This is a bit of a different type of article than what I normally write, but I found it interesting and wanted to share it. A few months ago, Zillow announced its Instant Offers program, which basically allows sellers to receive offers on their homes within two days from institutional investors. These investors are highly qualified buyers and close with all the cash in a week. At this time, Zillow claims that it does not offer this service to negotiate deals and collect commissions; he is doing it to fill a need in the industry. They claim that he is actually encouraging sellers to use agents, not the other way around.

Many agents are upset. In fact, according to a recent survey, 87 percent of real estate agents believe that Zillow is trying to become a broker and eliminate agents. However, some agents are excited about this change and want to work more closely with Zillow.

If you haven’t heard, here’s how the Instant Offers program works in two test markets. A home seller completes an online questionnaire. From there, Zillow passes this information on to a small group of institutional investors buying homes in that market and to a qualified real estate agent. The real estate agent is tasked with providing a detailed comparable market analysis, while the investors are tasked with submitting offers. In just a few days, sellers should have multiple cash offers and a CMA to compare offers. They then decide to go ahead and accept one of the offers where they can work with an agent to help with the transaction, or they can close the transaction without the help of an agent, or they can choose not to accept the offer and sell the house in a more traditional way. . This could include listing with an agent.

There have been several agents who claim to have received a large number of leads with the new program. They send out the CMA and are then encouraged to follow up to try and get listed.

I don’t see this as a bad thing for agents. Zillow does not charge any fees to borrowers or investors for this service, and states that it is not interested in setting up a brokerage or charging commissions. They generate income from ads and lead sales, not from houses. Although many agents feel that this could change because Zillow is not a profitable company. Getting into the brokerage business could be a new profit center. I don’t see it that way, at least not yet. I see this more as a marketing ploy to attract leads for agents.

While I’m not worried about Zillow taking over the broker job, nor do I see this as much of a threat to investors, I can see how one might view it that way. Zillow’s mission with the instant deal program is to capture as many distressed seller leads as it can and deliver them to cash buyers or their “pay-to-play” agents, virtually eliminating the small rehab investor. It’s our job to stay on top of what’s going on and maneuver our business to our advantage.

Here’s why I’m not worried. First, cash buyers will need deep discounts and agents who just want a quote will offer inflated CMAs. Those two could be so far apart that it’ll hurt Zillow and the Zestimate he’s so proud of. (Zillow Value Opinion) This alone could cause the program to crash before it even gets going. However, that is not what I think is going to happen. My guess is that most sellers will end up listing the house with the agents that provide the inflated CMAs. The agent will likely have trouble selling it because he will price it too high. This could be a great thing for a small rehab investor. Here are two ideas you can implement to take advantage of, assuming the Instant Offers program hits your market.

1. You can network with “pay to play” agents. If you can show that you close their deals and build a relationship with them, they too will bring a cash offer to the table. There are ways to make your offer more attractive than offers from institutional investors. This could be a great way to get sellers’ attention before distressed homes go on the MLS.
2. You can keep track of listings that appear to be too high in the MLS. Once they’ve been listed for a while, you can start marketing to the seller and/or listing agents. However, be careful. You may not be able to market directly to a listed home owner unless you are unlicensed. Cash offers on distressed homes are attractive after the motivated seller has their home listed for a while with no traction.

Currently, this program is only available in Las Vegas and Orlando, but there seems to be a lot of optimism around it, so there is a chance that it will hit your market before too long.