Compare Zillow Offers and Ribbon

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 Sellers

Not Applicable
0
No Rates
Ribbon does not offer services to sellers.

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.

For Buyers

Cash Offer
1.95%
Service Fee
It costs 1.95% to make a Ribbon Cash Offer. Cash Offer made with Ribbon is not free to buyers since the seller will have to account for the added fee when accepting an offer. Cash Offers stand-in program is highly selective and may come with added risks in case a buyer decides to back out of the sale. Buyers should carefully review their agreement with Ribbon.
Question: What is the difference between Zillow Offers and Ribbon?
Answer: 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 while Ribbon is a stand-in cash offers program for buyers
Compare Zillow Offers and Ribbon 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 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.

Buying with Ribbon

Ribbon is a multi-state stand-in cash-backed offer program that aims to help buyers when purchasing a home, it is not a real estate agent, nor is it an iBuyer.

Ribbon is a cash program for buyers that may help the buyer to make a competitive offer. Ribbon program also comes with added risks and sizable fees.

Despite the fact that the program costs an additional 1.95% service fee when used properly, Ribbon Cash Offer may be beneficial to the buyer in cases when a seller is highly motivated by a faster sale. If you are a buyer looking into this program, we recommend that you read the entire Editor’s Review for unbiased tips on how to navigate this process.

Ribbon Pricing

Ribbon also offers buyers Cash Offers stand-in program, where the company either backs buyer’s offer or buys a home and resells it back to the buyer for an added fee (1.95% service fee)

Listing Services

  • This Service Does Not Represent Sellers

Buyer's Agent Services

  • This Service Does Not Represent Buyers

Ribbon Editor's Review:

Ribbon is a consumer-focused cash-backed value-added proposition for home buyers in select areas where it operates. Ribbon claims that buyers are able to make offers to sellers that are less than the asking price due to the added security of each offer. In this review, we focus primarily on this claim when placed against the fact that the program costs an additional 1.95% in fees. Placing additional fees into real estate process almost never leads to savings, however, making secure offers does offer certain benefits. Using Ribbon Offers does not preclude the buyer from negotiating a buyer’s commission refund with their real estate agent.

Guaranteed Cash Offers
Ribbon offers buyers a Cash Offers stand-in program where Ribbon purchases a home outright from the seller on a buyer’s behalf, and sells it back at the same price to the buyer on an agreed upon closing date. Ribbon guarantees the seller that the home will close, and if it doesn’t, Ribbon will then buy the home for the same terms. Cash Offers stand-in program is not free, it is also highly selective.

Ribbon extensively qualifies clients with a complete financial background check prior to doing business. Cash Offers program also comes with added risks in the event the buyer decides to back out of the sale. Buyers should carefully review their agreement with Ribbon before participating in the Cash Offers stand-in program so to fully understand the fees and potential penalties for backing out of the Cash Offer once it is made.

In order to maximize their options, Buyers should utilize Ribbon Cash Offer alongside a traditional non-Ribbon Offer that does not include the added 1.95% Ribbon Fee. Ribbon allows this as an option and buyers should always place two offers on the table before the seller so that the seller can pick whichever option suits them the best. Unless a buyer places Ribbon Offer and non-Ribbon Offer before the seller, another buyer who makes non-Ribbon Offer may be at an advantage because it comes without the Ribbon fee.

If the seller chooses non-Ribbon Offer, they will not pay the Ribbon fee, but they still have an option to go with Ribbon Offer if they want.

If hustle and risk of placing a Ribbon Offers genuinely comes with added savings, buyers should theoretically be able to place a winning Ribbon Offer at 95% value of their traditional non-Ribbon Offer. This becomes the ultimate test - if the seller decides to accept a lower Ribbon Offer due to added security, buyer genuinely saves 5% in this type of transaction. If the Seller accepts a traditional non-Ribbon Offer, then this program didn’t help the buyer, but it didn’t cost anything either.

