Question:
“Hi, I’ve heard Zillow is going to start buying homes. What’s that about?”
Answer:
Have you seen those scribbled signs by the side of the road that say, “I’ll buy your home for cash”?
Or received one of those letters where they pretend they’re specifically interested in buying your house for cash, but it’s actually a mass mailer?
This is just another, bigger version of that. And they’re called “iBuyers.”
Several large venture-capitalist-funded companies are happy to buy your home if you take the bait or are desperate enough to sell it way under market to them.
Here’s how you know you’re not going to get even close to value:
- They have to cover their costs of buying, holding, possibly fixing, then re-selling the home, THEN earn a profit on top of that.
- Because these are big monolithic companies, they have a huge amount of overhead and bureaucracy that has to be paid for.
- Also because they’re so big, they must have a large margin of error (i.e. pay a lower price) because they’re not experts on any given neighborhood.
- Once more, because they’re sooo big, they must have an even larger margin of error in case the market slows. Think about it…a downturn could cause such massive losses that they’d go under.
But I’m not even done yet with the bad news…
If you don’t accept Zillow’s low offer, THEY WILL SELL YOUR PERSONAL INFORMATION to one or more real estate agents.
So either you lose a bundle of money by accepting their low offer. Or you refuse the low offer and they sell your personal info.
I call that a LOSE-LOSE situation.
