Zillow to close its home-flipping division, lay off 25 percent of staff

[Zorro]

The company cited the unpredictability of forecasting housing prices in its decision to stop buying and selling homes.

Facing the prospect of selling hundreds of homes at a loss, Seattle-based Zillow plans to close down its house-flipping division and lay off a quarter of its staff, CEO Rich Barton said Tuesday.

“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,” Barton said in a statement.

Zillow Offers is the company’s iBuying operation, a practice similar to house-flipping in which Zillow itself buys and then resells homes.

Zillow said the “wind-down” of Zillow Offers will take “several quarters and will include a reduction of Zillow’s workforce by approximately 25 percent.”

https://www.tampabay.com/news/real-estate/2021/11/03/zillow-to-close-its-home-flipping-division-lay-off-25-percent-of-staff/

[genxlib]

1. Good

It is a terrible conflict of interest.

To be a main player in setting price point and also in place to profit off of how that price point moves.

Bad for the market.

[MineralMan]

2. That's not surprising, actually.

They were operating during the peak of sales of existing homes, and were paying top dollar for houses, and without checking them out carefully. Then, as the market cooled a little, they were literally left holding the bag on many of the places they bought.

Flipping houses is a very, very difficult business to be in. Often, houses need considerable work to be completely salable. Successful flippers are good at inspecting houses and estimating the cost of getting them ready for sale at a profit. Zillow jumped in and did it all wrong, like some inexperienced flippers often do. So, they ended up with houses that were not immediately salable and that they had paid too much for to make a profit after the necessary rehab costs.

Zillow was counting on a market where prices were going up quickly. That didn't work out for them, and they had to compete with local flippers to buy them, all in a market that saw houses selling almost instantly for asking price or even more.

Now, they're stuck with their poor purchase decisions.

Too bad...

[JanMichael]

3. Ha! I thought that they were expert predicters? nt

[enid602]

4. Boom

I take it that the housing boom is now officially over.

[onethatcares]

5. better ask

John and that other guy on HGTV

[jimfields33]

6. I don't know about that

My house on Zillow just went from 301K to 306K in a week. Strange. Last year it was 236K. Prices are insane.

[Mosby]

7. Check out this condo

They bought it for 293k. Its just over 1000 sq ft. Now it's listed for 290k. Take a look at the purchase history.

They just don't know what they are doing, because money can be made buying, fixing up a little and reselling, but they are massively overpaying for properties. These condos at Las Brisas are worth about 225k.

https://www.zillow.com/homedetails/750-E-Northern-Ave-UNIT-1156-Phoenix-AZ-85020/65438358_zpid/

[enid602]

8. Sunnyslope

I live in the hills just northeast of there; 16th st and butler. ‘The good part of Sunnyslope.’ Most houses going for over $1MM.