If any of the UK property portals were considering buying and selling homes direct then latest results from US portal giant Zillow might persuade them otherwise.
The Seattle firm’s recently-launched iBuyer and mortgages operation has bought just 200 properties in the US so far, or 1% of the 20,000 homes offered up by vendors.
Zillow enables both agents and owners to sell their homes on the same platform, although 80% of its revenue comes from agent listings. Since launch in 2006 it has launched several initiatives that cut out agents including ‘instant offers’ that pair up investors with home vendors directly.
It’s iBuyer scheme is in a similar vein; it is designed to offer sellers an alternative to auctions and other home-buying services. After offering-up their homes to the portal, Zillow then makes an offer on the property using an Automated Valuation Model (AVM), buys the property direct and then immediately lists the property for sale via Zillow.
The service has been controversial in the US. Some agents now see Zillow as a potential competitor, although the low numbers using the fledgling iBuyer operation show it has some way to go. But 22,000 signed a petition calling on the portal to stop cutting out agents from the sales process.
Zillow’s iBuyer and mortgages operation is part of its attempts to plug a gap in its slowing revenue growth, which has dropped from 32% a year in 2016 to a forecast 12% in 2018.
And US portal commentator Mike DelPrete says iBuyer has hidden benefits for the portal as a lead generator. “Zillow is a lead generation machine, and its recent foray into iBuying is no exception,” he says.
Investors in the company are more nervous about its prospects. The portal’s US share price nosedived by nearly a quarter last week after it published poor third quarter results including losses of nearly half a million dollars.