Here’s why Zillow instant offers don’t mix well with our red-hot market.
Sellers, this is your fair warning: Getting a Zillow instant offer on your home is a bad idea in today’s fast-paced market. Now, I know what you’re thinking: “Nick, you were the first person in our area to introduce an instant offer platform. Why the sudden change of tune?”
Well, three years ago, when we started our instant offer program called My Rocket Listing, the market looked quite different than it does today. Here are the four reasons why today’s market is simply not the place for instant offers:
1. Inventory levels. A balanced market has six months of inventory. In Portland metro/Salem/Clark County, we’re currently working with weeks of inventory, not months. We just listed a home for $750,000, and there was only one competing listing in a three-mile radius.
2. Days on market. Back when we started our instant offer program, the average days on market was around 35 to 40. Now, it’s only five; homes are flying off the market at an explosive pace. That means the uncertainty often associated with a traditional sale is gone. We’re running a program called the 48-hour guarantee, which allows you to take a guaranteed offer through My Rocket Listing if your home doesn’t sell within the first weekend that it’s listed on the market.
3. Multiple offers. In today’s market, nine out of every 10 listings will fetch multiple offers. We took six listings in the week prior to this recording, and all six garnered multiple offers ranging from $1.5 million down to $469,000. That leads us directly to the final reason…
4. Price appreciation. Multiple offers make for historic price appreciation. The market is barreling ahead with full speed, so you have to stop looking at closed sales for guidance. Homes that sold two or three months ago are not comps. The new comps are whatever you’re competing against, and since each new listing represents the frontline of our dwindling inventory, there’s hardly any competition. There is a massive wave of demand running up against a severe supply shortage. So offers from Zillow or OpenDoor seem like a good opportunity, but those are based on ‘solds’ data. By accepting an instant offer, you risk leaving thousands of dollars on the table.
If you’re unconvinced, take this recent example: We had a client call us about My Rocket Listing on Oak Street in Tigard. Several companies submitted instant offers. Zillow’s offer of $528,000 was the highest. We listed the property on a Thursday, and by Sunday night we had 24 offers and a sale price of $605,000—as is, cash. Had this seller accepted even the best instant offer, they would have left $77,000 in net profit on the table.
Zillow, OpenDoor, and the like are all publicly traded companies on Wall Street. I don’t know about you, but I’m not a big believer that Wall Street is looking out for my best interests. Now more than ever, you need to head to market with an experienced, well-resourced team of real estate professionals who have your back. You need access to today’s data, not yesterday’s.
As always, if you have questions about this or any real estate topic, don’t hesitate to reach out by phone or email. I’m here to be your go-to resource.