LOS ANGELES – The Zillow Group said on Tuesday it would stop buying and selling homes, citing the “unpredictability” of house price forecasts.
The Seattle-based real estate information firm said that shutting down its Zillow Offers home buying and selling unit will take several quarters and will result in an approximately 25% reduction in the company’s workforce, which is now high. currently around 5,300 people.
The announcement comes about two weeks after Zillow said he would suspend buying homes until the end of 2021, citing a backlog of renovations and other operations due to labor constraints and supply. The idea was to temporarily stop buying houses and focus on selling the ones she had already bought.
But the company has since decided to shut down its home turnaround business entirely. In a press release announcing the company’s third quarter results on Tuesday, CEO Rich Barton explained the reason for Zillow Offers shutdown on the difficulty in predicting home prices.
âWe determined that the unpredictability of the home price forecast far exceeds what we expected and that continuing to move the Zillow offerings would cause too much profit and balance sheet volatility,â Barton said.
The company also revealed that it suffered a depreciation of around $ 340 million because it bought homes in the third quarter at prices exceeding Zillow’s estimates for what those properties will earn in the future. .
Zillow Offers is part of a group of so-called âiBuyersâ, which includes Redfin and Opendoor. These businesses buy homes, usually from sellers who want to sell their homes quickly, and then put the homes back on the market.
These companies compete with regular home buyers as the housing market has overheated over the past year due to a shortage of properties on the market. The home turnaround business contributed to Zillow’s income this year. For the nine months ended September, Zillow Offers revenue increased 88% to $ 2.65 billion compared to the same period of 2020.
Zillow said it expects to post additional losses of $ 240 to $ 265 million in the fourth quarter, primarily on home deals that are expected to close this quarter.