SAN DIEGO (KGTV) -- Online real-estate tracker Zillow says it will offer cash for some homes in San Diego County based on its well-known Zestimate formula, which estimates value.
Zillow introduced the formula in 2006, which allows buyers and sellers to quickly look up an estimate on a specific home price. In an announcement Thursday, Zillow said it will make offers for the Zestimate due its growth in reliability, and to show that its confidence in its proprietary formula. A news release says the formula has a median error of 1.9 percent off a property's final sale price.
"For 15 years, homeowners and home shoppers have come to rely on the Zestimate as an essential first step," said a statement from Zillow Chief Operating Officer Jeremy Wacksman. "Presenting the Zestimate as a cash offer to qualifying homes up front will save time, reduce friction and provide greater transparency - getting us closer to our vision of helping customers transact with the click of a button."
Would-be sellers can see if their home is eligible by searching for their property on Zillow's website and clicking on the green "get cash offer" button. Zillow says its service allows sellers a more hassle-free experience by eliminating time and resources to prepare and stage a home, including bypassing open houses and showings. They can also choose their closing date.
Still, Zillow charges a varying fee that's typically around 6 percent. While that is comparable to typical sellers and buyers agent fees, analysts say sellers can often command a higher price on the open market. Zillow also charges closing costs of 1 to 2 percent, and will deduct for any repairs. Off-market homes are eligible.
"For a homeowner who is thinking about putting their home on the market, they've got two big questions. Number one, how much is my house going to sell for, and how quickly can i sell my home. This answers both of those questions right away, instantly," said Amanda Pendleton, a spokeswoman for Zillow.
David Spiewak, a San Diego realtor with Coldwell Banker, said the Zillow service could work for those who need to sell fast, such as if there is a death in a family. However, those who want top dollar, such as a move-up buyer, should go the traditional route in a market like San Diego, where multiple offers can bid-up prices.
"The more eyes on your property, the more money you're going to make, bottom line, I think it's no secret it's pretty much a seller's market," he said.
Loan Officer Mark Goldman said the local market is to tight that even offers above-asking are being rejected.
"Buyers are in tears because they can't get an offer accepted. There's a shortage of inventory that we haven't seen before. It's just very difficult for someone who is trying to buy a home," he said.
In San Diego County, the median price for a single family home grew 13.8 percent over the year to $716,000, and the median price for a county grew 11 percent year-over-year to $480,000, according to CoreLogic.
Zillow says its Zestimate is available for 100 million homes nationwide. It says the formula relies on public records, listing services and artificial intelligence. A spokeswoman for the company noted Zillow would plan to re-sell the homes it buys after making repairs, but would not rent them out permanently or temporarily as vacation homes.
San Diego is one of 20 markets where Zesimates will be offered to a subset of homes.