After years in competition, late last week, Zillow and Opendoor announced a multi-year partnership which “will allow home sellers on the Zillow platform to seamlessly request an Opendoor offer to sell their home.”
Home sellers can opt to simply accept the Opendoor offer, but may also select a Zillow agent, and Zillow finance.
It has caused a slight stir, given that the two companies have existed in competition with each other in the iBuyer space (which is a growing group of companies using algorithms to estimate a home’s value, paying cash for residential properties, then flipping them).
But both have had struggles – Zillow’s iBuyer program was shuttered after it failed spectacularly, and Opendoor just got nailed with a $62M fine from the Federal Trade Commission for allegations of misleading customers by saying they could make more money by selling homes through Opendoor rather than through a traditional brokerage.
Zillow’s current CEO and Co-Founder, Rich Barton in the past called iBuying an “existential threat” to Zillow, then they launched Zillow Offers, an extremely aggressive iBuying program, and then it uncovered that making investment decisions based on Zestimates was flawed, the program failed, and a quarter of Zillow staff were laid off.
Opendoor benefited from their largest competitor exiting the iBuying market, and now they’ve teamed up. Whiplash.
Andrew Loh Ah Kee, President of Opendoor called the partnership a way to help sellers “save themselves the stress and uncertainty of a traditional sale process.” That sounds quite like a safer, more polished version of the statements that landed them in hot water in the first place.
Because there were no public disclosures regarding financial terms of this budding partnership, it is impossible to say how the money flows, but at first glance, it looks to us like little more than lead generation that Zillow benefits from. If Zillow isn’t doing iBuying, it’s smart business to still get a piece of that sweet, sweet iBuying pie.
If any other companies entered into some sort of simple lead gen relationship, would anyone really care? Sure, the implications are bigger here because the companies have targets on their foreheads, but we’re not convinced the news is worth any of the hand wringing we’re seeing online.