Zillow begins buying Twin Cities homes
(FOX 9) - If you've ever done any house hunting, chances are you've gone online to Zillow to get an idea what your own house is worth and what else is out there.
On Monday, the company started getting into the buying and selling market in the Twin Cities metro. The concept is called an "instant offer," and it's been emerging over the past couple years. Zillow began rolling their version out a year ago, and the Twin Cities is now the 10th market.
Kris Lindahl quickly made a name marketing his guaranteed cash offer, a real estate model he went into last year. Zillow’s real estate venture, Zillow Offers, is essentially the same thing – a cash offer to buy your house. Lindahl’s agency was chosen to represent Zillow in the Twin Cities.
“I believe the future of real estate is a convenience-based model,” Lindahl said.
Zillow Offers is what’s known as an iBuyer. With their version, you enter information, and they give you an offer. Contingent on an in-person evaluation, closing can be anywhere from a week to three months.
Think of it like a car dealer with a lot full of trade-ins. They have an inventory they own to resell for a profit.
“The perception is - and to a degree this is true - it’s faster, it’s quicker and I can just be done with it,” said realtor Jesse Godzala.
Godzala is a traditional agent connected to Edina Realty. He says the new way is a competitor for business, but there’s a cost to convenience.
“I have to sell them and educate them on, ‘hey, we might be able to get a little more here, but it’s going to take a little while too,” Godzala said.
For example, it’s like selling a car outright. The old way can get a higher selling price that even after commissions, you still keep more.
“But, I bet you with an iBuyer you’re giving up 2 to 3 percent. My experience, $10-12,000,” Godzala said.
Lindahl is convinced, like no-haggle car pricing, this will become the norm.
“Technology continues to evolve, and I think as convenience-based models come into all the different industries right now, I think that things will look a lot different in five years,” he said.
Zillow does charge a service fee, and it averages about seven percent. So, similar to a traditional sale, the company says interest has been strong, getting a request every two minutes.