Zillow Offers is Upside Down

Zillow paused purchases of more homes under their Zillow Offers program. Why? Too many homes for sale and they lost $59 million in the 2nd quarter with Zillow Offers. Real estate industry analyst Mike Del Prete said in Phoenix that Zillow listed homes for sale on average for 6.2% LESS than what they paid for their home. Whoops! And Zillow was buying homes in Phoenix ABOVE list price even after they sat in the MLS For weeks. I have heard this happening too in Denver.

As of June 30th Zillow owed $1.5 billion in debt for the operation of Zillow Offers. And Zillow reported unsold inventory of $1.2 billion. In other words, ZILLOW IS UPSIDE DOWN!!! Zillow will be reporting 3rd quarter results on November 2nd and it will be very intriguing to see this report.

Steve Murray, founder and senior advisor at RealTrends said, “Zillow thought that lots of great tech and algorithms and lots of capital will suffice to be successful, forgetting that the last mile from the web sites to the purchase or sale of a home still requires a great deal of human capital/”

Investment firm Blackstone who has studied iBuyer’s transaction’s financials, “flatly says the model is an unworkable way to make money.”