Compare Zillow and Zillow Offers

For Sellers

Not Applicable
0
No Rates
Zillow is an MLS Aggregator, it does not provide listing services to consumers.

For Sellers

Cash Offers
15%-20%
Home Equity
Zillow Offers does not provide real estate listing representation. Instead, the company buys homes directly, repairs and resells them to consumers or companies that rent them to tenants. Zillow Offers typically makes an offer equal to estimated 80%-85% of home value accounting for fees and any cost of the repairs and resale.

For Buyers

Not Applicable
0
No Rates
Zillow is an MLS Aggregator, it does not provide buyer representation services to consumers.

For Buyers

Not Applicable
0
No Rates
Zillow Offers does not provide real estate services to home buyers. Zillow Offers does resell some of the homes it buys on the open market, just like any other real estate investor aiming for the highest return on investment.
Question: What is the difference between Zillow and Zillow Offers?
Answer: Zillow is a Multiple Listing Services (MLS) aggregator while Zillow Offers is a direct home cash buyer that buys select homes off-market with cash offers and resells them at a profit to homebuyers
Compare Zillow and Zillow Offers for home buying and selling. HomeOpenly is an impartial and an open resource focused on trending real estate services, portals and start-ups.

First published: 17 February 2019
Last updated: 25 April 2021

Buying and Selling with Zillow

Zillow is an MLS Aggregator that allows buyers and sellers to list homes and find out what local homes are available for sale. Zillow aggregates home listing data from thousands of private MLS databases across the United States.

By making this otherwise unavailable information to consumers, Zillow creates a positive value-added experience with local results for the majority of available listings.

Zillow generates revenue with ads using Zillow Group’s Premier Agent and Premier Broker programs.

Zillow Pricing

Zillow does not offer paid services to consumers directly, instead, the portal generates revenue with ads and referral fees from real estate brokers.

Listing Services

  • This Service Does Not Represent Sellers

Buyer's Agent Services

  • This Service Does Not Represent Buyers

Zillow Editor's Review:

This review is focused on Zillow as an MLS aggregator, separate from the referral fee network (Zillow Premier Broker) and (Zillow Instant Offers). Two separate reviews are assigned to Zillow Premier Broker and Zillow Instant Offers programs. As an MLS aggregator, Zillow benefits real estate consumers with highly accurate MLS data and home value estimates.

Today, most consumers ready to buy or sell real estate begin their search on the Internet. This is a logical first step that can help identify similar properties, pricing budget to help make the correct decision about buying or selling real estate. Zillow is one of the main and most well-known sources of such information. Zillow analyzes property values, aggregates data and displays results that make sense to seasoned real estate professionals as well as newbie home buyers and sellers.

Undeniably, Zillow, has a great wealth of aggregate MLS property information, an easy-to-use interface, valuable neighborhood information, excellent user reviews and a wide array of real estate-related services, articles, and forums. Zillow is one of the top real estate platforms in the United States and will likely remain there with acquisitions of Trulia.com, Streeteasy.com, and RealEstate.com “mirror” platforms. The chances are that a consumer either buying or selling a home uses Zillow platform or one of its affiliates as part of their real estate transaction experience.

Zillow is technically free, but Zillow is funded with advertising and referral fees. Zillow advertising costs vary by ZIP code, cost per impression and Premier Broker referral fees are currently hidden from consumers. Agents that sign-up for their Premier Agent program "get in front of buyers and sellers in the largest online real estate network."

This fact ultimately means that real estate agent recommendations provided to real estate consumers by Zillow are biased. Those agents that pay Zillow for Premier Agent accounts consistently show up first in their search results without a clear indication of Premier status. Thus, an agency at the top may or may not be the best choice, yet Zillow implies to its users that it is.

As of 2019, Zillow has further turned to “broker mentality” against consumers with an introduction of Zillow Premier Broker and Zillow Instant Offers programs. Both of these programs effectively take Zillow into a middle-man real estate broker category, and away from an independent portal. Zillow had designed these programs to “trade consumers as leads” and push buyers and sellers onto a select group of real estate agents in exchange for hidden referral fees.

Unlike the Premier Agent program, where agents simply pay for ads, Premier Broker is a pay-for-play lead generator pipeline that qualifies consumers as a service.

This literally means that Zillow qualifies consumers into a commodity where agents buy that commodity; Zillow calls this a “flexible” payment option. Zillow CEO states that “it simplifies selling process because it de-risks the purchase decision for advertisers.” There is no upfront fee to brokers when they receive consumers info as validated leads, so there is no risk to the broker if they quote a consumer a "standard" commission – if the broker doesn’t get the business, they move on to the next validated lead with their overpriced commission offerings.

Like any other limited agent referral network of agents who are willing to pay “industry standard performance advertising expense” the only job for Zillow here is to push a few agents onto consumers en masse. With even a small percent success rate, each time Zillow converts consumers into leads, it receives thousands or tens of thousands in referral fees, typically set at 25%-40% of the commission. This business model is called reverse competition, where Zillow still refuses to acknowledge the exact amount in referral fees it receives from this new program.

