** LEGAL UPDATE **
There's a new way to sell your house in some places in the U.S.: Ask Zillow to make an offer on it. In April 2018, Zillow began buying homes directly from sellers through its Zillow Offers program, with the idea of reselling them at a profit.
The program launched in only a few U.S. cities, but has recently expanded. Zillow now plans to be in as many as 14 markets by the end of 2019.
Sellers hoping to get an offer from Zillow simply answer a few questions and submit photos of their house. If the home is eligible for the program, Zillow will send the seller a cash offer within a few days, while reserving the right to change the offer based on an in-person inspection or other information it considers relevant.
Sellers who accept Zillow's purchase offer can choose their own closing date. The sellers are not represented by Zillow itself, but can choose to be represented by a partner agent (a real estate agent located in the sellers' community who advertises on Zillow).
After closing on the property, Zillow makes any necessary repairs, then re-lists the property for sale, essentially acting as a house-flipper.
Zillow Offers touts its many benefits to sellers: no home prep needed to go on the market, no inconvenient showings, no uncertainty about how long the home will be on the market, and a quick closing on the sellers' schedule. Buyers who need to sell their home in order to purchase a new one will especially benefit from a quick and predictable sale to Zillow.
One of the major downsides of Zillow Offers so far appears to be that its offers tend to be below the market price—but, for people looking to sell their home quickly, the benefit of a quick sale might outweigh the downside of a lower sales price.
Zillow is not the only online home buyer out there (Redfin, Offerpad, and Opendoor are just a few of the others), but it's definitely the most well-known. Zillow disrupted the real estate industry in 2006 when it started attaching Zestimates (its estimated market value computed using a proprietary formula) to homes. It's likely that Zillow Offers will again shake things up if it gains traction—it will change the way sellers approach listing their homes, as well as the role real estate agents play (and the way they are paid) in sales transactions.
At the very least, home sellers and their agents will have to consider how Zillow Offers' impacts their market, and strategize accordingly.
Effective Date: April 1, 2019