Zillow, a company best known for being an online real estate marketplace, is shutting down its IBuying division, known as Zillow Offers, resulting in the lay off of 25% percent of the company’s employees.
Maybe the biggest lesson from Zillow's home-flipping flop is that you're better off buying and holding a house for the long-term rather than trying to trade them in the short-term
The long-term always wins
— Ben Carlson (@awealthofcs) November 3, 2021
Zillow Offers began to struggle in the last few weeks, pausing operations. The CEO Rich Barton announced recently in the company’s third-quarter earnings release that “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too many earnings and balance-sheet volatility.” According to Insider, he goes on to say that “While we built and learned a tremendous amount operating Zillow Offers, it served only a small portion of our customers. Our core business and brand are strong, and we remain committed to creating an integrated and digital real estate transaction that solves the pain points of buyers and sellers while serving a wider audience.”
so zillow let a robot buy up thousands of properties, outbidding real buyers and artificially inflating the market, and now will be laying off a full quarter of its workforce and selling off the properties to rental corps like BlackRock at vastly discounted prices. that right?
— eh (@BethLynch2020) November 2, 2021
Barton also notes that the most difficult part of the decision is that it will ultimately affect colleagues and it is “not something we take lightly. We are grateful for their efforts, and we are committed to providing a smooth transition.” Originally, Zillow Offers paused its operations after there was a backlog of houses in need of renovating. In addition, an Insider analysis reports that “revealed other issues with the company’s iBuying strategy. Of the hundreds of homes Zillow has recently listed for sale in its five biggest markets, 64% were being marketed for less than the company originally paid for them.” In fact, the numbers are staggering with examples like 93% of properties owned by Zillow in Phoenix were priced below what Zillow originally paid.
Apparently, Zillow is expected to pay a range from $240 million and $265 million in losses. This points to the newer use of instant buying referred to IBuying, which is when tech advanced companies buy homes or an off plan property Estepona that outbid other buyers and intend to resell them after renovations are completed. iBuyers are institutional house flippers, these are companies that use algorithms to estimate a home’s value and then buy it directly from the owner for cash. So if you want to sell your house for cash without needing to do repairs or deal with agents, you can sell home quickly at sellmyhouse7.com.