Is ‘Instant Offers’ Just a Test?

June 7, 2017

It’s a common trope in the real estate industry that Zillow’s recent foray into Instant Offers is an attempt to cut agents out of the real estate process. But some onlookers say that doesn’t make any sense.

“The industry is up in arms about Zillow displacing agents and brokerages, but the data doesn't support it,” tech entrepreneur and business advisor Mike DelPrete writes in Seeking Alpha. He says that when you consider the company’s financial model, the new product is simply an “opportunistic move by Zillow… to capitalize on the growing consumer demand for instant home offers.”

DelPrete’s argument is based on the fact that around 70 percent of Zillow’s revenue comes from real estate agents and that they don’t seem to be diversifying their income streams in any significant way.

“The agent controls the purse strings,” he writes. “I consider it unlikely that Zillow is making moves against the industry. The existing business is just too lucrative with plenty of growth left to put it all at risk.”

However, just because Zillow isn’t ready to take on the industry now doesn’t mean it can’t make a move sometime in the future. “I guarantee many—myself included—will be watching this test with great interest,” DelPrete concludes.

Source: “Zillow: Killing The Golden Goose?” Seeking Alpha (June 7, 2017)