The only way real estate agents are able to pay 25%-40% of their commission to Zillow is to either reduce service or jack up the price. Consumers should be careful not to provide their complete information to Zillow including name, email and a phone number in order to avoid being "sold as leads" to random real estate brokers.

Where does Zillow operate?

Zillow currently operates in select areas across United States.

Buying and Selling with Zillow Offers

Zillow Offers is a real estate investor and an agent referral network that operates across highly specific locations. Where available Zillow Offers mainly focuses on homogenous homes. In determining the offer, Zillow Offers discounts from the estimated retail value after home is fully renovated.

Zillow Offers Pricing

Zillow Offers is almost entirely built to sell consumer’s data to Premier Broker and Premier Agent participating agents. Zillow also makes money with a difference between buying and selling homes, although only about 1% of all requests end up in successful Zillow Offer.

With these few actual buying transactions each year, Zillow makes money with value appreciation between what Zillow Offers buys and seller each home for. Sellers can expect to receive 80%-85% of their home value from this type of sale after any fees, cost of the minor repairs, and resale.

Zillow Offers further looks to push consumers to use its own mortgage company.

Listing Services

  • This Service Does Not Represent Sellers

Buyer's Agent Services

  • This Service Does Not Represent Buyers

Zillow Offers Editor's Review:

Skip the hassle, it is only 1% likely that sellers will accept an offer from Zillow Offers. Instead, Zillow will try to convert seller's request into a lead, sold to random Premier Agent.

Zillow Offers is a classic bait-and-switch sales model. First, consumers are "baited" by Zillow’s magical all-in-one home offer opportunity, but out of tens of thousands requests only a few dozen homes are actually sold to Zillow. Instead, Zillow’s business model aggressively converts consumer requests into seller leads. The interesting thing about this scheme is that Zillow is blatantly open about it.

Here are some excerpts from Zillow Offers website:
  • "Initial data from Zillow Offers indicates that of sellers who request a Zillow Offer, the vast majority end up using an agent."
  • "Zillow Group does not guarantee that it will make an offer or that any offer made will provide the best terms available or will result in the greatest net proceeds to you."
  • "If you do not accept our offer, we can refer you to one of our local partner agents who advertises on Zillow."

Zillow Offers suffers from terrible privacy policy. From one side Zillow states to consumers that "we do not share your contact information unless you request to be connected with an agent or a mortgage lender," and on another section directed at brokers it states that "if a seller is not yet working with an agent and they decline Zillow’s offer, Zillow will work to immediately connect them with a local partner brokerage and agent."

Here is how one of these Premier Brokers describes the process:
  • "We receive listing and buyer referrals directly from Zillow's Premier Broker concierge services. These leads have been scrubbed and vetted before they are directly handed off to you."Source: Sonoma County RE/MAX Marketplace, Zillow Premier Broker participant.

Zillow Offers will buy a home at a price that is below market value due to necessary repairs, renovation, and other factors. After Zillow Offers buys the home, it renovates and resells it for a profit to other buyers or companies that rent homes to qualified tenants. With low offer price, comes a convenience of an all-cash closing when selling a home. Zillow Offers claims to provide convenience, speed, and certainty of a fast sale.

Dubbed as an iBuyer, Zillow Offers makes an offer on a house within days, but this offer is highly conditional. Each offer Zillow Offers makes is just an estimate until it makes a home inspection. At the inspection, Zillow Offers will often find reasons to lower its original offer when it finds items that need repair or if it has made a mistake in its original valuation. When the company is unable to make an offer, it simply redirects consumers to a random real estate agent in exchange for an undisclosed fee. Zillow Offers only makes offers for select homes in select regions.

The main disadvantage of using Zillow Offers is high losses in homeowners’ equity, this is beside the fact that the program is designed to collect and sell user data instead of actually buying homes.

As any real estate investor, Zillow Offers is susceptible to losing money in any given transaction. This model is susceptible to a number of risk factors, high operational costs and a continued need for higher-than-average Return on Investment (ROI) with each flip. Zillow Offers is not legally bound to represent consumers, its main legal obligation is to its shareholders.

Zillow Offers’s fast transaction and easy move-out experience typically come at an extremely high price because this model incurs “double” transaction costs during the purchase, holding period, rehab work and final sale that includes real estate agent fees.

Zillow Offers pays real estate agent commissions like any other buyer and seller of real estate, so these costs must be accounted for in the company’s fee structure. Moreover, because most homes in the United States are financed, homeowners own only partial net equity in their home. Banks receive the same amount of the remaining mortgage sum regardless of how any given home is sold, whereas only homeowners’ net equity is lost in transaction fees paid to Zillow Offers.

Typically Zillow Offers uses the following factors when determining the offer: existing condition of the home including repairs needed, time it will take to finish needed repairs, value of a home compared to other comparable homes in the area, real estate commission required to resell, costs associated with maintaining a home during repairs, including taxes, payments, insurance, utilities and homeowner dues.

Where does Zillow Offers operate?

Zillow Offers currently operates in select areas across Raleigh, Charlotte, Phoenix, Denver, Atlanta, and Las Vegas.