offers ancillary services including home repairs and loans. The company acquired Seattle startup Pro.com last year. Its market capitalization is just under $3 billion, down from $8 billion last year.

For parents looking to upscale, a young professional moving for a new job, and the millions of others who regularly use Zillow to explore their home selling options, we give them the ability to move with the tap of a button. Andrew Lowe Ah Kee said in a statement.

Shares of Zillow fell more than 10% after reporting its second-quarter earnings report. Zillow’s stock is down nearly 40% this year. The market capitalization is more than 9 billion dollars.

Zillow 2Q22 shareholder letter via GeekWire on Scribd

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