Home shoppers in Los Angeles may soon have some competition from one of the nation’s largest online real estate databases.
Zillow announced plans Thursday to expand its growing Zillow Offers program into six new cities, including Los Angeles.
Through the program, homeowners can sell properties directly to Zillow, rather than listing them on the traditional real estate market. The company pays cash and will then fix up the property and quickly list it for sale, using its own website to advertise the home.
Zillow Offers is one of several instant buyer platforms launched in recent years by tech companies like Redfin and Opendoor. The concept is similar to traditional house-flipping, but at a scale that few individual investors could match.
According to a press release from Zillow, the company receives requests for cash offers “every two minutes” through the program, which launched last year and is only available in nine cities so far. Zillow also announced plans earlier this year to eventually buy and sell 5,000 homes per month in the cities where the program is available.
Los Angeles is the largest real estate market the company has announced plans to move into so far.
Dana Cuff, professor of architecture and urban planning at UCLA, tells Curbed that the program could be attractive to sellers willing to make do with what’s likely to be a lowball offer from the company in exchange for a less stressful sale process.
But Cuff argues that the flipping process can artificially inflate the value of homes because investors are likely to skimp on costs when fixing up properties.
“We already have a housing crisis on our hands,” she says. “This is not going to make that better. It treats housing only as an investment.”
Zillow spokesperson Matt Kreamer disagrees.
“If anything it will make the market more stable,” he writes in an email. The program, he argues, “allows people to sell (and buy) more easily, and creates a more reliable equilibrium.”
Kreamer says homes sold through Zillow Offers will also be “turnkey,” making them more attractive to potential buyers.
Cuff says the Los Angeles area is already awash in speculators doing that work, and that those in the market for a home may be better off purchasing from a local seller.
“I think it’s a buyer beware circumstance because it’s a large corporation running it,” she says. “It’s all remote. There’s no human there.”