Zillow, a Seattle-based real estate and financial services company, has announced that it is suspending signing new contracts with homeowners who use its iBuying service Zillow Offers until the end of the year. However, the company will continue buying homes that were already in its pipeline as the pause impacts prospective sellers yet to sign home sale contracts.
“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” said Jeremy Wacksman, COO of Zillow. “We have not been exempt from these market and capacity issues and we now have an operational backlog for renovations and closings. Pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory.”
Zillow Offers is a service to homeowners to sell without having to coordinate repairs or host open houses or showings. After buying a home, Zillow prepares it for sale by doing the same type of projects a typical seller would, then lists it on the open market. For prospective sellers, Zillow Offers is now connecting them with a local premier agent partner.
iBuying created 1% of all U.S. home purchases last quarter for the first time as homeowners increasingly used these services to sell more than 15,000 homes nationwide.
Instant buying, or iBuying, happens when real estate companies use algorithms to evaluate a property’s worth based on comparable market data and purchase houses, directly from the seller, in quick cash transactions. Those companies then quickly list them for sale on the open market after making light repairs and updates. Benefits to the seller include cash offers, flexible move dates, and the convenience of preparing and not showing the home. For those same reasons, iBuyers tend to charge sellers a higher fee than traditional agents.