MINNEAPOLIS (WCCO) — It’s been three months since Zillow started buying and selling homes in the Twin Cities, marketing itself as a CarMax-type of service for the housing market and promising quick, hassle-free deals.
It caters to homeowners like Terrance Reeves-Chong, of Maple Grove. He sold his house to Zillow in July, saving time and effort at the cost of negotiating power.
“We did not have time to do the showings,” said Reeves-Chong, who is married and has three young children. “You have like an hour [long] window of clean house, and if you don’t show up in that hour, sorry.”
Homeowners who have time and are looking to maximize their profit are likely better off going with a traditional sale. Zillow bought Reeves-Chong’s home for $338,000. He also paid a 6-8% service fee, which is comparable to a realtor’s fee. Zillow listed the home for $355,000, in hopes of making a $17,000 profit, minus repairs.
Local Zillow broker Kris Lindahl says the profit margin after that is fairly low, which is part of the point.
“It’s a huge volume situation, so there’s significant amount of properties that we’ve acquired, and we’re turning it around and putting it back on the market,” said Lindahl. “And the program has been really successful.”
Zillow will not disclose how many homes it has bought or sold in the Twin Cities market since its early May launch, however it says it sold 786 homes and bought 1,535 homes in its second quarter, which includes Minnesota along with 11 other markets.
Zillow plans to expand to operate in 26 markets by mid-2020.