This is a slightly different type of article than I normally write, but I found it interesting and wanted to share it. A few months ago, Zillow announced its Instant Deals program, which basically allows sellers to get offers on their homes in two days from institutional investors. These investors are highly qualified buyers and they close with all the cash in one week. At this time, Zillow states that it does not offer this service to negotiate deals and collect commissions; it is doing it to satisfy a need in the industry. They claim that you are actually encouraging salespeople to use agents, not the other way around.

Many agents are upset. In fact, according to a recent survey, 87 percent of real estate agents believe that Zillow is trying to become a broker and remove agents. However, some agents are excited about this change and want to work more closely with Zillow.

If you haven’t heard, this is how the Instant Deals program works in two test markets. A home seller completes a questionnaire online. From there, Zillow passes this information on to a small group of institutional investors who are buying houses in that market and to a qualified real estate agent. The real estate agent is tasked with providing detailed comparable market analysis, while investors are tasked with submitting offers. In just a few days, sellers should have multiple cash offers and a CMA to compare the offers. They then decide to go ahead and accept one of the offers where they can work with an agent to help with the transaction, or they can close the transaction without the help of an agent, or they can choose not to accept the offer and sell the house in a more convenient way. traditional. This could include listing with an agent.

There have been several agents who claim to have received a large number of leads under the new program. They submit the CMA and are then encouraged to follow up to try and get the list.

I don’t see this as a bad thing for agents. Zillow does not charge borrowers or investors any fees for this service, and states that it is not interested in setting up a brokerage or charging commissions. They generate income from ads and sales leads, not houses. Although many agents believe that this could change because Zillow is not a profitable company. Going into the brokerage business could be a new profit center. I don’t see it that way, at least not yet. I see this more as a marketing strategy to attract leads from sellers to agents.

While I’m not worried about Zillow taking over the broker job, nor do I see this as a huge threat to investors, I could see how it could be viewed that way. Zillow’s mission with the Instant Deals program is to capture all possible leads from distressed sellers and deliver them to cash buyers or their “pay-to-play” agents, virtually eliminating the small investor in rehab. It is our job to stay on top of what is happening and make our business profit.

Here’s why I’m not worried. First, cash buyers are going to need deep discounts and agents who just want a quote are going to offer inflated CMAs. Those two could be so far apart that they will hurt Zillow and the Zestimate he’s so proud of. (Zillow’s opinion on the value) This alone could cause the program to crash before it even starts. However, that is not what I think is going to happen. I guess most sellers will end up listing the house with the agents who provide the inflated CMAs. The broker is likely to have trouble selling it because it will be priced too high. This could be a great thing for a small investor in rehab. Here are two ideas you can implement to take advantage of them, assuming the Instant Deals program reaches your market.

1. You can connect with the “pay to play” agents. If you can show that you are close to your contracts and establish a relationship with them, they will also bring a cash offer to the table. There are ways to make your offering more attractive than the institutional investor’s offerings. This could be a great way to get sellers’ attention before distressed homes enter the MLS.
2. You can track listings that appear to be too high on MLS. After they’ve been listed for a while, you can start trading with the seller and / or the listing agents. But be careful. You may not be able to market directly to a listed home owner unless you are not licensed. Cash offers on distressed homes are attractive after the motivated seller has their home listed for a while without traction.

This program is currently only available in Las Vegas and Orlando, but there seems to be a lot of optimism around it, so there is a chance it will hit your market in no time.