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After Ditching Homebuying Business, Zillow Group Partners with Rival Opendoor – GeekWire

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Zillow Group still wants to help people sell their homes faster.

The Seattle real estate giant has announced a partnership with Opendoor. It allows home sellers on Zillow’s platform to request instant cash offers from Opendoor, one of his leading “iBuyer” companies aiming to make real estate transactions more seamless.

Zillow last year decided to shut down its iBuyer business, Zillow Offers, putting an astounding end to an ambitious home flipping bet that resulted in a $405 million write-down and a 25% headcount reduction. rice field. Zillow said home prices could not be accurately predicted and the business would ultimately require a large amount of capital.

Zillow users can continue to receive instant cash offers at home today, but the transaction is made easier with Opendoor. Zillow receives a referral fee when a customer sells to Opendoor.

Zillow CEO Rich Barton said the deal will expand Zillow’s reachable markets and allow it to create a suite of sales services.

“This is not just a lead generation sales deal,” Burton said on a conference call with analysts on Thursday. “This will be a deep integration.”

Barton said it will leverage the investment Zillow has made in developing Zillow Offers. Details from Burton by phone:

“We spent a lot of time, treasure, and IQ finding ways to integrate cash offers into our homepage detail pages and user flows to attract merchants to interact with us. All of our learnings can be applied to this partnership, and what’s interesting is the deep integration of Opendoor’s offerings into our suite of services, which allows us to quarterback the process and request Opendoor’s cash offers. It gives our customers the opportunity to introduce them to Premier Agents, Mortgages, Zillow Closing Services and the myriad of things we have at our disposal.”

Home sellers can compare cash offers from Opendoor to traditional open market sales facilitated by real estate agents in Zillow’s Premier Agent program.

Zillow Chief Operating Officer Jeremy Wacksman said in a statement that customers can “evaluate their selling options and easily package them with other Zillow services to buy and finance their next home. I can,” he said.

Opendoor reached a $62 million settlement with the FTC this week. The FTC said the company used misleading marketing techniques to trick customers into “thinking he could sell Opendoor more money than the public market using traditional sales processes.” said.

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Zillow says the partnership with Opendoor builds on the company’s strategy to offer a “housing super app.” It’s a digital experience that management described earlier this year as “connecting all the fragmented parts of the moving process and putting them together in one transaction,” he said.

In a letter to shareholders on Thursday, Burton said, “Over time, we’ve built complementary seller services that make sense across agency transactions and related services such as mortgages and titles and escrow. It opens up a lot of opportunities,” he said. “Once fully deployed, Zillow will create another way to serve potential sellers in more than 50 U.S. markets and grow the business in a less capitalized way, which he explained when he exited iBuying. You can.”

Founded in 2014, Opendoor went public in 2020 and will reach $8 billion in revenue in 2021, up from $2.6 billion the year before. He was one of the first companies to use the iBuyer model, giving home sellers the certainty and immediacy of an all-cash offer instead of paying a commission. Redfin and Offerpad also have their own iBuyer businesses.

In addition to fees similar to real estate fees, Opendoor also makes money from the difference between the purchase price and the sale price of a home. We also provide ancillary services such as home repairs and mortgages. The company acquired Seattle startup last year. Its market capitalization is just below $3 billion, from about $8 billion last year.

“For parents looking to size up, young professionals moving to a new job, and the millions of people who regularly use Zillow to explore their home sales options, all at the tap of a button. We will provide the ability to navigate with ,” said Andrew Lo-A-Kee, president of Opendoor, in a statement.

Zillow shares fell more than 10% on Thursday after releasing its second-quarter earnings report. Zillow’s stock is down nearly 40% this year. Its market capitalization is over $9 billion.

Zillow 2Q22 Shareholder Letter by Scribd’s GeekWire