Everybody is a Fix & Flipper

by | Apr 15, 2018 | blog

Everybody is a Fix & Flipper

This week we learned that Zillow will begin to be a Fix & Flipper. I guess Zillow has been watching too much HGTV as well. While I have been wrong on many occasions, being an online internet marketplace is a different business model than being a construction and real estate company.

“When Zillow purchases a home, it will aim to quickly flip the home, making updates and repairs and listing it as soon as possible. An agent will represent Zillow in each transaction.

How will this impact the marketplace?

For wholesalers – I see this as direct competition, as Zillow has a huge advantage for those that claim their house on their website. They can easily reach out to the homeowner and inquire if they are interested in selling their home.

For Realtors – I see this as a conflict as there are realtors on their platform and pay for advertising. I am curious how this will impact their revenue and marketing for realtors if Zillow is acting like a wholesaler.

For Contractors- This could be a boom. It gives contractors a one-stop shop to find work, similar to those who work for home depot. The question will be if Zillow seeks out lowest pricing model, good luck.

For Fix & Flippers – This is competition, but this model is not new, and I have not heard of any effect on the marketplace at this time.

Overall, I am with wall street and pessimistic. Running a fix and flip business needs boots on the ground and proper management. It’s not as easy as it looks on TV. If there are no boots on the ground – try renovating a house from afar and let me know how that turns out for you. Let me give you a hint – it will not go well. If they have boots on the ground, finding quality management in today’s tight market is difficult and where will the management come from? With the liquidity in the marketplace, finding hard money for a deal is not as difficult as it was five years ago, so why would someone work for Zillow when they could potentially flip homes themselves? There are those newer investors who are looking for experience and this would be great experience, but the overall impact on a company having inexperienced staff will lead to problems.