- Zillow is listing over half of the homes it owns in its key cities for less than it originally paid for them and in the Minneapolis-St. Paul metropolitan area 67.1% were priced below what Zillow paid.
- Until putting a hold on it last month, the $20 billion real-estate giant had embraced a strategy called iBuying, or “instant buying,” which uses artificial intelligence to help determine the prices it pays for homes.
- If Zillow sold all of its Minneapolis-area homes at their list prices right now, it would lose over $1 million, and the median loss per home in Minneapolis alone is nearly $4,300.
James Rodriguez James Rodriguez, Alex Nicoll, Daniel Geiger, Hana R. Alberts from Insider write:
“Zillow is listing more than half of the homes it owns in its key cities for less than it originally paid for them, an Insider analysis found.
The $20 billion real-estate giant had embraced a strategy called iBuying, or “instant buying,” until putting it on pause last month. The iBuyer division, called Zillow Offers, uses artificial intelligence to help determine the prices it pays for homes. It has attracted sellers by allowing them to receive an offer almost immediately and offload their property almost entirely online. It then fixes them up and resells them — along with services like mortgages and title insurance – for a profit plus additional fees.
Insider reviewed all the homes for sale by Zillow in the Minneapolis-St. Paul metropolitan area as of October 27. Out of 155 homes, 104 — or 67.1% — were priced below what Zillow paid. The potential losses highlight the risks of the iBuyer business, which aims to buy and resell properties for a profit in a roller-coaster market.
After purchasing 5,661 homes across 25 metropolitan areas from Austin to Tucson since the beginning of 2021, Zillow announced on October 17 that it would stop buying homes for the remainder of 2021. Chief Operating Officer Jeremy Wacksman said the pause was because of “an operational backlog for renovations and closings” that he blamed on “a labor- and supply-constrained economy inside a competitive real estate market…”
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