Per RISMedia – In another shocking blow to real estate giant Zillow, the company announced late Tuesday that it would sunset its iBuying arm, Zillow Offers, and bow out of the iBuying game as the company failed to find stability and success flipping homes, losing $381 million last quarter, according to its most recent earnings report.
The move comes after Zillow—considered a potential force in the still-developing iBuying world due to its established name and size—said on Oct. 18 it was “pausing” any new purchase through Zillow Offers, ostensibly due to labor and supply shortages.
At the time, other major iBuyers including Redfin and Offerpad offered assurances that they would continue to scale and move forward.
But new questions around the viability or scalability of iBuying are inevitable now as Zillow’s pause becomes permanent with the company winding down its iBuying operations over the next “several quarters,” a process which will also include a 25% reduction in Zillow’s workforce according to a press release.
“While we built and learned a tremendous amount operating Zillow Offers, it served only a small portion of our customers,” said Zillow co-founder and CEO Rich Barton, in a statement. “Our core business and brand are strong, and we remain committed to creating an integrated and digital real estate transaction that solves the pain points of buyers and sellers while serving a wider audience.”
According to the Zillow release, the company expects to write down around $550 million in Q3 and Q4 of this year after purchasing or agreeing to purchase homes “at higher prices than the company’s current estimates of future selling price.” Zillow currently holds an inventory of around 9,800 homes across the U.S., with 8,200 under contract, according to the Wall Street Journal.
The announcement was made after the closing bell, and the company’s share price ended today down nearly 12% at $85.48.