This is a big decision.
Digital real estate company, Zillow, has just announced that they will be shutting down the portion of their business which is called “Offers” and will now no longer buy and flip homes. They also announced that they will be cutting up to 25% of their work force after they missed their third-quarter earnings results.
According to CNBC, Zillow CEO Rich Barton stated, “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated. Continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.”
Zillow launched Zillow Offers in 2019 where they would buy homes directly from sellers and then flip them to purchasers. However, after running Zillow Offers for a few years the company realized it was not as lucrative for their business as they once thought and are now planning on stopping its operation.
“After closing on a home, Zillow will take care of necessary repairs, working with local contractors to complete projects like a fresh coat of paint, servicing HVAC units and other work a typical homeowner would do to get their home ready for sale,” Zillow said in a statement.
“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” said Jeremy Wacksman of Zillow. “We have not been exempt from these market and capacity issues and we now have an operational backlog for renovations and closings.”