Zillow begins making cash offers for houses based on its 'Zestimate' in push to snap up properties as home prices rise at the fastest rate in seven years
Online real estate listing site Zillow will begin making cash offers to homeowners based on the company's 'Zestimate', a price estimate of the home's market value.
Zillow announced on Thursday that its home value estimation tool is now an initial cash offer for eligible homes in more than 20 cities nationwide, marking a major change of business model for the popular listing platform founded in 2006.
'This exciting advancement demonstrates the confidence we have in the Zestimate and the lengths we are willing to go to make selling your home truly seamless and easy," said Zillow Chief Operating Officer Jeremy Wacksman in a statement.
'Presenting the Zestimate as a cash offer to qualifying homes up front will save time, reduce friction and provide greater transparency - getting us closer to our vision of helping customers transact with the click of a button,' he added.
The 'Zesitmate' value estimation tool is now an initial cash offer for eligible homes in more than 20 cities nationwide, Zillow said
Zillow CEO Rich Barton is seen above. The move marks a major change of business model for the popular listing platform founded in 2006
Zillow revealed in regulatory filings that it has already dipped its toe in the property market, selling about 900 homes in the fourth quarter at a net loss of $67 million.
The company aims to improve efficiency by scaling up to large volume, focusing on making small margins by flipping lots of homes.
After a customer requests a cash offer from Zillow, a Zillow employee will inspect the home, provide a list of needed repairs and an adjusted final offer, and the homeowner can pick a closing date. Zillow charges sellers a fee of about 7.5 percent on average.
Currently, Zillow's Zestimate is published for nearly 100 million homes nationwide, and the company claims median error rate for on-market homes of 1.9 percent.
To determine the Zestimate, Zillow says it uses data from public records, feeds from multiple listing services and brokerages as well as artificial intelligence to analyze photographs.
The move positions Zillow to become a major player in the residential real estate market, and comes as U.S. home prices rise at the fastest rate in seven years, fueled by low mortgage rates and Americans moving from crowded urban areas to houses in the suburbs.
Home prices climbed 10.1 percent in December from a year earlier, according to data released this week from the S&P CoreLogic Case-Shiller 20-city home price index.
Home prices climbed 10.1 percent in December from a year earlier, according to data released this week from the S&P CoreLogic Case-Shiller 20-city home price index
The year-end jump was the biggest since April 2014 and follows a strong 9.2 percent year-over-year gain in November.
Home prices climbed 14.4 percent in Phoenix , 13.6 percent in Seattle and 13 percent in San Diego in December. But prices also rose all over.
Chicago, which recorded the slowest price gain, saw a 7.7 percent uptick. Detroit was not included in the year-over-year figures because of record-keeping delays caused by the coronavirus pandemic.
Zillow launched as a media company selling advertising on its website, but has expanded to offer property management tools and a mortgage marketplace.
The latest move will see Zillow snapping up properties and flipping them for profit.
The company said the initial offer equal to the Zestimate valuation is currently available on a limited subset of homes in certain markets.
Markets with homes eligible for the program include: Phoenix, Dallas, Houston, San Antonio, Las Vegas, Atlanta, Minneapolis, Miami, Denver, San Diego and Los Angeles.
The program is also available in Tucson, Arizona, Charlotte and Raleigh in North Carolina, Jacksonville, Orlando and Tampa in Florida, Portland, Oregon, Colorado Springs and Fort Collins in Colorado, Nashville, Tennessee, and Riverside and Sacramento in California.
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