Redfin and Zillow‘s house flipping are two of the biggest online real estate marketplaces. This could disrupt the house flipping business, put flippers out of business, etc.. This recent news is pretty alarming. It could lead to a drastic change in the way flipping takes place in the USA.
Zillow’s House Flipping
First, let’s talk about Zillow‘s house flipping and what they’re doing. In April 2018, Zillow launched “Zillow offers.” This feature allows homeowners to sell their properties. They receive an offer from Zillow with an analysis of their home’s worth. According to an article by “Marketplace,” Zillow looks to purchase, rehabilitate, and resell the properties in ninety days or less. Zillow plans to purchase over 5,000 homes-a-month in the coming years. At first, the Zillow offers program was only available in seven markets. Today it is available in twenty-four markets. Homeowners will be able to get a cash offer from Zillow.
Although, Zillow doesn’t intend to wholesale the properties by relisting them per sale. They plan on fixing and flipping them. The question is what are their buying criteria? How will their cash offers compare to other local wholesalers like you and me?
At first, Zillow said that it wanted to flip the houses in 90 days. But they weren’t attaining the 90-day goal. Today, they can complete the flipping and reselling processes in seventy-six days.
Redfin’s house flipping
Redfin is a force to be reckoned with. The Seattle based company went public in August 2017. They’re the most innovative with technology. Redfin seems to embrace creative ideas. They are the best when it comes to analyzing deals to determine the ARV, the after repair value. Redfin launched their 1% listing service, challenging the status quo for real estate agents. They have their mortgage and title services.
They launched their home buying program. “RedfinNow” is the name of the program. RedfinNow promises to give homeowners a cash offer in twenty-four hours or less. How does this work? A homeowner requests a quote, and then Redfin uses a million data points such as your build, size, location, and sold data. They then give the seller a price range. If the homeowner accepts the price range, Redfin visits the building. What comes next is a firm offer from redfin to the homeowner.
How is the RedfinNow program is different from the Zillow offers program? As of today, it’s unclear if Redfin plans on fixing and flipping. Redfin states that they are relisting them for sale. In other words, wholesaling. It’s worth noting that the RedfinNow program is a pilot program. Today, RedfinNow is available in just three markets.
What do I do?
- Instead of fearing change, embrace it. It’s happening. These companies have millions of dollars behind them. They are investing in technology to make the selling process more streamlined than automated. In the next few years, they will be in every market. This means the discount home selling process to homeowners will become mainstream. So, know what’s happening and know what’s coming.
- Whenever there is an industry disruption, find a way to reinvent yourself. The way to compete with these giant players is to win on the customer experience. Provide a better experience for the motivated seller. Finding creative solutions other than paying cash will be the key tip.
- Find an unserved niche in your market. Redfin and Zillow’s house flipping have specific criteria for the types of homes they’ll buy. If the round peg doesn’t fit in the round hole, they won’t do the deal. There will be a lot of deals and opportunities that don’t meet their parameters. Find those types of sellers.
These disruptions are a good thing because it’s going to take the flipping industry to a whole new level. Only the best will survive. The fly-by-night-get-rich-quick flippers will become obsolete. Which one would you be?
