When Zillow Offers exited the instant-offer market this past March, there were a lot of disappointed sellers, but no one was really surprised. After all, as CEO Rich Barton described the situation at the time, the novel coronavirus COVID-19 pandemic was certainly the type of Force Majeure event covered in the “Acts of God” provisions in every responsible purchase and sale (PSA) agreement. Last week, however, Barton partially reversed the move, first announcing Zillow Offers would resume making offers by the end of the month during a call with investors and then telling Barron’s that all of his data indicates “we have passed the worst of [the coronavirus and its associated market impact]”.
Zillow Offers joined Redfin Now, Opendoor, and Offerpad in announcing a swift return to daily operations, although Barton did note that the company will slash its marketing budget for Zillow Offers and take various steps to cut costs by 25 percent across the board. Barton also said his company’s digital data collection indicates the housing market is in for a bullish summer.
“Forget the stock market for a second – who knows what’s going to happen there – but from a consumer health perspective and an emotional perspective, we’ve passed peak fear,” Barton said.
He noted Zillow is posting double-digit growth in site visits and that the company is now prepared to operate its home-buying and -selling programs digitally in the event of a second wave or if COVID-19 “season” becomes an annual event.
Redfin is also putting its money where its mouth is and has brought back roughly 10 percent of laid-off and furloughed employees, agents, and other company professionals. In March, Redfin CEO Glenn Kelman shut down Redfin Now because “with whole cities shutting down, no can say what a fair price is right now.” Today, he plans to reopen the flipping operation in Austin, Texas; Denver, Colorado, and parts of California’s Inland Empire.
Most real estate investors may view this development as negative since i-buyers sometimes “snap up” prime deals where a seller is motivated and a property requires little rehab work. However, investors should view the reentry of these behemoths into the marketplace less than three months after they left as a positive sign that will not only create stronger positive consumer sentiment among buyers and sellers but that could bolster the overall housing market and bring buyers, sellers, and tenants out of the shelter-in-place mindset and back into “house-hunting” mode.
Tom Olson is the founder and president of The Olson Group of real estate companies and the Good Success Mastermind. You can access the latest edition of his book, Contingency Planning for Your Small Business During COVID-19, and learn more about the Good Success Mastermind and 30-Day Good Success Journey at www.GoodSuccess.com.
