Zillow Turns Price Estimates Into Cash Offers

Fix-and-flip investors have a deep-pocketed new rival: Zillow Group, which has begun taking its hotly discussed “Zestimates” and making them into cash offers. So reports Bloomberg.

Zillow now allows owners of more 500,000 properties across 20 U.S. markets in the U.S. to sell to the company for the value estimated on the site.

Like competitor Opendoor Technologies, Zillow is making a volume play with small margins, as well as hoping to cross-sell mortgages, title insurance and other products.

Read the full article from Bloomberg.

Source: themortgageleader.com

Zillow follows Saturday Night Live spoof with record profit

Zillow Group Inc. has cemented its role in the pandemic-era zeitgeist, with “Saturday Night Live”poking fun at homebound millennials who lust after online home listings.

The growing popularity of the company’s websites and apps has also earned the company record profits during the fourth quarter, with adjusted earnings before interest, taxes, depreciation and amortization of $170 million, according to a statement on Wednesday.

That beat the average analyst estimate of $125 million and represented a wide swing from a $3.2 million loss a year earlier period. The results sent shares surging as much as 13% to $193.39. The company’s stock had already jumped more than 600% since bottoming out in March.

The rally comes amid a housing boom in the U.S. that has been fueled by low mortgage rates. With Americans confined to their homes, Zillow scrolling has become a national pastime.

“Because of all the people who are stuck at home, dreaming about a new home, and because of all the millennials having babies and shopping for homes, the Zillow brand has broken through to a new level of awareness and cultural significance,” Zillow Chief Executive Officer Rich Barton said in an interview. “There’s lots more shopping, lots more dreaming, and lots more fantasizing.”

Zillow’s websites and apps received 2.2 billion visits during the fourth quarter. That drove revenue growth in the company’s core marketing business, which brought in $314 million, up 35% from the prior year.

Zillow’s booming marketing operation has shifted the spotlight away from its nascent home-flipping initiative. The company acquired 1,789 homes in the quarter, compared to 1,787 a year earlier, as it returned to pre-Covid purchasing levels after slowing acquisitions earlier in the year.

Zillow also announced it has agreed to pay $500 million to acquire ShowingTime.com Inc., which makes tools for house-hunters to arrange home tours with agents. The purchase fits a key theme in the U.S. housing market in recent months, as socially-distancing efforts and the coming-of-age of millennial homebuyers drives more house-hunting functions online.

That theme has also been good for other companies at the intersection of technology and the U.S. housing market. Shares in brokerage Redfin Corp. have soared, and next-generation home-flipper Opendoor Technologies Inc. went public through a merger with a blank-check company.

Barton said that Zillow, along with consumers, will benefit from the increasing digitization of the homebuying process.

“The seller and the buyer are going to win from more innovation, happening faster,” he said. “It’s long overdue.”

Source: nationalmortgagenews.com

iBuyer revenues slump amid high market demand

iBuying companies are experiencing a slump in sales during a time when many thought the opposite might happen, as they provide a contactless way to sell a home.

Opendoor, the biggest iBuying company, has seen its revenue fall by almost half in the past year, and said it doesn’t expect its business to recover properly until mid-2022, according to the Wall Street Journal.

When the COVID-19 pandemic emerged last spring, most iBuyers, which buy and resell homes electronically, halted their businesses. By summer, they had come back online and resumed making instant cash offers to people who wanted to bypass the traditional homeselling process.

But it seems the high demand for homes from a flood of buyers enticed by the pandemic into making a move has worked against iBuyers. Selling on the open market is more appealing as the high demand means most can fetch good prices for their homes, and they don’t have to wait long to do so. Most iBuyers offer prices that are below market value with the promise of a fast sale, but that is no longer such an enticing prospect.

Opendoor, which launched its business in 2014, is still the leader in the iBuying space, but it is facing challenges from numerous competitors, such as RedfinNow and Zillow Offers. While the company’s revenue surged 158% to $4.7 billion in 2019, Opendoor cut more than a third of its workforce in April 2020 due to economic hardship during the pandemic.

Opendoor has responded by expanding its business model to include escrow, title and other services.

iBuyers have managed to sell a large number of their home portfolios during the pandemic. Opendoor said it sold 80% of its housing stock in the first six months of last year. But that has meant rivals have been able to gain a bigger market share.

Still, Opendoor insists that other iBuyers aren’t its primary competitors, seeing traditional brokerages as its main rivals instead.

Source: realtybiznews.com