Zillow is being dragged through the mud on social media over its business practices.
Recently a Las Vegas real estate agent went viral for his claims that Zillow has been sneakily manipulating the housing market. Meanwhile Reddit user ‘satanicmajesty’ went viral claiming that they were offered $30,000 above market value by Zillow for their house. Users in the comments went on to talk about other shady business practices they believe the company is up to.
User ‘JollyOpportunity63’ wrote, “Zillow is trying to become Carvana for houses, having an inventory available you can click and buy.”
User ‘Kansas_Fan said, “If they buy up the homes, they can control the market in the area. They can send in a couple contractors to update a few of the houses, raise the value by 20K then the rest of the houses they own increase in value as well. Sucks for the buyers.”
In response Zillow emailed a statement to Yahoo Finance. Here’s what they said:
“Zillow’s home buying and selling program, Zillow Offers, empowers movers with the ability to sell on their timeline, limiting the stress involved in a traditional home-selling process. We pay market value for every home we purchase. When we looked at homes that sold traditionally after they declined a Zillow Offer, we learned that on average, those selling traditionally sold for only .09% more than the Zillow Offer. And on every home that Zillow buys and sells, we are transparent: the purchase and re-sale prices are publicly displayed on the property page on Zillow.com. With Zillow Offers, our goal is to buy at market rate, then sell quickly at market rate. The business model is designed to generate our profit margins from the convenience fees we charge sellers — typically around 5% today.
“Because our margins are so thin, it’s critical that we price a home accurately. If we overpay — we’ll lose money on the resale. If we make too low of an offer — homeowners won’t use us.”
Do you side with Zillow or the critics? Or is there a more nuanced position to be taken? Let us know what you think!