Opendoor is a new home sales service in Sacramento. See how it works
Are you willing to sell your home online, with a click of a mouse? Millions of Californians soon will have that chance.
Zillow, the national real estate data giant, announced Thursday it is expanding its controversial new online home sales service to Sacramento, Los Angeles, San Diego and several other cities nationally at the end of this year.
The service, called Zillow Offers, is being pitched as a home sales industry “disrupter” service. Owners can sell their houses directly to Zillow online rather than put the home on the market and go through the steps of hiring a realtor, opening the house for viewings and hoping for bids.
Zillow, the Seattle-based company known for its public database of home listings and price estimates, says it will offer a fair-market price, then absorb the risk of reselling the house itself, likely after sprucing it up.
Zillow moved into the “on-demand” online home purchase market in nine markets nationally in the past year. Its new markets announced this week include Austin and San Antonio in Texas and Tampa, as well as the three California cities. Zillow Offers is already in business in Riverside.
Zillow is not alone. Other companies have launched similar businesses in the last few years.
Opendoor, a San Francisco-based company, was the first to set up shop in Sacramento last fall. “This is the next phase in real estate,” Opendoor spokeswoman Cristin Culver predicted in February. “We’re breaking tradition.”
Zillow spokeswoman Jordyn Lee said her company’s research found that many consumers find home-selling stressful and are open to ways it can be simplified.
“I don’t think people would have been ready for this five years ago, but consumer expectations are changing,” Lee said. “Now, people want an on-demand experience, to do things with a click of a button.”
Zillow requires potential sellers to email photos of their house before the company makes an offer. Both Zillow and Opendoor send home inspectors to check houses before finalizing deals. Both say that can happen in a matter of days. If home repairs are needed, the companies adjust their asking price. Both companies will work with real estate agents, but sellers and buyers don’t have to.
The online services use computer algorithms and human analysis to determine the price of a house. The companies promote their service as a way to offer sellers quick money, flexibility, varying move-out dates and the option to back out of the deal. The services typically allow potential buyers to view the house on their own, using a smart phone app that unlocks the house’s front door.
“Home sellers want to sell on their schedule, and buyers expect a seamless shopping experience. And they want it now,” Zillow Offers’ Matt Kreamer said in an email. He called Sacramento “a dynamic market where we believe we can deliver great offers to home sellers.”
The company charges sellers a variable fee for its service, which has averaged 7 percent this year. Opendoor also charges a variable fee. The Bee recently requested a home price offer from Opendoor on a South Land Park home and was quoted a 7 percent fee for a proposed purchase price that appeared to match recent neighborhood sales.
In Sacramento, Opendoor has started out purchasing only homes built after 1960 and in the $200,000 to $600,000 range. Zillow Offers officials this week said they do not have specific limitations on the homes they plan to buy.
The online trend has caught the attention of the traditional real estate industry. Some say they believe the new business model may only work in real estate markets where prices are going up. If prices remain flat or go down, companies like Zillow Offers and Opendoor could lose money on a sale if they hold onto a house too long.
In a recent email to The Bee, Jared Martin, president of the California Association of Realtors, said online businesses appear focused on sellers who want a quick buck.
“Convenience-based platforms may help sellers who need to unload their property in exchange for a quick buck, but there is no substitute for the unparalleled value of a Realtor,” Martin wrote. “Buying or selling a home is usually the largest, and often the most complicated, transaction a consumer will ever make, and a Realtor can help them navigate through the process.”
Paula Swayne of Dunnigan Realtors in Sacramento said she believes the new companies can find a place in the market, but doesn’t see the trend taking over the industry.
Appraiser and real estate analyst Ryan Lundquist, speaking recently about Opendoor, said time will tell about the impact. “Everyone wants to be the new Netflix in the Blockbuster world,” he said. “I am curious to see if their model can work.”