Zillow Breaks House Flipping Strategy

Digital real estate platform Zillow is taking a step back from its home acquisition strategy due to a housing glut and is now referring sellers to its local Premier Agent partners, according to several media.

“We operate in a limited economy in terms of manpower and supply within a competitive real estate market, particularly in the construction, renovation and closure of spaces” Jeremy WacksmanZillow’s chief operating officer said in a statement. “We have not been exempt from these market and capacity issues, and we now have an operational backlog for renovations and closures.”

Zillow manages a digital portfolio of real estate listings online and on its smartphone app. Its residential brokerage subsidiary iBuyer was introduced in 2018 and offered an Instant Home Buyers program that bought homes from sellers with invisible sight and no formal registration.

Although Zillow did not review the properties it intended to purchase, the company did have each home professionally inspected for major repairs. After the purchase, Zillow hired contractors to do minor renovations, like replacing the carpet and painting the interior.

Related News: Zillow Bets On House Flipping With ‘iBuying’

Zillow’s main rival, Open door, said he had no problem keeping up with inventory or demand and continued to “evolve and grow”. Opendoor operates in 44 markets, including all but two of Zillow’s 25 markets.

In the second quarter of this year, Zillow bought 3,805 homes and said it would enter into contract deals and continue to market and sell homes from new acquisitions. Opendoor bought 8,494 homes during the same period.

Rival Offer solutions posted contribution profit per home sold that was more than 4.7 times that of Zillow in 2020, according to BTIG Research.

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Zillow said he doesn’t know when he will reinstate the iBuyer program, but he plans to do so, though likely not until the end of this year. The company withdrew the program at the start of the pandemic, as did Opendoor.



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