As an experiment a seller of ours recently queried Zillow online to try Zillow’s “Instant Offer” program. In this program, Zillow encourages homeowners to “Skip the hassle. Sell to Zillow.” We’re also seeing a flood of these kinds of instant cash offers or guaranteed offers from other companies.
We weren’t surprised with the particular response. But our client sure was!
After a few days came a phone call and email to us, their agent, from a Zillow rep proposing to buy the home for a “net cash” amount more than $35,000 LESS than the price we currently had it listed. And they hadn’t even seen the home yet…
Here’s the breakdown of this “generous” Zillow offer:
First, they “valued” the home at nearly $10,000 LESS than the listed price. This number is based on online tax information and a confusing mishmash of other online data the company computers“scrape” online. So, they start with a low-ball offer and work down from there. What they offer in return is “no showings or open houses,” “we take care of prep and repairs,” and “sell on your own schedule, choose when to close.” Is this worth $10,000 to you?
Next, Zillow said they would charge the seller a “7.4% service fee.” What is this fee for? No explanation given. When pressed on the phone, the rep explained this fee would be used to help pay commissions ZILLOW would need to pay later when ZILLOW resells the home. So, they ask the seller to pay for Zillow’s selling commission. Never mind how illogical that is. But the fee itself is already quite a bit more than the selling agent and buyer agent commissions combined as we had it listed!
After that, Zillow deducted an estimated $4,480 for “prep and repair” from their offer. Yes, Zillow will “take care” of this but the SELLER pays for it up front by lowering the price by this amount, right off the top. And remember, Zillow had never seen the house and has NO idea of its condition (or upgrades).
When all is said and done the result is, basically, a convenience fee of more than $35,000 for the privilege of letting Zillow buy the home from our seller. Obviously, our seller declined. But this is what is being touted as a fresh approach to home selling with these new, instant offer companies.
Please keep your hard-earned money. A professional, expert Realtor can give you a much more accurate home value estimate to start with, and we strive to get you as much money as possible for your home, not take as much away as possible.