The post-Zillow collapse
In Tampa, Fla., Gary Byrd, 59, a campus facilities supervisor at a community college, recently got engaged and wanted to sell a 1,200-square-foot, three-bedroom, two-bathroom home. His fiancee who had a big house.
Mr. Byrd wanted a quick and easy transaction, and he said, “I don’t want people trapped in my house.” It went online in August and received a quick estimate from Zillow. Within a few weeks, he had a home appraisal scheduled, and a Zillow employee confirmed that the company would match an online offer of $235,000. Zillow took a 3 percent fee, plus an additional $2,000 for minor repairs, and the deal closed in October.
“It worked on my busy schedule, and you’re cutting out the middleman,” Mr. Byrd said.
He used the proceeds to pay off debt, invest in a 401(k), and buy a new truck. His experience — a flawless sale, a typical real estate transaction with no problems — was weeks before Zillow’s iBuying operation went down.
Before iBuying’s sudden exit from the market, the online real estate marketplace was taking a big bite out of the housing supply in several US cities, including Atlanta, Phoenix and Dallas. But Zillow was suffering huge losses and has since admitted that it made mistakes in predicting prices, offering too high discounts and failing to adapt to the market for refrigerated homes. It is now working to offload thousands of homes to institutional landlords.
This sounds like a cautionary tale about the dangers of investing in iBuying. However, Opendoor and Offerpad representatives said they are ramping up their own iBuying efforts.
Why iBuying isn’t for everyone.
Traditional brokers are watching iBuyers closely, and some are responding by rolling out their own versions of the service. For example, Keller Williams has Keller Supplies. And websites like QuickBuy allow brokers to offer iBuying-like services to customers.