Scramble to become Amazon of home sales is back on for Zillow, Redfin, other iBuyers
When Opendoor, Zillow Offers and other iBuyers popped up around the country a few years ago, they hoped to upend the traditional homebuying process by doing for real estate what Amazon did for online shopping by using technology to eliminate all the hassles and uncertainties of buying and selling a house. That included offering sellers instant online offers on properties the companies would later resell.
But last spring, with the pandemic bearing down on the economy and the future of the real estate market uncertain, those iBuyers stopped buying, interrupting efforts to disrupt an industry that has long relied on face-to-face interactions. But now they are back at a time when theres a shortage of house listings and properties are selling in record time, prompting some analysts to say the promise of an instant offer isnt enough.
Overall, iBuyers are struggling in this high-demand, low-inventory market, said Mike DelPrete, a global real estate tech strategist. The consumer proposition of an instant offer is less relevant and appealing now than its been in the past.
Opendoor and at least a half-dozen players in the iBuyer space, including Zillow Offers, RedfinNow and Offerpad, said that to make the model more relevant they have retooled the buying and selling process with new systems aimed at eliminating face-to-face contact between buyers and sellers.
And in an effort to raise more cash, Opendoor recently made its case to investors. Last month Opendoor started trading on the New York Stock Exchange after an initial public offering that valued the company at $17 billion just weeks after announcing a national expansion.
The iBuyer model is the product of tech companies that have built national websites that feature house listings and real estate data thats gleaned from multiple listing services and public records. Those companies are using that information to create complicated algorithms based on recent local sales of comparable properties that enable them to quickly determine the value of a property without an initial visual inspection.
Instead of a traditional real estate commission, sellers pay iBuyers a fee thats negotiated before the sale. After acquiring the property the iBuyer does minor repairs before listing the house for more than they paid.
Though critics of the model said iBuyers deprive sellers of the opportunity to expose their property to a broader market and the possibility of a higher price, proponents said the services offer sellers the ability to forgo all the typical premarket home preparations, including home repairs and staging. Sellers also dont have to worry about open houses, home showings and listing photos. They also offer a flexible and guaranteed closing and a quick sale.
It was painless, said iBuyer customer Amanda Broz. I couldnt imagine going the traditional sales route with two little kids and being so busy in our careers.
When she and her husband, Dave Broz, decided they needed a bigger house, they wanted to know how much their house might be worth. They went to Zillow.com, which provides home-value estimates, and clicked on the instant offer button.
They had no intention of doing of a virtual sale, but when they received an instant offer just a couple of days later, they decided to play it through. The promise of not having to ready the house for sale and being able to set a closing date based on when the new house they were buying would be ready was enticing.
Maybe we could have gotten a few thousand dollars more (via a traditional sale), but its hard to know, she said. And we didnt do one repair to our house or touch up paint or fill nail holes. We literally just walked out of the house. We didnt even have to clean it.
Such deals account for just a fraction of all real estate transactions nationwide, according to an analysis of MLS and public records by real estate transactions by Redfin, which operates its own iBuyer platform via RedfinNow.
During the third quarter of those iBuyers accounted for % of all U.S. home purchases. That was a slight increase from the previous quarter, but far below a peak of % during the same quarter a year earlier. Just four years ago such transactions were virtually nonexistent.
In March, Zillow and Redfin, both of which are based in Seattle, and others halted home purchases because of local and state coronavirus shutdowns but also because of uncertainty in the housing market.
Jim Lesinski, Minnesota general manager at Opendoor, said that during the shutdown the company updated its process to make it fully digital and contact-free for sellers. That included new virtual interior home assessments, enabling the seller to walk Opendoor reps through their home via video.
Today, were seeing consumers more widely adopt digital solutions, he said.
Because the company is still in the quiet phase following its IPO, the company wasnt able to provide additional details on market share or future expansion plans. But DelPrete, the strategist, said that while Opendoor is still the dominant iBuyer, its national market share had fallen from 70% in to 50% last year. Zillow, meanwhile, had a 3% market share in , but now has 26% of the iBuyer market.
DelPrete said Opendoors expansion was likely fueled by the prospect of its IPO.
From an optics standpoint, it needs to demonstrate growth, he said. One way it can do that is by launching new markets, and most of the new markets it is launching are smaller, satellite markets near existing markets.
He said that while the consumer proposition of an instant offer might appear to be less relevant than it has been in the past, Opendoor, Zillow, Offerpad and all iBuyers are very slowly recovering.
I believe iBuying is here to stay, he said. It remains a unique customer proposition for a segment of homeowners and solves friction in the process. But the path to success and profitability is a long, uncertain road.
