Zillow’s iBuyer Program Debuts in South Florida
WEST PALM BEACH, Fla. – A new player will begin snapping up homes in Palm Beach, Broward and Miami-Dade counties. Seattle-based Zillow said Monday that its Zillow Offers program has debuted in South Florida.
Zillow calls it “a stress-free way to sell.” Owners of houses and condos that fit Zillow Offers’ buying criteria can solicit offers and unload their property in as little as five days, although Zillow Offers said it will extend deals for as long as three months.
Zillow Offers is part of the “iBuying,” or instant buying, trend sweeping the Sun Belt. Zillow and its rivals pitch themselves as a quick and painless way to sell a house, without the hassle of painting, cleaning and clearing out for every showing.
Zillow Offers competitors Opendoor and Offerpad haven’t moved this far south, but both buy homes in Orlando and Tampa, and Opendoor does business in Jacksonville.
The iBuyers target relatively new houses and condos valued near a metro area’s median price – in Palm Beach County, that’s about $360,000 for houses and $190,000 for condos and townhouses. The new breed of buyers steers clear of fixer-uppers, historic properties and mansions, focusing instead on cookie-cutter properties that are easier to value.
Zillow Offers completes minor renovations and then lists the home for sale.
South Florida’s largest traditional brokerage, Keyes Co. Realtors, is responding with an enticement of its own. Keyes, which also owns Illustrated Properties, will unveil a new program this week that covers up to $15,000 in renovation costs for sellers who list their homes with the company.
Keyes will be reimbursed at closing from the proceeds of the sale. With Zillow Offers and others roiling the property market, traditional brokers have been forced to adapt.
“We’ve been waiting for them,” said Keyes Co. head Mike Pappas. “It’s another player that’s going to make some noise in the marketplace.”
The obvious question for homeowners: Should you sell to one of these companies? Consumer advocates say seller beware, noting that the fees can be steep.
The Consumer Federation of America said the cost of selling to an iBuyer can be 13% to 15% of a home’s price.
“Home sellers should carefully consider the high costs of iBuying before embracing it,” said Stephen Brobeck, who follows the housing market for the Consumer Federation of America. “Fortunately at present, sellers can explore iBuying and reject it, as most sellers do.”
Pappas agreed that the cost of selling to an iBuyer is steep – especially in a region where modestly priced homes still move quickly.
“Homes are selling in 35 to 45 days,” Pappas said. “Why would you give up so much money for such a short differential?”
Venture capitalists are betting big on the iBuying concept. San Francisco-based Opendoor has raised $1.3 billion from backers that include SoftBank Vision Fund, Miami-based homebuilder Lennar Corp., Access Technology Ventures, Fifth Wall Ventures and Khosla Ventures. Opendoor says it’s buying 3,500 houses a month.
Phoenix-based Offerpad, for its part, has raised $975 million from venture capitalists and from Citigroup.
Zillow Offers was launched by Zillow, a tech company that is expanding beyond its original business luring buyers, sellers and agents to a website that posts estimates of home values. Zillow says it aims to spend $4 billion a year on homes nationally.
Real estate brokers also are jumping into the new field. Seattle-based Redfin has begun buying homes. And two large traditional brokerage companies, Realogy Corp. and Keller Williams, are testing the waters, too.
© 2019 The Palm Beach Post (West Palm Beach, Fla.), Jeff Ostrowski. Distributed by Tribune Content Agency, LLC.