Zillow stop buying homes (for now)

E

eyephone

Well-known member
CNN: Zillow slams the brakes on home buying as it struggles to manage its backlog of inventory

Zillow will stop buying homes through Zillow Offers for the rest of the year, as the company's iBuying program goes from full speed to full stop.

The company announced on Monday it would not contract to buy any more homes in 2021 in order to work through the backlog of homes it has already bought.

The "iBuyer" model used by Zillow and other real estate companies entails purchasing homes directly from sellers, and then re-listing the properties after doing minor work. But thanks to the current shortage on labor and materials, Zillow can't close, renovate and resell the homes fast enough.
https://www.cnn.com/2021/10/18/homes/zillow-halting-home-buying/index.html
 
This might possibly a reason. I just seen multiple listings in Vegas that were bought by zillow and listed for less. (hmm)

I searched Las Vegas, selected zillow owned, clicked price tax and history
 
they probably got a huge spike in business for this service because of the hot housing market and people wanting to access their equity in current house to trade up to another house (and w/ contingent offers being impossible in a sellers market).  it is not that surprising that they would suspend for 2021.

i think people are reading way too much into the "they listed my house for less than they bought from me" thing.  zillow has no interest in being a house flipper.  this service is not long term sustainable if they need to sell houses for higher than they buy.  the whole point is to act as a middleman and profit from fees.  they charge seller 8-9% in fees, plus repairs, plus all closing costs.  they win no matter what.
 
fatduck said:
they probably got a huge spike in business for this service because of the hot housing market and people wanting to access their equity in current house to trade up to another house (and w/ contingent offers being impossible in a sellers market).  it is not that surprising that they would suspend for 2021.

i think people are reading way too much into the "they listed my house for less than they bought from me" thing.  zillow has no interest in being a house flipper.  this service is not long term sustainable if they need to sell houses for higher than they buy.  the whole point is to act as a middleman and profit from fees.  they charge seller 8-9% in fees, plus repairs, plus all closing costs.  they win no matter what.
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I agree. I think their way of making money is through the fees.

Believe it or not, most of Costco's revenue comes from membership fee.
 
CalBears96 said:
fatduck said:
they probably got a huge spike in business for this service because of the hot housing market and people wanting to access their equity in current house to trade up to another house (and w/ contingent offers being impossible in a sellers market).  it is not that surprising that they would suspend for 2021.

i think people are reading way too much into the "they listed my house for less than they bought from me" thing.  zillow has no interest in being a house flipper.  this service is not long term sustainable if they need to sell houses for higher than they buy.  the whole point is to act as a middleman and profit from fees.  they charge seller 8-9% in fees, plus repairs, plus all closing costs.  they win no matter what.
Click to expand...

I agree. I think their way of making money is through the fees.

Believe it or not, most of Costco's revenue comes from membership fee.
Click to expand...

My experience with Zillow Offers was ~6.5% in fees:https://www.talkirvine.com/index.php/topic,17707.msg378102.html#msg378102

Insightful video about Costco:https://www.youtube.com/watch?v=S7BycrGnaJA
"Costco makes 75% of its money from membership fees"
 
eyephone said:
This might possibly a reason. I just seen multiple listings in Vegas that were bought by zillow and listed for less. (hmm)

I searched Las Vegas, selected zillow owned, clicked price tax and history
Click to expand...

I searched in Phoenix and I saw multiple listings that are selling below zillow purchase price.

*I took screen shots of my findings just in case people say I am making it up. Hehe
 
fatduck said:
they probably got a huge spike in business for this service because of the hot housing market and people wanting to access their equity in current house to trade up to another house (and w/ contingent offers being impossible in a sellers market).  it is not that surprising that they would suspend for 2021.

i think people are reading way too much into the "they listed my house for less than they bought from me" thing.  zillow has no interest in being a house flipper.  this service is not long term sustainable if they need to sell houses for higher than they buy.  the whole point is to act as a middleman and profit from fees.  they charge seller 8-9% in fees, plus repairs, plus all closing costs.  they win no matter what.
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Another thought came to me. Do they spend additional money to fix up the place after they purchase it? I assume it depends. (yes and no)

Is the offer they give too good to the seller?
 
Zillow seeks to sell 7,000 homes for $2.8 billion after flipping halt
The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Zillow will likely sell the properties to a multitude of buyers rather than packaging them in a single transaction, said the people, who asked not to be named because the matter is private.

The move to offload homes comes as Zillow seeks to recover from an operational stumble that saw it buy too many houses, with many now being listed for less than it paid.

The decision came after the company tweaked the algorithms that power the business to make higher offers, leaving it with a bevy of winning bids just as home-price appreciation cooled off a bit.

