Zillow CEO Spencer Rascoff. (GeekWire Photo / Kevin Lisota)
Zillow Group has expanded its new business of directly buying and selling homes to Las Vegas, its second market after kicking off in Phoenix in April.
Some homes on Zillow in Las Vegas will now have a big button that says “get an offer.” The seller fills out a short questionnaire and sends in a couple photos. About 48 hours later, Zillow comes back with an offer and an agent to work with. The seller and Zillow set up a call to walk through the offer and schedule an inspection. Then Zillow sends a revised offer after seeing the house. If both sides are happy with the situation, the seller signs forms digitally and picks a closing date. Zillow takes care of the rest.
Contractors working for Zillow do a small renovation project to prepare the home for sale. Zillow works with local agents — in Las Vegas Berkshire Hathaway HomeServices Nevada Properties and Coldwell Banker Premier Realty — to list and sell the homes.
The entrance into direct buying and selling represents an expansion of Zillow’s Instant Offers program. The move marks a risky bet, but one that CEO Spencer Rascoff says could be especially lucrative.
The company says it is going for sales volume over making a bundle on each and every sale. Rascoff explained the company’s pricing strategy in Zillow’s most recent earnings call, saying that right now, the main goal is just to come out ahead on homes at the beginning of the new program. Rascoff expects the margin on each home to rise as the home sales business grows.
For 2018, Zillow expects to hold 300 to 1,000 homes in inventory related to the new Homes financial reporting segment, from which it expects $125 million to $255 million in new revenue.
Zillow’s entrance into direct buying and selling of homes makes what was already a competitive market even more crowded. Another Seattle real estate heavyweight, Redfin, jumped into the market last year. Opendoor just today announced it has reeled in $325 million in fresh funding, a few weeks after Offerpad landed a $150 million debt and equity round.