As most of the industry focused on where the housing market is going and how best to navigate the shift, Zillow has been busy quietly piloting a new offering it has termed “Zillow-backed offers.”
Launched in August, it is essentially a cash-backed offers program backed by the company’s own cash. From the date of the closing, homebuyers have 90 days to secure their financing, but if the financing falls through, Zillow will step in to purchase the home and the client will then have another 90 days to repurchase the home. If the homebuyer is still unable to secure financing after the second 90-day period, the Seattle company will resell the home on the market.
At the moment, the pilot program is only available to homebuyers in the Raleigh and Denver markets purchasing single-family and townhome-type properties costing up to $750,000. In addition, buyers must be working with an agent trained in Zillow-backed offers and have a minimum of a 5% down payment.
While buyers are able to work with the lender of their choosing, the service fee for using Zillow-backed offers is 2.5% instead of the 0.5% charged if Zillow Home Loans is used for financing.
“To help home shoppers increase their odds of winning their dream home and feel more certain in their offer, Zillow is piloting Zillow-backed offers, where we will back a buyer’s financed offer with our cash,” a Zillow spokesperson wrote in an email. “According to listing agents, a cash-backed offer is more than two times more likely to be accepted over a pre-approved offer. We continuously test solutions to help buyers transact and win their next home and this pilot is one more way we’re continuing to empower our customers in their home shopping journey.”
Nearly a year after Zillow’s swift exit from the iBuying space, the firm is still exploring and testing its options in the real estate ecosystem. In early August, the company announced a partnership with its former arch-rival Open doorand, in April, began testing changes to its Premier Agent program.
During the second quarter of 2022, Zillow generated a modest net income of $8 million, while revenue for the quarter came in at $1 billion.