Zillow closed its home flip business and laid off 25% its staff

By
Real Estate Agent with (408) 425-1601 CA bre 1519182

                                                   Sam  Shueh

                                                   Silicon Valley Realtor 

                                                   (408) 425-1601   

                                                    SamShuehRealtor at Gmail.com

"Zillow’s iBuying division hit a stumbling block in recent weeks as the company paused buying new homes, citing a “labor- and supply-constrained economy inside a competitive real estate market.”

The result: Zillow faced selling homes at a loss. Analysts who reviewed 650 of Zillow’s more than 3,142 homes found that two-thirds of them were listed for less than Zillow paid to buy them, with an average markdown of 4.5%, according to an Oct. 31 analysis from Ed Yruma, managing director at KeyBanc Capital Markets.

In its third-quarter earnings announced Tuesday, Zillow wrote down about $304 million worth of homes it purchased and expected to sell at a loss. The company said it expects additional losses of $240 million to $265 million in the fourth quarter. 

Zillow Offers does not buy and sell homes in Seattle but is active in Portland. Tucson, Mesa and Phoenix saw the steepest markdowns, Yruma found."

 

Comments (8)

Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Sam- very interesting!!!

Nov 02, 2021 05:14 PM
Joseph Domino 480-390-6011
HomeSmart - Scottsdale, AZ
Real Estate Made Easy

This is a good thing for us here in Phoenix. IBuyers have had a huge impact on our market. If the others follow suit, we will begin to see a more normal market.

Nov 02, 2021 07:40 PM
Sam Shueh

Good to know.

Nov 03, 2021 11:10 AM
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Hello Sam Shueh it is interesting that Zillow couldn't compete with other ibuyers. I expect a few other ibuyers will have same issues.

Nov 02, 2021 08:57 PM
Ryan Huggins - Thousand Oaks, CA
https://HugginsHomes.com - Thousand Oaks, CA
Residential Real Estate and Investment Properties

This does not surprise me at all.  Getting skilled labor and materials is extremely difficult and insanely expensive between supply shortages and this hyper-inflation.  I suspect they'll be back when the winds are more favorable for them.  Meanwhile, we've been an "iBuyer" since the 80s and this doesn't phase us one bit!

Nov 02, 2021 10:23 PM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Sam - real estate, like everyday life is subject to change.  And sometimes that change seems to "disappear" but suddenly(or not so suddenly) once again makes its appearance known.  Maybe not exactly the same but definitely reminiscent.  

Nov 03, 2021 04:54 AM
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Sam,

The winds of changes are always present.  Too bad for Zillow.  This was not their niche. /A

Nov 03, 2021 07:28 AM
Raymond Henson, eXp Realty
eXp Realty of California, Inc. (lic. #01878277) - Elk Grove, CA
Realtor

I wonder if they are done for good or just done for a bit.  I know they paid too high a price for a home just a half block from my house, then had a tough time selling it. 

Dec 17, 2021 09:20 AM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Someone heard the same news and decided to place bets on Z stock playing PUTs on 5,000 shares.  He got that wrong and wonder how he is going to pay for his gambling loss from borrowed money (from margin account).  He is not going to have a good Xmas for sure.

Dec 21, 2021 08:26 AM