Thoughts from folks at Zillow? (Saw that there's a 25% staff reduction? Really sorry to hear that) Zillow Shuts Down Home-Flipping Business After Racking Up Losses https://www.bloomberg.com/news/articles/2021-11-02/zillow-shuts-down-home-flipping-business-after-racking-up-losses
Looks like you might get flooded!
Great news. Now mom and pop landlords/investors have less completion. They were pay over asking on homes with little value to add and somehow expected to make a profit on flipping. They just can’t scale like Wall Street can and Wall Street is renting the homes out which is where the real cash flow is
And likely their flipping schemes were mismanaged
Hooray? They swoop in and pay $50k over asking price. It's going to take a while to sell at a profit at those prices and nobody can afford to rent already. Add on bank fees and new appraisals and taxes. That's got to be a money sink until they own a significant portion of all homes... Like Amazon losing money for decades. Thank goodness they are short sighted.
It was one of the most bone-headed moves by a tech company of all time!
To clarify - are you referring to getting into ibuying or killing it?
Getting into buying, it is just useless inventory that’s sitting, awaiting a sale. To really make money, they need to buy a highly undervalued property and sell it at crazy prices. I can’t imagine how they would have the data to identify such properties coz usually the devil is in the details - inspection reports, in person tours and many other factors that cannot simply be crunched by a machine learning algorithm. On the other hand, the hot properties are going to invite a tonne of competition from many who are floating in cash, for whom this may be the primary residence, so they are willing to outbid the competition. I can’t see how Zillow thought they had an advantage here. Not to mention the increase in prices of raw materials, constructions costs, labour and all other global supply chain issues that would have eaten into any profit margins they could have had in those properties they got a good deal on.
Why did Zillow fail while OpenDoor is crushing it?
Per article above, looks like Zillow is saying zestimate is unable to effectively price the home, resulting in them acquiring and selling at a loss. But would love to get some folks from Z to chime in.
Leadership is incompetent when it comes to executing with margins and precision in mind. They went all in without hiring the right people and were overconfident that the leadership they had possessed transferable skills to a very different business. They were wrong and their hubris didn’t allow for the many many many people inside and out who warned them.
I saw this coming a year ago… they rushed into it and just got burned.
Same. It’s kind of amazing to see how slowly the titanic turns away from the iceberg
Zillow friends, feel free to dm for a referral.
Sorry about this, Zillow peeps. Please dm me for a referral.
Seeing that property bubble burst coming 🔮💥
Don't count on it Amazon. Zillow stopping isn't stopping other iBuyers and investment firms scooping up property.
So more companies can lose more money?