Zillow Closes It’s iBuying Business For Good

When the average consumer is looking to price a house, where do they go? The answer is often Zillow. People want to know the value of their homes and they want to know what other homes are worth, and they immediately look at the Zillow estimates or Zestimate®.

Three years ago Zillow started Zillow Offers which was their iBuying arm of the business. Often Zillow would buy homes at premium prices with the goal of flipping the house and selling at a profit. Unfortunately for Zillow, things didn’t work out as planned.

A week ago, Zillow announced that it would end Zillow offers and lay off 25% of its workforce which amounts to approximately 1600 people.

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated, and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,” CEO Rich Barton said in a statement.

The average consumer looks to Zillow to predict what their home can sell for, yet Zillow wasn’t able to predict prices for their own homes. Zillow is currently working on a backlog of about 9,800 homes, and is still under contract to purchase another 8,200 homes. The company expects lo lose about 7% on those homes. In just the last quarter Zillow Offers lost $381 million. How’s that for market predictability?

(About the Author: Lou Serrano is a Southern CA licensed Realtor® specializing in residential real estate in Glendora, San Dimas, and La Verne.)