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Has Zillow gone broke over-paying for houses??

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If you've been paying attention to real-estate news lately, you may be asking yourself some version of this question: What the heck is happening at Zillow?

It's been a rough for the real-estate giant. On October 18, the company announced that its instant-buying (iBuying) division, Zillow Offers, would cease buying up homes for the rest of the year.

After two tumultuous weeks — during which an Insider analysis found that of the nearly 1,000 homes Zillow recently listed for sale in its five biggest markets, 64% were being marketed for less than the company paid for them — that pause turned into the complete shuttering of Zillow Offers.

The winding down of Zillow Offers was announced after the market close on Tuesday, when Zillow's share price dropped about 12% to about $85. Zillow stock has now plunged 32% since the start of the week.

If you're wondering why the company started buying homes, what might have gone wrong, how Wall Street is reacting, or what this all means for regular buyers and sellers, you've come to the right place. Below, you'll find all of our Zillow coverage.

We'll continue to update this page with the latest Zillow news as soon as we have it, so make sure to check back regularly.

OK, so what happened with Zillow?

This story really starts in 2018, when Zillow got into the then-nascent iBuying business. iBuying refers to the process in which deep-pocketed tech-enabled companies buy up homes, complete light renovations, and then sell them for a gain.

Zillow bet big on this strategy. Though it has yet to turn a profit through home flipping, Zillow Offers raked in $1.47 billion in revenue in the first half of 2021.

Zillow's announcement of its homebuying pause initially sent its stock sliding. It recovered but then stumbled again after analysts cast doubt on the Zillow Offers division's bottom line. On November 2, after the market close, Zillow announced it would shutter Zillow Offers and lay off 25% of its staff.

The decision highlighted the challenges the company faced with iBuying.

Our analysis of Zillow Offers listings in the company's five biggest markets showed that Zillow could be headed toward millions of dollars in losses from its iBuying operations:

  • In Phoenix, 93% of Zillow-owned listings were priced below what the company paid.

  • In the Minneapolis-St. Paul metropolitan area, Zillow was listing two-thirds of homes for less than it paid.

  • Zillow also appears poised to take losses on the majority of its listings in Houston and Dallas.

Wall Street analysts and property-technology experts predicted more pain would be evident in Zillow's third-quarter earnings, released on November 2.

But the true losses were more dire than anyone expected. Here's how Zillow CEO Rich Barton explained why the company is abandonying iBuying altogether.

Zillow's stock took a beating in the days following the announcement. Cathie Wood's Ark Investment Management bought the dip on Tuesday, but has since dumped shares of Zillow for two consecutive days.



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