The increase in purchases left the company struggling to find workers to renovate the properties.
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https://www.seattletimes.com/busine...00-homes-for-2-8-billion-after-flipping-halt/
 
Liar Loan said:
Zillow seeks to sell 7,000 homes for $2.8 billion after flipping halt
The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Zillow will likely sell the properties to a multitude of buyers rather than packaging them in a single transaction, said the people, who asked not to be named because the matter is private.

The move to offload homes comes as Zillow seeks to recover from an operational stumble that saw it buy too many houses, with many now being listed for less than it paid.

The decision came after the company tweaked the algorithms that power the business to make higher offers, leaving it with a bevy of winning bids just as home-price appreciation cooled off a bit.

The increase in purchases left the company struggling to find workers to renovate the properties.
Click to expand...
https://www.seattletimes.com/busine...00-homes-for-2-8-billion-after-flipping-halt/
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Can't buy homes just using AI and technology, nothing beats putting feet on the ground on putting eyes on the home.  Real estate is a very local, fragmented market where buying on the wrong side of the street can impact value.  Zillow got a little too frisky and got burned, maybe they learned their lesson.
 
USCTrojanCPA said:
Can't buy homes just using AI and technology, nothing beats putting feet on the ground on putting eyes on the home.  Real estate is a very local, fragmented market where buying on the wrong side of the street can impact value.  Zillow got a little too frisky and got burned, maybe they learned their lesson.
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Yeah, I was thinking the same.  The extremely successful home flippers I know concentrate on particular neighborhoods and know them so well that it allows them to buy sight unseen or with minimal inspection if the situation requires.  Otherwise, a 10-15 minute inspection will give them everything they need to know.  They would never rely on a pricing algorithm to come up with an offer.

When I had Zillow come out to inspect my primary before selling last year, they spent about two hours taking around 400 photos if I remember correctly.  One issue on my last house was an unpermitted patio room that I was completely up front about over the phone.  They made it sound like it was no problem, but then after that lengthy two-hour inspection, they informed me that they actually couldn't make an offer due to the unpermitted room; There is a company policy against it.  Haha... Ok, why did you send a guy out then? 

I was wondering if this iBuying business would fail after that experience.  It just seemed too wasteful and inefficient to succeed in the long run.  Most home flippers operate on tight margins and a lot of times getting the sales commission is the largest part of their profit.
 
I think they are permanently shutting it down, not just till the end of the year. 7000 homes they have to sell PLUS 9000 in escrow to flip.
https://finance.yahoo.com/news/zillow-shuts-down-home-flipping-200500342.html

Seen some really huge losses for them on some of their homes in AZ. Some homes were up for sale, didn't sell. Taken down and then sold to Zillow for ALOT more than they were asking. Now Zillow is asking what the seller wanted originally. Was looking yesterday and a couple were a 20% loss.

They took homes out of the hands of people who wanted to buy them to live in. How many people overpaid for their houses because of Zillow's speculation? I bet lawsuits are coming for that.

They deserve the losses. Same thing happened in 1989 when we were trying to buy a home and realtors were flipping homes. Worked until rates ticked up and buyers couldn't qualify. Lots of foreclosures for those realtors which of course took the rest of us down too.
 
Zillow Shuts Home-Flipping Business After Racking Up Losses
(Bloomberg) -- Zillow Group Inc. is pulling the plug on its tech-powered home-flipping operation after deciding that its pricing algorithms weren?t accurate enough to build a stable business.

The company plans to take writedowns of as much as $569 million and reduce its workforce by 25% as it winds down the business in coming months, according to a statement Tuesday. Zillow shares plunged as much as 11% to $76.22 on the news before paring the losses.

The decision comes as the company?s third-quarter results showed it lost more than $380 million in the flipping operation, called Zillow Offers. The business hit a major snag in recent months as the company?s algorithms caused it to overpay for houses just as the heated U.S. market began to cool slightly, forcing it to list properties at a loss.
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So Zillow had to learn the hard way that Z'estimates are not to be trusted.  ;D ;D ;D
 
Liar Loan said:
Zillow Shuts Home-Flipping Business After Racking Up Losses
(Bloomberg) -- Zillow Group Inc. is pulling the plug on its tech-powered home-flipping operation after deciding that its pricing algorithms weren?t accurate enough to build a stable business.

The company plans to take writedowns of as much as $569 million and reduce its workforce by 25% as it winds down the business in coming months, according to a statement Tuesday. Zillow shares plunged as much as 11% to $76.22 on the news before paring the losses.

The decision comes as the company?s third-quarter results showed it lost more than $380 million in the flipping operation, called Zillow Offers. The business hit a major snag in recent months as the company?s algorithms caused it to overpay for houses just as the heated U.S. market began to cool slightly, forcing it to list properties at a loss.
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So Zillow had to learn the hard way that Z'estimates are not to be trusted.  ;D ;D ;D
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If you look at zillow owned homes (most have been cut after listing) and their own estimate is lower than their asking price and yet they are not sold. LOL!
 
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