Man was that Zillow home-flipping plan a really bad idea
Posted by
decline (aka Decline)
Nov 3 '21, 07:07
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Zillow’s home-flipping business is a flop. The online real estate company said yesterday it’s shutting down the unit and reducing its overall workforce by 25%.
Why? “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated,” CEO Rich Barton said. In other words, what happened in the Excel spreadsheet didn't translate to real life…
Zillow Offers, the company’s algorithmic home-buying business, lost $381 million last quarter.
And its demise wasn't exactly a shock:
Over two weeks ago, Zillow said it would stop buying homes for the remainder of 2021 because it didn’t have the bandwidth to work its way out of a backlog.
Earlier this week, an analyst pointed out that 66% of the homes Zillow bought were listed below their purchase price.
Looking ahead...Zillow also said yesterday that it has 9,800 homes it still needs to sell, and an additional 8,200 beyond those it’s already in contract to purchase (and would then need to flip). It expects to lose 5%–7% on those sales.
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