Why Did Zillow Offers Get Shut Down?
Mar 23, 2021
Every red-blooded American is familiar with Zillow, the home buying, selling, renting, leasing, and/or ogling-mansions-for-fun website. It can be an extremely helpful resource when looking for a new pad in particular. But with the addition of “Zillow offers” — available in 25 U.S. markets including Cincinnati as of late March 2021 — more sellers were asking what exactly is going on with these Zillow instant offers. How do they work? Can you get a good deal through the program? What fees do they charge? These were important questions until recently, and we will be leaving the answers up for anyone interested in gaining insight into what exactly happened to Zillow Instant Offers.
Update: As of 11/2/21, Zillow Offers has been shut down. Explore alternatives to what we predicted would be a somewhat un-amazing program below.
Table of Contents
How Did Zillow Offers Work?
Zillow Offers was the Zillow internet empire’s attempt at establishing a direct buying arm to its business. If you’re wondering what direct home buying is, the very basic answer is that direct buying is when a company buys your house from you without a realtor or real estate agent.
But not all direct buyers operate exactly the same. On one hand, you have reputable home buyers and those who will pay all of your costs, bring in a third-party title company, and generally make sure you’re apprised throughout the whole process. We might call these “all-inclusive home buyers.” On the other end of the spectrum, there are outright scammers, many of whom will put up those tacky signs you see on the sides of streets and near highways.
While we really don’t recommend doing business with companies who put up home buying signs, it’s probably true that not every single person who puts up a street sign is going to scam you out of your money. Likewise, not every “reputable” company is also guaranteed to cover your costs or treat you right.
Although much, much closer to “cover-all-your-costs” territory than “scam-you-out-of-money” territory (we have no reason to believe this), Zillow Offers seemed to operate somewhere in between the two. They may be a reputable company, but they’re also a very large one. Zillow instant offers may have sounded great for its simplicity, but you have to factor in a couple of things.
- A Zillow Cash Offer may not give you the most competitive price.
- You’re going to get hit with some fees.
What Fees Did Zillow Offers Charge?
A Zillow cash offer may be free, but it was never totally free to accept it. Buyers would have to pay fees before the process was over. Now, these are mostly all fees you would also have to pay if you sold through a real estate agent, but you actually could avoid them by finding a direct buyer that doesn’t charge them. We do still exist! But more on that later. Say you trusted Zillow and you really wanted to go with them. That’s fine — but were the fees worth it? Let’s take a look at what they were exactly.
Average Ohio closing costs in 2021 are expected to run around 2-3% of your home sale price. That’s not nothing! Again, you’ll pay this in the majority of selling scenarios, but not all. Just be aware of what that percentage will mean for your bottom line before signing anything with Zillow.
Yup. Zillow Offers made sellers pay selling costs.
If there was anything wrong with your home, a Zillow cash offer did not help to cover those costs. This may not be a big deal if your home is in great shape and market-ready, but some pre-sale home renovation costs get insanely pricey.
Honestly, this one is a little frustrating. They said on their website that there wasn’t a charge to get your Zillow cash offer, but also admitted that there are “fees associated with the offer.” While making sellers pay repair costs, selling costs, and closing costs is pretty standard fare for a lot of direct buyers, the high service charge that Zillow Offers reportedly charges is a bit of a slap in the face to home sellers. It kind of feels like you’re made to pay for the name at that point.
Did Anyone Get a Good Deal By Letting Zillow Buy Their House?
Probably. So, here’s the deal: Zillow Offers straddled a line in the home buying world. They probably weren’t anyone’s best option when it came to direct home buyers unless you legitimately couldn’t find anyone trustworthy to give you a cash offer and cover all of your fees. On the other side of things, Zillow Offers also wasn’t set up to get you more money than a traditional listing would (although they did claim willingness to work with a seller’s real estate agent, which was cool). It was a hybrid, quick-sale machine with the built-in, socially perceived trust of a massive corporation. But they made sellers pay a bit for that safety net.
So Zillow Offers seems to function as a reasonably safe bet; one that is as unlikely to knock your socks off as it is to leave you feeling abjectly cheated.Statement from original publication of this article on March 23, 2021.
An Alternative to Zillow Offers
Give Upward Homes a call if you need a fair, cash offer in Central Ohio. We won’t run you through a bunch of hoops or tack on any hidden fees. We’re a husband and wife renovation team that has been working to revitalize Columbus area neighborhoods for over 15 years, and we truly care about finding win-win home sale solutions.
Did you receive a Zillow instant offer? We’d love to hear about your experience.
As always, please feel free to send us any questions about real estate, home renovations, Zillow cash offers, or other real estate topics! We look forward to helping you find the answers you’re looking for.
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