PHOTO: Zillow
After insisting for years that it had no plans to hire any agents, Seattle-based Zillow has reversed course and will open a residential real estate brokerage — though on a very limited basis.
Agents in the new division, called Zillow Homes, have a narrow purview: acquiring and listing homes for the company’s home-flipping division, Zillow Offers. Zillow said Wednesday the service will launch in January in Atlanta, Phoenix and Tucson, and will expand to additional markets (though not Seattle) over the course of next year.
Spurred by competition from venture capital-backed Opendoor, online listings hubs Zillow and Redfin — now followed by traditional residential property giants Keller Williams and Realogy — have made huge bets on digitally brokered home flipping, also called iBuying.
Since launching Zillow Offers in 2018, the company has spent hundreds of millions of dollars per quarter purchasing, renovating and reselling thousands of homes in low-cost, high-growth markets like Phoenix and Atlanta. Still, the iBuying sector accounts for only a tiny fraction, 0.5%, or roughly $8 billion, of overall U.S. home sales, according to industry analyst Mike DelPrete. Zillow Offers generated $1.37 billion of that figure, with Opendoor taking the lion’s share of the pie.
Zillow decided to open its own brokerage in part to streamline Zillow Offers, said Errol Samuelson, the company’s chief industry development officer, in a video circulated Wednesday to brokerages. Home sellers using Zillow Offers have found the company’s current system of relying on local third-party real estate agents to facilitate the transaction “confusing” in some instances, Samuelson said.
The company also believes Zillow Home “will help the unit’s economics long-term,” said Zillow spokesperson Viet Shelton.
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