Zillow to halt home-flipping, cites pricing ‘unpredictability’

LOS ANGELES — Zillow Group said Tuesday that it volition halt buying and selling homes, citing the “unpredictability” of forecasting lodging prices.

The Seattle-based existent property accusation institution said winding down its Zillow Offers homebuying and selling portion volition instrumentality respective quarters and volition effect successful astir a 25% simplification successful the company’s workforce, which is present astatine astir 5,300.

The announcement comes astir 2 weeks aft Zillow said it would intermission buying homes done the extremity of 2021, citing a backlog successful renovations and different operations owed to labour and proviso constraints. The thought was to temporarily halt buying homes and absorption connected selling those it had already purchased.

But the institution decided since past to shutter its home-flipping concern altogether. In a property merchandise Tuesday announcing the company’s third-quarter results, CEO Rich Barton pinned the crushed for closing down Zillow Offers connected however hard home-prices forecasting has become.

“We’ve determined the unpredictability successful forecasting location prices acold exceeds what we anticipated and continuing to standard Zillow Offers would effect successful excessively overmuch net and balance-sheet volatility,” Barton said.

The institution besides disclosed it took a write-down of astir $340 cardinal due to the fact that it bought homes during the 3rd 4th astatine prices that transcend Zillow’s estimates for what those properties volition fetch successful the future.

Zillow Offers is among a radical of alleged “iBuyers,” which includes Redfin and Opendoor. These companies bargain homes, typically from sellers who privation to merchantability their location quickly, and past enactment the homes backmost connected the market.

These companies person been competing with regular homebuyers arsenic the lodging marketplace superheated implicit the past twelvemonth amid a shortage of properties connected the market. The home-flipping concern has helped foodstuff Zillow’s gross this year. For the 9 months ended successful September, Zillow Offers’ gross accrued 88% to $2.65 cardinal versus the aforesaid play of 2020.

Zillow said it expects to publication an further $240 cardinal to $265 cardinal successful losses successful the 4th fourth chiefly connected location transactions expected it adjacent this quarter.

Shares successful Zillow fell 10.2% Tuesday earlier the merchandise of its net amid published reports astir the company’s plans to shutter the home-flipping business. The banal slumped different 12% successful after-hours trading pursuing its announcement.