Why is Zillow offering CASH OVER ASKING PRICE?
Why is Zillow offering cash over the asking price?
It's a big question. Recently, one of our listings was listed high five hundred and we had multiple offers. Zillow offered $5,000 over the asking price, cash on that property. The question is a big player like Zillow, and we all know the market is high right now. Why are they going to pay over the asking price? Even our asking price was not below market. It was a little over the market. That's what the seller wanted to keep the negotiation room.
I did see some videos, some blogs about Zillow doing that and also Redfin and Open door doing the same thing. They're buying properties at a high price.
And some of the people are saying that they want to dominate the market. Zillow, Redfin, they want to buy cash at a high price, then they want to set up a standard price. But I don't think so. Being in real estate for over two decades and saw all those changes that happened in the past years.
Sometimes what we do, we make a decision based on whatever happened in the past. But I can tell you something that the real estate market is always changing and it's never the same. It's a different change all the time. Like this time there's a pandemic right now. This is totally opposite to what happened in 2008 and 2009. So there's something to think about.
The big players like Zillow, Redfin, Open Door, those iBuyers they're offering over the asking price. Why? Now, this is my opinion and I believe that there are some markets in the US. Their prices are still low, even though we are here, we think they are high price. But compared to the other cities of the same kind of lifestyle, some parts, like, for example, in Southeast Florida, the prices are lower than if you compare to New York or if you compare to California or some other part of the country like in New Jersey, the prices are low. I respect what Zillow does. They're very smart. Look, the changes they did throughout the years, they're very smart. So you have to think that what those smart guys do, they keep up with the market, what they're doing. My opinion, again, is the reason they're buying because they know that these markets, these particular cities or particular areas, because of job opportunities, because of the migration, because of different reasons people moving in from different parts of the country, the prices will go up. The prices will not go down.
Zillow knows that because they spend a lot of money. They spend a lot of time doing all that research. So definitely, when I see Zillow and Redfin and Open Door are doing this.... buying the property at a higher price, I'm sure that the market is going to go up.
And if you're thinking of selling and you're thinking like, why not? You may thinking of contacting Zillow and they're paying the great price, just to let you know that they do have high fees. On this particular offer, They were charging sellers 7.5%, not just 6% or 5%. It probably varies from property to property. But, their fees are high. So even though Zillow is paying you more, you're not going to net more with them.
If you are a buyer and you are on the fence to buy the property, this is something to think about. Or if you're thinking of selling and maybe want to upgrade or downgrade, this is something to think about. You don't want to pay much higher price later days for the property you want to buy.
So put some comments. We all have our own opinion with the experience we have. But again, my question is why Zillow is offering over the asking price....... Cash? And it's a big question.