Zillow launches home-flipping program in Phoenix and Las Vegas
Zillow Group Inc. plans to start buying houses directly from sellers to test its ability to make money by flipping real estate.
The listings website operator is building on a program called Zillow Instant Offers, in which sellers upload information about their homes and receive offers from local investors within 48 hours. The sellers also get an assessment of the home’s market value from an agent, allowing them to choose between a fast sale and selling their property the traditional way.
Now, Zillow is going to start playing the role of investor, bidding on homes in Las Vegas and Phoenix using cash from its balance sheet to finance acquisitions. In a phone interview, Chief Marketing Officer Jeremy Wacksman described the program as a test, projecting the company will own 300 to 1,000 homes by the end of the year.
Unlike traditional home-flippers who bet they can make money on home appreciation, Zillow plans to profit by charging sellers a fee in addition to agent commissions. Wacksman said most owners who use Instant Offers wind up selling their homes the old-fashioned way, but that people like to have choices.
"What drove us here is the seller demand," he said.
Zillow joins a field of companies using tech platforms to make fast decisions to buy homes. Opendoor and OfferPad have similar business models. To run its new operation, Zillow hired Arik Prawer, a former executive at single-family landlords Colony Starwood Homes and Invitation Homes.