Zillow Is Quitting the Home-Flipping Business

Company is laying off a quarter of its staff
By Rob Quinn,  Newser Staff
Posted Nov 3, 2021 1:49 PM CDT
Zillow Is Quitting the Home-Flipping Business
A home for sale sign in Orange County near Hillsborough, NC.   (AP Photo/Gerry Broome, File)

(Newser) – Zillow has decided to cut its losses and get out of the home-flipping business, which it described as "one-click nirvana" when it expanded the "Zillow Offers" operation earlier this year. The real estate company said Tuesday that it is shutting down Zillow Offers and laying off around a quarter of its 8,000 employees. The New York Times describes the announcement as as a "black eye" for chief executive Richard Barton. Two weeks ago, the company said it was going to pause buying homes until the end of this year because it had a huge backlog of renovations and was dealing with supply and labor issues, the AP reports.

Last year, Barton predicted Zillow Offers could make up to $20 billion a year, but the company disclosed Tuesday that it had lost $422 million in the third quarter of this year. Barton told CNBC Tuesday that Offers failed because the company was unable to accurately predict housing prices "within a narrow margin of error," making it hard to turn a predictable profit from buying houses, making improvements, and putting them back on the market. The company's share price has dropped by almost a third over the last week.

"We could blame the current losses on exogenous market events," Barton said Tuesday. "But it would be naive to predict that unpredictable events won’t happen in the future." Bloomberg reports that the company, which now has a large number of homes worth less than it paid for them, is trying to sell around 7,000 homes to institutional investors. The Times notes that the Offers debacle has raised concerns about Zillow's main business, which is based on providing accurate real estate estimates. (Read more Zillow stories.)

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