Zillow’s In-House Brokerage Launches Next Month—What Agents & Investors Need to Know | Daily Podcast

Zillow is an emerging industry leader in iBuying, and other established organizations such as Opendoor and Offerpad focus solely on the iBuy model. Previously, Zillow used its iBuying potential to match sellers with agents not affiliated with their company. But now, after years of denying plans to do so, the online real estate behemoth has announced it will further its iBuying operation by employing salaried agents.

Zillow will begin these in-house transactions in three cities in January 2021, adding more locations throughout the rest of the year.

This launch means that Zillow is looking to capture a larger part of the residential home sales sector. As a company, they have stated that they only plan to use their in-house brokers for the iBuying process as opposed to in the traditional sense.

So, what does this look like for the real estate investor community?

Why Zillow Shifted Focus So Quickly

iBuying has quickly revolutionized the way residential properties are listed and sold over the internet. Short for "instant buying," iBuying uses proprietary algorithms to make offers on homes that clients can buy or sell directly over a platform, rather than through a traditional agent. While it lacks the in-person chemistry that the traditional listing process entails, there's a reason it's becoming popular. iBuying has proven to be extremely convenient for buyers and sellers by skirting negotiation headaches and offering flexibility in the status of the deal. As a real estate investor, this is attractive.

Companies profiting from iBuying only work with a small portion of the total residential housing market. Yet, over the past few years, iBuying has helped generate a growing amount of Zillow’s total revenue. In 2019 alone, iBuying accounted for around half of Zillow’s total income ($2.7 billion). As such, technology investors are beginning to realize the monetary capacity associated with iBuying and the role it will play within the industry going forward.

However, traditional agents still stand to gain business from Zillow if the seller is not interested in using iBuying. For now. The emergence of COVID-19 and growing dependence on technology put Zillow and other industry leaders in a position to forever disrupt the “old school” listing and selling experience.

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