Michael Heller, the general manager for Zillow Offers in the Twin Cities in Minnesota, said it has restarted acquisitions in all Zillow Offers markets and launched its 25th new market in September. It also adopted its own Move Forward. Stay Safe protocols that were developed in consultation with a former U.S. surgeon general.
Kris Lindahl Real Estate, a Twin Cities broker/partner for Zillow, said that the low inventory situation has turned out to be an advantage for many iBuyers.
Low inventory makes it hard to find a home, Lindahl said. And its scary for a lot of people to sell when they dont yet know where their next home will be.
Hes not yet certain the model can overtake the traditional approach to selling but likens the growing acceptance of the concept to online grocery and car purchases.
Its not perfect for everyone, but more and more people are becoming comfortable with embracing technology to make big transactions, Lindahl said. At its core, buying or selling a home is still a very emotional transaction for most people. So, even as iBuying grows, it has to remain a very personalized experience.
4 Top Alternatives to Zillow and Trulia
Zillow Group, Inc. (NASDAQ: Z), is a popular online real estate company founded in Zillow operates as a real estate search engine that lists more than million homes across the United States. It also offers a value estimate known as the "Zestimate," along with comparables for each of the homes listed on the site. Zillow is considered by many analysts to truly be a media company that makes its money from its ad placements.
Trulia, Inc., like Zillow, is another online residential real estate website that connects home sellers with buyers, renters, and real estate professionals in the United States. With a business model similar to Zillow’s, Trulia was acquired by Zillow Group in for $ billion.
- Zillow Group, which includes Zillow and Trulia, is the biggest online real estate company in the U.S.
- HomeSnap is known for its user-friendly mobile app, while NeighborhoodScout provides additional information about an area, such as crime rates and school data.
- One of the best ways to conduct a search for a new home is to use several real estate websites to cull information.
The resulting entity is considered the largest online real estate company operating in the United States with the most popular website, measured by the number of unique monthly visits it racks up—59 million, as of January While an entity as large as Zillow Group provides its users with benefits of scale, its market domination means it hasn't felt the need to adopt some features of some of the smaller competitors in the space.
Many online real estate websites have cropped up to try to dethrone Zillow Group as an industry leader. The following are four options that provide alternatives to Zillow and its subsidiary, Trulia.
Redfin is a large online real estate company that seeks to redesign the way people buy homes. It offers several benefits that make it a viable alternative to Zillow and Trulia. The Redfin app, available on iOS and Android, claims to update its data every five minutes.
On Oct. 29, , several fair housing organizations filed suit against Redfin, accusing the company of systematic racial discrimination. The complaint says the online real estate broker offers fewer services to homebuyers and sellers in minority communities. Housing discrimination is illegal, but it does persist today and you can fight against it.
First, the user interface and site design are very similar to Zillow's and Trulia's, allowing users can search for properties through a map-based function. After searching the site with a city or zip code, Redfin displays information—home value, home appreciation, square footage, year built, homeowner’s association fees, construction components, sewage system specifics, and other housing data points—that a home buyer might want to know. Also, users who are browsing for homes can find favorite units for a side-by-side comparison.
Second, Redfin offers additional features that Zillow and Trulia do not. The company, which began as a real estate broker, employs a team of real estate agents who are rated by Redfin users. The compensation of these real estate agents is directly correlated to the ratings they receive. To help home buyers, the company also rebates part of the real estate commission back to the purchaser.
However, users should be aware that in some cities Redfin does not disclose exact addresses if sellers prefer to keep them hidden, and the site does not automatically provide home value data if the listing agent chooses not to have it displayed. In other cities, Redfin does automatically provides complete sales and listing data.
Finally, while the full data might not always be there, the company integrates with the multiple listing services (MLS) and has homes listed within 15 minutes of the unit going into MLS.
Homesnap is an online real estate platform that includes features such as an intuitive map-based search function and a robust amount of property information. Much like Zillow and Trulia, its real estate browse function is easy to use.
What sets Homesnap apart from the competition is its mobile app. With the app, it is possible to take a real-time picture of a house that is for sale with a mobile device and have the app query all the necessary listing information about the property.
The mobile app even works on unlisted homes, apartments, and condos, giving users property values of places currently off the market. The app is available for Android, iPhone, Apple Watch, and Apple TV users.
Many online real estate websites are portals that get their information from databases of properties shared by agents and brokers. As a brokerage, Redfin is an exception.
NeighborhoodScout provides users with information regarding neighborhoods in the United States. Users can access the company’s neighborhood information using the search function by entering a city or specific address. Once the search criteria are entered, NeighborhoodScout provides average house values, local school information, demographic data, crime rates, traffic data, and more.
While most of this information is free for users, a subscription is needed for some of the more robust data. With plans starting at $ per month, users are provided with detailed school reports, crime rates, and housing appreciation rates.
