In a Facebook post on Friday, Glenn Sanford estimated that consumers pay an average of 11.4 percent in commissions when selling to Zillow.
Glenn Sanford, CEO and founder of eXp World Holdings – the parent company of eXp Realty which has an iBuyer platform of its own – is not being sold for the benefit of the largest iBuyer platforms in the country, Zillow Offers and Opendoor.
In a Facebook post, Sanford said that sellers who sold on Zillow Offers were essentially paying an 11.4 percent commission, by his calculations, compared to the 5.4 percent they average with a full-service broker at the price paid and related fees are factored in.
Sanford joked that he was “pretty decent at math” and posted his math on a public table.
“I know Zillow and Opendoor pushed brokers like ours to develop comparable offerings, but I still don’t see consumers being served when they get an average of $ 15,000 to $ 20,000 less net or less [5 to 7.5 percent] less of the total value of their home, ”wrote Sanford.
EXp Realty has an iBuyer program called Express Deals. According to Sanford, the difference is that an agent at eXp Realty gives the consumer a choice of what it looks like when selling to an iBuyer rather than selling in the open market.
Both Zillow and Opendoor employ licensed real estate agents. Opendoor also offers listing services through its Opendoor brokerage arm. Zillow has partner agents to connect consumers with when they are not interested in the iBuyer offering and pre-set all options for consumers.
Even so, Sanford said many consumers still don’t understand the implications of selling to an iBuyer.
“There is a very small percentage of the market that should go the iBuyer route. Often, however, home sellers find the excitement and convenience of selling on OpenDoor or Zillow that they don’t really consider the full cost and implications, ”Sanford wrote. “For the average salesperson, the difference could be over 6 months of full-time employment and the difference between sending their kids to college or putting money aside for a rainy day or retirement.”
In its own attempt to provide consumers with transparency about its offers and net costs, Zillow published its own study of the actual costs of reporting to Zillow back in December 2020.
“Many analysts have simply compared our service fee to the 6 percent commission cost for brokers on a traditional home sale,” wrote Errol Samuelson, Zillow’s chief development officer, in a blog post. “However, this comparison, which uses only commissions, ignores the fact that a home seller has to manage or bear other costs: cleaning the home, staging, HOA fees, or the costs associated with misaligning a home sale, e.g. B. Carrying two mortgages, renting an apartment, etc. in traditional sales. “
“These are significant costs that add up quickly,” added Samuelson. “With Zillow listings, a home seller doesn’t have to worry about making one of them himself.”
Zillow’s own research also targeted the industry’s perception that Zillow is buying homes that are well below market value. The company examined 6,300 homes where a seller turned down Zillow’s offer and traditionally sold. He found that the house sold an average of 0.09 percent more than Zillow’s offer.
“Recently, some analysts have suggested that traditional sales models provide far better value to home sellers than our approach,” Samuelson wrote. “The reality, however, is that selling on the open market may not result in a price much higher than what Zillow is offering.”
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