Zillow has said it will start making cash offers for "eligible homes" based off of its "Zestimate" tool in 20 U.S. cities, including the Twin Cities metro.
The online property search giant says it's standing by its Zestimate tool, claiming it provides a reliable valuation of properties despite criticisms from users that it overestimates the values of homes.
It is pairing Zestimate with its Zillow Offers program it launched in spring 2019, with the company making cash offers to buy homes directly from sellers listed on its site.
The Twin Cities is among the markets where Zillow will use its Zestimate tool to make offers for "qualifying homes," though it hasn't laid out which homes will be eligible and what criteria it's using to determine that.
"Homeowners with qualifying homes will see the initial cash offer prominently displayed at the top of their property information on Zillow," the company says, noting that it will expand the number of eligible homes as its Zillow Offers
It is backing its Zestimate figures, claiming the margin of error for its estimation tool for almost 100 million homes nationwide is 1.9%, with the company using public records, artificial intelligence, and details from local brokerages to determine a home's value.
It comes amid a rise in so-called "iBuyers," companies that make offers directly to sellers so they can avoid going through the traditional selling process, though the Star Tribune reports that traditional brokerages argue it can mean homeowners don't get the full amount their property could get by exposing it to the largest possible number of potential buyers.
It comes at a time when demand for property is so high and supply so limited that there is intense competition for the majority of those on the market.
The pandemic has changed priorities for buyers amid the rise of work-from-home, with Judy Craig of Edina Realty telling BMTN the average sale price as a percentage of list price is currently at 102%.
"This is the first time in my 28 years I have seen this," she said. "We are seeing aggressive multiple offers on most listings."
"I would say the market over $1 million isn’t as aggressive unless the property is on a lake or body of water," she continued, but those hoping to buy homes valued at up to $500,000 "must be open to coaching on how to win in multiple offers," noting that "experience and networking matter."
"Over full price, flexible closing dates to accommodate sellers, possibly no inspection which isn’t ideal for the buyer, amongst other strategies," she said. "The best first step is to be pre-approved with a great local lender, and possible have an option to fund through your own investment accounts so you can be a cash buyer in the eyes of the seller. Then get a mortgage after you take possession."