People know Zillow as a quick way to find online and mobile residential real estate listings. But on Monday, Seattle-based Zillow Group Inc. announced the Twin Cities rollout of Zillow Offers, a new arm of the company which directly buys and sells homes.
As a Wall Street Journal headline put it last week: “Zillow Sees a Future in House Flipping.”
The concept calls for Zillow Offers to resell homes it buys from sellers. Local home owners can request a no-obligation cash offer from Zillow for their property. Zillow’s pitch is that this allows sellers to skip spending money to prep their home for open house showings. Zillow Offers allows sellers to pick a closing date that works best for them. Zillow then puts homes on the market once the properties are “professionally repaired, refreshed and move-in ready.”
Zillow Offers debuted last year in Phoenix; Minneapolis-St. Paul is now the 10th metro market where Zillow has launched the service. Zillow plans to be in 20 U.S. markets by the end of the first quarter in 2020. Zillow partners with local agents and brokers on its transactions.
During the first quarter of this year, Zillow sold 414 homes – an increase of 200 percent compared to the fourth quarter of 2018. Those sales contributed $128.5 million in revenue to the company’s Homes segment. Based on those statistics, the average sales price for a Zillow home was approximately $310,000.
In the first quarter the company also launched Zillow Home Loans, which offers mortgage financing. Theoretically some customers could see a property listed on Zillow, buy it from Zillow and then finance it through Zillow.
Zillow Group announced its first quarter results last Thursday. In the company’s statement last week, Zillow co-founder and CEO Rich Barton touted the future of home buying and selling.
"Zillow Offers' incredible consumer demand and rapid growth gives us confidence we're in the early stages of something important,” said Barton. “We are aligning our entire portfolio to deliver a seamless, integrated transaction experience to help today's on-demand consumers buy, sell, rent and finance homes faster and easier than ever before."
The publicly traded Zillow Group reported a net loss of $129 million on revenue of $1.3 billion for 2018. The company has posted strong, continued sales growth but has not seen an annual profit since 2012.
The company’s first quarter 2019 revenue of $454.1 million was up a robust 51 percent compared to a year ago. But the company posted a net loss of $67.5 million for the quarter, significantly larger than the $18.6 million it lost in the first quarter of 2018.