Zillow Canceling Home Purchase Contracts
3/25/2020 by Don Pedersen
We just got this email yesterday from Zillow, the buyer of one of our client’s home.
It is notifying us that they are canceling escrow on the purchase of a home. They are stating the reason for the canceling all of their escrows and suspends home buying in all 24 Zillow Offers markets because of the COVID-19 virus.
I have to wonder what is the real underlining reason for this mass cancellation of contracts other than concern their concerns about the “impact of COVID-19” safety issues.
Remember that Zillow says it is “committed to helping you find the best path to selling your home” by offering all cash offers, quick escrows, and once you are in contract a hassle free experience.
Also consider that to get into escrow with Zillow all you have to do is:
Allow them to come and inspect your home to determine what they will charge for repairs
Then accept the low ball price for your house.
Accept their estimated cost for their repairs.
Accept their large administrative fees; from 4.4% to 7.5% (these are not called commissions, only “bad” Real Estate Agents Charge Commission and they are BAD for charging 3-5%).
Once you accept the offer then there is nothing left to do except for the Seller to find another home.
So my question is; “Why is Zillow Cancelling hundreds of escrows because of COVID-19?”
There is NO further contact with the seller or their home, except a final inspection of a vacant home once the seller has moved out…
No contact with Escrow except for a possible mobile notary.
So where is the great risk of contact?
This action is devastating to the sellers, they trusted Zillow to keep it word, to make this transaction as easy and hassle free as possible, that is why they are reducing their home price and accepting the large “administrative fees.”
Our seller is probably like most sellers affected by Zillow’s canceling of their purchase contract, they in escrow with another house that they have invested large amounts of cash for earnest money deposits, home inspections, and appraisals.
And the sellers could be in a position of even losing their earnest money deposit since they took Zillow’s word that this transaction was a “risk free Zillow offer” which is the “same as cash.”
So some probably shortened their contingency periods and in many cases even “removed their contingencies” thus putting their earnest money as risk of loss. They could lose thousands of dollars and the home of their dreams.
All for what??? What could Zillow’s real reason be for using the COVID-19 virus crisis to get out of thousands of contracts?
Maybe they anticipate a home values declining during this crisis and they want to get out now and buy again later (as stated in the email below).
Maybe they even hope that this move by such a large market player might cause a panic in the market and create a crash similar to the crash with the stock markets?
Maybe, like some inside investors and politicians who knew about the COVID-19 virus sold their stock prior to the crash (Short Selling) so they can buy it up again at a much lower price and capitalize on the recovering market after the COVID-19 scare?
Regardless this action has really hurt our client who trusted Zillow along with probably hundreds if not more, other sellers. Our clients trusted Zillow’s promises to move on to new and bright future in a new home only to have this hope dashed to pieces.
From: Zillow Offers No Reply <email@example.com>
Date: Tue, Mar 24, 2020 at 7:22 AM
Subject: An update on your client’s Zillow Offer
I’m writing to inform you that, starting today, Zillow is temporarily pausing home purchasing due to the impact of COVID-19 and latest public health orders issued. This was a difficult decision that we did not make lightly, but one that we felt was necessary for the safety of our customers and employees.
These are unprecedented times and we are actively monitoring our communities, public health authority recommendations, and local housing markets to adapt to conditions as they continue to change.
As a result, we will be reaching out as soon as we can to discuss next steps. As the leader of the Zillow Offers Advisor Team, I am working with our representatives to ensure they’re able to connect with each person who we have under contract. We have a large volume of customers to connect with, and please know that we are working as diligently as we can to reach you and will be reaching out as soon as possible.
We are still committed to helping you find the best path to selling your home. If your client has flexibility in timing and is still interested in working with Zillow Offers, we will adjust our timeline so we can provide you an updated offer on your home at a later date. I must note that, given the current state of the market, we may need to generate a new market value on your client’s home, but our goal is to hit the ground running as soon as the time is right.
If you have questions prior to us reaching out, please email us at ZOsupport@zillowgroup.com and we will do our best to get you the information you need.
Senior Director, Zillow Offers Advisors