If the buyer only places a single Ribbon Offer on the table before the seller, there is nothing to compare savings against and, instead, all parties may have just wasted 1.95% on fees without any reason to do so. Before placing this review, we had asked Ribbon team for details about the program:

Question 1: Ribbon states that if the Buyer backs out from the purchase after making the Ribbon Offer they would lose the Due Diligence Deposit (if applicable) and Earnest Money Deposit. How much are these penalties, and how are these calculated? When are these applicable? Does this penalty remain in place if the appraisal comes in below the Ribbon Offer? Are there any other penalties for backing out of the Ribbon Offer?

Ribbon Answer: The buyer contributes their standard DD / EMD fees that are typically 1% of the purchase price. These are funds that are preserved and credited back to the buyer when they repurchase from Ribbon. Ribbon buys and reserves the home for the consumer buyer. If the buyer chooses not to purchase the home, these funds would be credited back if Ribbon resells the home back into the open market above the original purchase price. Less than 3% of buyers choose not to purchase the home after we step in to buy on their behalf so this is an uncommon outcome. Additionally, consumers requested that when we buy, to provide consumers with a 1-year lease so they have the peace of mind of the home they are living in. We introduced this feature and buyers carry standard responsible for a 1-yr lease that would terminate immediately upon their purchase of the home from Ribbon.

Question 2: Ribbon states that Ribbon Offer typically commands a 5% discount relative to competing bids which have financing contingencies. Do Ribbon terms allow Buyers to make two concurrent bids to the Seller - one set at 100% of the home price with typical financing contingencies as a non-Ribbon Offer and another as the Ribbon Offer made at 95% of the same offer amount? If the Buyer were to propose this option to Ribbon, what would the reply be?

Ribbon Answer: Yes, a buyer can make a Ribbon and Non-Ribbon offer. We believe consumers should have a choice in how they buy and we enable this for them. We have enabled this for other buyers and this is one of several ways in which we calculate the true cash discount rate.

Question 3: Ribbon states that Ribbon Offer typically commands a discount of 5% or more of the home price, when compared to the 1.95% Ribbon fee. Can Ribbon show proof of this statement? Is there a possibility that the Seller considers Ribbon fee a deterrent in light of a competing offer without the fee?

Ribbon Answer: We establish a cash discount based on the following methodology: where did the Ribbon offer clear relative to other offers received by the seller. We often receive this input from the listing agent. If not, we calculate cash discounts based on the predicted and actual appraisal value of the home.

Question 4: When Ribbon purchases the home, instead of the Buyer, Ribbon pays Buyer's Agent Commission under its own agreement with the Agent. In this scenario, Buyer's Agent does not take any risk nor has any added expense in case the Buyer backs out of the deal. This gives the Buyer's Agent, effectively, two clients instead of one. Why should the Buyer believe that this Agent is not looking out for her own interest since both Ribbon and the Buyer are represented by the same Agent and are subject to the same commission structure? How can the same Agent fairly represent two distinctly different Buyers in the same transaction?

Ribbon Answer: Ribbon stands in as the backup buyer to the original buyer represented by the realtor. If, and only if, the original buyer is unable to close on time, Ribbon stands in to purchase the home on their behalf at the exact same terms as the original offer. As such, we have zero conflict of interests as the original buyer sets the price and terms with their realtor. Ribbon provides, upfront, the max terms that we will back the home for (this includes, max purchase price, minimum DD/EMD fee, minimum DD time period and minimum time to close). The realtor represents the original buyer up until the point where the contract is assigned to Ribbon prior to close.

Ribbon clearly offers the buyer an interesting value-added alternative, despite the added 1.95% fee. Buyers should place two side-by-side Ribbon and non-Ribbon Offers to capture savings. These offers may be equal, or 5% less of each other, depending on how far the buyer wants to test the savings claimed by the program. Buyers should also fully understand all risks for backing out of a Ribbon offer before using the program. If the buyer makes only the Ribbon Offer without the non-Ribbon alternative, the added fee may simply backfire because the seller may accept another equal or lower traditional offer from another buyer.

Where does Ribbon operate?

Ribbon currently operates in select areas across New York City, Charlotte, Raleigh, Nashville, Atlanta, San Antonio.