The information given to users through NeighborhoodScout’s subscription service is currently not offered by either Zillow or Trulia, making it a viable alternative to either company.
Realtor.com is an online real estate website owned by News Corp. (It licenses the name "realtor" from the National Association of Realtors.) While the information is current, the site is more basic and doesn't have the robust features of Zillow, Trulia, or the other companies on this list.
However, it's connected to MLS with the most current listings on the market and is a good place to start searching for a home. It also has a texting option to connect to real estate professionals and a pricing feature to assess how specific home features, such as a garage, affect cost.
Once a home listing is found, a user can employ a blended strategy to search for that home on one of the three websites listed previously. This way it's possible to be the most informed about a listing, so a buyer can be the first to view the property on Redfin, Homesnap, or NeighborhoodScout, then contact the realtor quickly.
The Bottom Line
While Zillow and Trulia are popular real estate sites, excellent alternatives do exist. Buying a home is one of the biggest financial decisions you will likely make, so it’s important to pull information from a variety of reputable sources. In addition to the above-mentioned sites, Investopedia also offers a complete guide to buying a home that can help make the search easier.
Zillows Response to COVID
How We Are Helping Our Employees
Based on the recommendations of the CDC and other health organizations to promote social distancing, all Zillow offices are currently closed, and most of our employees are working from home. Our decision to re-open offices will depend on a number of factors, including the safety of our employees, and the public health situation in each community. We are providing most of our employees the option to work from home through the end of as well as flexible work schedules to help our team navigate childcare and other challenges.
Our hiring process has become virtual as well. We continue to recruit for the positions listed on our careers site and encourage prospective candidates to apply. We also recommend interested candidates keep in touch with us by setting up a job alert or connecting with us on LinkedIn.
Our employees want to make a difference, and we’re supporting them by identifying giving opportunities with organizations on the front lines of response efforts. Zillow will continue to match employee donations so personal giving can have an even greater impact. We are also highlighting volunteer opportunities that allow for social distancing, like Family Eldercare’s “Lifetime Connections Without Walls,” where people can talk to an elderly person on the phone or even run a virtual bingo game.
Search Zillow job opportunities
Open House Etiquette and Rules
For decades, sellers and their agents have been using open houses to help generate interest in their listings. Open houses give the general public the chance to view a home without scheduling a private showing. While open houses do get a lot of curious neighbors and casual browsers, they can be a good opportunity for serious buyers to decide if a home is worth pursuing further, or a way to get a better grasp on neighborhood home values.
In fact, 59% of home buyers attended an open house during their shopping process last year and 43% of buyers said attending the open house was very or extremely important to determining if the home was right for them.* On average, home buyers attended open houses before buying.
Whether youre a sincere buyer or simply curious about the inside of a home, you should know how open houses work and understand how you can be a good open house attendee.
Note: If open houses are restricted or unavailable due to public health concerns, work with your agent to arrange a private tour or video tour. All Zillow-owned homes include a self-tour option just use our app to unlock the door and tour at your convenience.
What is an open house?
An open house is an event during which potential buyers can tour a home thats on the market. Its usually hosted by the sellers listing agent, or by the seller themselves, in case of a for-sale-by-owner (FSBO) listing. Open houses usually take place on weekends, during a set range of hours — typically midday.
Open house benefits for buyers
No scheduling required: Unlike a private showing, you dont need to set up a specific appointment to see a home. Simply show up during the open house hours and view the home at your own pace.
Scope out the competition: If youre interested in a home, attending the open house can help you gauge interest from other buyers. This can be helpful when determining how quickly you need to submit an offer and how much you should offer.
Understand current home values: Seeing what homes are selling for in your area and what you can buy at a particular price point can be helpful if youre just starting your search.
Redefine your nonnegotiable home features: Checking out homes in person can help you redefine your list of must-haves: Do you really need that extra bedroom? What does a backyard of this size really look like?
How do open houses work?
Not every seller or listing agent will hold one, but heres the typical process for sellers setting up an open house:
- The seller and their agent determine a day and time for the open house.
- The agent lists the open house on the local MLS.
- The agent advertises the open house on social media, online and with print ads or flyers.
- The agent prepares for the open house — purchasing refreshments, printing flyers, setting up signs and adding little touches to make the home feel welcoming to buyers. (Yes, as a shopper, you can eat the cookies.)
- The agent hosts the event, greeting buyers and answering questions about the property and community.
- Buyers remove their shoes, tour the home, take pictures and video (if allowed) and jot down important notes.
- Any buyer who liked the house will contact their own agent. Theyll then set up a private showing to see the home again or theyll submit an offer right away — the latter is common in fast-moving real estate markets.
