A few weeks ago we decided to move into one of my rental properties and sell our current home. When I started researching how much my house was worth, I noticed on Zillow that they are purchasing homes in the Tampa Bay area.
About a year ago I inquired with one of the companies that buys houses (maybe it was OfferPad, but I can't remember) and they offered $212,000 for our home. I paid $215,000 for it in August, 2018 and, while the offer wasn't enough to convince me to move, it made me feel good that our home was sustaining its value. I assumed that Zillow would lowball the offer like those "We Pay Cash for Houses" outfits. This wasn't the case.
So far this has been a very easy process:
- On January 23rd, I answered some basic questions about the home on the Zillow website. Things like square feet, number of bedrooms, and whether any updates had been made to the house.
- On January 26th, I received an email titled, "We've Calculated a Market Value for Your Home." When I clicked through the email, I discovered my house, according to Zillow, was now worth $266,700. This was justified by a list of other houses that had recently sold in my neighborhood, so it was easy for me to see that my offer was within the range of what houses are selling for.
- The next step was setting up an appointment for an inspector to evaluate the home. I had the option to be present, but I chose to sign a waiver allowing the inspector to come while we weren't home.
- In addition to the market value, Zillow provided a couple of line items detailing what they would deduct to come up with a net price. This included 4.9% in Transaction Costs (comparable to the 5% commission I would have in a normal transaction), 0.1% Selling Costs (described as the fee to let me select a closing date in the future), and Prep and Repair Costs of $2,490. There was a breakdown of the repair costs, which included replacing carpet and touching up paint, along with a couple of other minor repairs. I think the repair costs were reasonable.
I have signed the contract and responded to the standard information requests, nothing out of the ordinary. Since one advantage of selling to Zillow is being able to set your closing date, I decided on March 31st. Our tenant is due to move out at the end of February, giving us a month to get the rental property cleaned up and to move.
My personal opinion is that pretty much all asset prices are irrationally exuberant right now. Stocks are in a bubble, and real estate is pricey, though not as crazy as stocks. I can't time the market, but I was already looking at moving, and now seems like a great time to sell a home.
Interesting, as it sounds like it would definitely take some of the guesswork & stress out of the process. We're in the bay area, so houses here often/usually have bidding wars (talk about irrational assets), so I don't think it would work as well in a market like this. But, it sounds a lot more preferable as a process!
ReplyDeleteThanks for stopping by! I see a lot of value in certainty and simplifying the process, but I wasn't going to give the house away, either. After I saw the offer I spent a few minutes trying to figure out why they would offer what I consider full price. Maybe I'm undercutting what we would get in a traditional sale, but the data I'm looking at says I got a fair price. Best of both worlds!
DeleteIf your house was in Colorado, it would have sold just in time. We sold our house in Sept. 2019 and got a very good profit on it -- prices, as of Zillow, have bumped up some more, but there are warning signs everywhere here that a huge drop is coming. Our experience, after living in CO since 1984, is that our state often tanks before the rest of the country. So we were grateful to have stepped out just in time.
ReplyDeleteIf it didn't get so cold, I might move to Colorado. Such a cool place. My partner's grandparents moved from Aurora about 3 years ago and had no issues selling their home for a huge premium. It's weird to talk about before it happens, but I agree that it definitely feels like we're in a bubble that's primed to burst. For now I'll be banking the equity I have and waiting for the inevitable correction.
DeleteCongrats on the quick sale. I'd never heard of Zillow buying houses. Do they flip them or what do they do with the houses after buying them?
ReplyDeleteZillow is only in certain markets. They buy newer homes that don't need much work, and yes, they flip them.
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