Bloomberg broke the story that Zillow is looking to sell about 7,000 homes for roughly $2.8 billion…(Bloomberg)
- “Zillow is likely to sell the houses 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.”
This, of course, comes less than two weeks after Zillow made the big announcement that they would stop buying homes through its Zillow Offers business.
- “Zillow says it made the decision to stop buying homes because it ‘has hit its capacity for buying homes for the remainder of the year.'”
If by capacity they mean capacity to lose money then, sure, that sounds right. If you are wondering how much money, two big reports have shed some light on just how bad Zillow is at flipping houses…
- Business Insider reviewed 963 homes that Zillow recently acquired and is now reselling in those five major metropolitan areas: Dallas, Houston, Phoenix, Minneapolis, and Atlanta. Insider found that 616 of the homes were listed below their purchase price by a median amount of almost $16,000…(Business Insider)
- KeyBanc analyst Edward Yruma completed an analysis of 650 homes in Zillow’s inventory, or about one-fifth of the homes owned, and found that 66% are currently listed below the purchase price at an average discount of 4.5%…(MarketWatch)
It’s really hard to comprehend just how much has changed in a month. At the end of September, a Las Vegas-based real estate agent, Sean Gotcher, posted a TikTok video that described a scenario where a so-called iBuyer (aka Zillow) was using its massive, user-generated database to scheme the local housing market. This video went so viral that Zillow was forced to respond to these accusations in a statement. One part of the statement I thought was really quite prescient…(Yahoo Finance)
- “Because our margins are so thin, it’s critical that we price a home accurately. If we overpay — we’ll lose money on the resale. If we make too low of an offer — homeowners won’t use us,”
Can you imagine how angry Rich Barton, the CEO of Zillow, must have been? Not only was this new venture losing money, but some idiot Vegas realtor’s TikTok video goes viral claiming that this money pit of an idea is actually manipulating local housing markets to hurt buyers and local communities for Zillows financial gain. You would have thought that would have been a great time to tell everyone how unprofitable the buyer program really was, but maybe they were still hoping they could salvage it? Either way, a lot has changed in just over a month…