ZILLOW CANCELING CONTRACTS as i-buying grinds to a halt

If you have been thinking about downsizing but dreading the idea of putting your house on the market for showings, then the idea of selling off-market to Zillow probably has crossed your mind more than once. For now, however, you are going to have to write this off as one of your options.

According to Zillow, it is not “prudent” at this point in time to continue its i-buying operations. That, in and of itself, seems relatively unsurprising. What is coming as a surprise to sellers with homes under contract, however, is that Zillow is planning to “cancel our existing contracts to the greatest extent we can,” according to Zillow co-founder and CEO Rich Barton. He added, “This is clearly a material adverse change, so we will be taking that position and then evaluating on a case-by-case basis…to hopefully largely extricate ourselves from those transactions.”

This includes transactions wherein the seller has already signed the contract to sell, such as one seller from Charlotte, North Carolina, who told HousingWire he was scheduled to move on March 30, 2020. That individual said he was given 48 hours to choose between $5,000 ($4,000 more than they would forfeit in earnest money) or an agreement from Zillow to pay all of the seller’s costs to have a local Realtor group put the house up for sale[1].

Zillow has emphasized repeatedly that it hopes to re-engage customers through Zillow Offers “as soon as it is viable to do so.” However, for sellers who used the commitment from Zillow to get approval on a mortgage for a new home or who moved out before their closing date, Barton’s promise to do things “as humanely as possible” still carries a lot of financial pain. Given that Zillow is only allowing homeowners 48 hours to decide and the outlook for the short-term real estate market looks extremely foggy, it is not surprising that relatively few are choosing to list with a local brokerage.

Do you think Zillow should honor its commitment to buy these houses, or is this a reasonable point in time to back out of deals when legally possible?

What do you recommend these homeowners do?

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[1] https://www.housingwire.com/articles/zillow-is-terminating-closing-contracts-citing-coronavirus-concerns/

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