If you haven’t seen the news Zillow has released a tool to provide “instant offers” to consumers on the purchase of their property via their website WITHOUT USING ANY AGENTS!  Will this ultimately be the demise of the traditional residential broker?  Why is Zillow getting into the space?

Zillow’s new instant offer platform was demised to allow property owners to quickly sell their properties without the traditional hassle of listing a property or paying the commissions.   Zillow’s goal is to: “offer a more streamlined and friction-free transaction, managed by Zillow-owned dotloop, and a process that may give the seller more certainty.”  (source inman news) Under this model, currently Zillow has limited to a select few markets and the “investors/purchasers” are limited by Zillow as well.

Why is this new service so profound?  In a recent survey of real estate professionals 87% felt that Zillow was becoming a brokerage.  I agree the survey was likely biased since a realtor doesn’t want Zillow encroaching on its turf but are the realtors right?

Is Zillow becoming a brokerage?  From official statements by Zillow they have denied that they want to become a broker.   Unfortunately, their actions speak louder than words.  If Zillow can become the middleman in a real estate transaction eliminating the realtor imagine the profit they could generate.  In most markets realtors charge 4-7% commissions, what if Zillow hired local realtors in each market to assist buyers and sellers on their transactions on their platform, paid them a salary and charged 1%?

Although “instant offers” is currently a “test”, there is no doubt this service will be rolled out throughout the country.  Why wouldn’t they roll out to the rest of the country?  They will already have mastered the model in a few major cities it will not be that difficult to expand the model.

Realtors should be scared!  Although everyone has predicted for years that realtors will be replaced by technology it hasn’t happened yet.  Yet is the operative word, Zillow currently has one of the highest brand recognitions in real estate  and the vast majority of consumers look at Zillow before buying or selling a house.  By leveraging their existing platform they could radically change the industry since they already have the relationship and trust of the consumer (zestimate has become a word now!)

Although, I don’t think Zillow will eliminate all realtors it will definitely alter the current landscape.  Realtors should be worried about this new change and adapt to ensure they are providing services their online counterpart cannot.

Additional Reading/Sources

  1. http://rismedia.com/2017/07/11/survey-results-say-instant-offers-signals-shift-zillow-become-brokerage
  2. https://www.inman.com/2017/05/26/everything-you-need-to-know-about-zillow-instant-offers/
  3. https://www.zillow.com/instant-offers/