Who hosts an open house?
The person hosting an open house could be any one of the following:
- Listing agent: As the person hired to sell the home, the listing agent should be an expert on the property.
- Listing agents team member or associate: A busy listing agent may also send another agent in their place — either someone on their team or another agent in their office. They should be experts in the local market, but may not be as familiar with the individual home.
- Homeowner: If a home is for sale by owner (FSBO), the homeowner will be hosting their own open house. Theyre undoubtedly the expert on the home, but their local market expertise may be limited.
How to prepare for an open house
There are times when you might just stumble upon an open house while youre on a walk or running errands. But if youre intentionally looking for open houses as part of your home-buying strategy, try these tips.
Seek out relevant open houses
If you plan to visit multiple open houses in one day, make sure youre focusing on listings that fit your criteria for budget and location. Its not worth wasting time looking at homes outside your budget or those that are too far from your work or school.
Tip: With Zillows home search tool, buyers can filter by homes with upcoming open houses (this filter can be applied in addition to other search filters like price, bedrooms, bathrooms, square footage and location). When you use the open houses filter in conjunction with filters for your other criteria, you can easily find the right open houses for your search.
You can also tour most Zillow-owned homes any time between 6 a.m. to 8 p.m., any day of the week — just select the tour option on the listing. Although the listing agent will not be present, you can avoid a busy open house and rest assured the property is in move-in ready condition.
Do research on the market beforehand
With help from your agent or on your own, find out how each home youre planning to visit stacks up against others nearby. Is the price in line with similar listings in the area? Are there any defects? Has it gone under contract recently and then returned to the market? Are there a lot of other interested buyers? Has it been sitting on the market for a long time? (Days on market is an indicator of a stale listing, but the standard number of days on market can vary based on where you live.)
If youre searching on a tight budget in a hot neighborhood, theres a good chance that the home that fits the bill will need some TLC. Fortunately, attending an open house can give you a better idea of the homes condition and potential, while also giving you the opportunity to ask renovation-related questions — e.g., the location of load bearing walls and the details of local regulations.
How to attend an open house
Now that youve done your research and are prepared to add some open houses to your home search, heres what you should do once the day arrives.
An open house is your best opportunity to ask the listing agent (or their associate) your questions — dont be shy. Ask questions that you wouldnt be able to answer just by reading a homes listing description, such as:
- What are the HOA restrictions?
- Has the seller done a property tax appeal?
- Have there been any recent renovations or repairs?
Tip: If youre not currently working with an agent and you ultimately decide you arent interested in a particular home you tour, the open house could help you see if the listing agent might be the right person to represent you — many agents represent both buyers and sellers.
If anyone other than the listing agent or the homeowner is hosting the open house, theyre likely an agent hoping to find potential buyer clients. If youre already working with an agent (or if you have no real interest in buying), be honest.
Check for damage and disrepair
Professional or edited photos can make a home look a lot better online than it is in person. At an open house, take the opportunity to closely evaluate a homes condition and take note of any potential defects that would factor into your offer price.
Assess the windows: Look for flaking paint, misaligned sashes and condensation due to air leaks. These could be signs of windows that need replacement.
Check for water damage: Look for warped baseboards, ceiling stains and musty smells.
Make note of cracks: Noticeable cracks in the ceiling or drywall could indicate foundation issues.
Test functions: Open cabinets, doors and drawers. Run the faucets. Check the water pressure. An open house is a good opportunity to make sure every part of the home is in good working order.
Gauge potential renovation needs: Home improvements can really add up. As you walk through a home, keep an eye out for urgent renovation needs like floors, fixtures or large repainting projects.
Open house tips for buyers
Whenever you attend an open house, put yourself in the sellers shoes — youre letting a bunch of strangers walk through your home while youre not there. While every seller wants their open house to net a buyer, they also want to keep their home safe and their furnishings free of damage.
- Take off your shoes or wear booties if requested.
- Greet the host and provide your name.
- Sign in if necessary or requested (this is a safety issue for the seller and their agent).
- Take notes on your phone about your likes, dislikes and follow-up questions.
- Ask if you can capture a video (if the listing doesnt already include a video).
- Respect other buyers and guests.
- Wait for others to exit a room before you enter.
- Provide feedback if requested.
- Thank the person hosting the event.
- Refuse to comply with an agent or homeowners house rules.
- Criticize the home or the owners style.
- Listen in on other visitors conversations.
- Touch the owners belongings.
- Let kids run around without supervision.
- Bring food or beverages in (except water).
- Reveal information that would compromise your negotiating power, like your budget or level of interest in the home.
- Bring pets.
*Zillow Group Consumer Housing Trends Report survey data
Open houses zillow
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