The fallout according to Zillow
In Tampa, Florida, Gary Byrd, 59, a campus facility supervisor at a community college, was recently engaged to be selling his 1,200-square-foot, three-bedroom, two-bathroom house so he could move in with his fiancée, the one had a bigger home.
Mr. Byrd wanted a quick and easy transaction and “didn't want people sneaking through my house,” he said. He went online in August and immediately got a quote from Zillow. Within weeks, he had a scheduled home appraisal and a Zillow employee confirmed the company would meet the $ 235,000 online offer. Zillow took 3 percent in fees and an additional $ 2,000 for minor repairs, and by October the deal was closed.
"It worked on my busy schedule," said Mr. Byrd, "and you cut out the middleman."
He used the proceeds to pay off debts, invest in his 401 (k), and buy a new truck. His experience – a seamless sale without the hassle of a traditional real estate transaction – came just weeks before the demise of Zillow's iBuying business.
Before its abrupt withdrawal from the iBuying market, the online real estate marketplace took a sizable chunk of the housing supply in several American cities, including Atlanta, Phoenix, and Dallas. But Zillow has faced massive losses and has since admitted that it was wrong in forecasting prices, made excessive offers, and failed to adapt to a cooling housing market. It is now working on outsourcing thousands of homes to institutional tenants.
This seems like a cautionary story about the dangers of investing in iBuying. Still, representatives from Opendoor and Offerpad have stated that they are increasing their own iBuying efforts.
Why iBuying is not for everyone
Traditional brokers are closely monitoring iBuyers and some are responding by rolling out their own versions of the service. For example, Keller Williams has Keller Offers. And there are sites like QuickBuy that allow brokers to offer their customers services on par with iBuying's.
But while iBuying is thriving in big cities, especially the Sun Belt, it has yet to gain a foothold in smaller cities, especially among wealthier shoppers.