Hat tip to GA for sending this in:
Zillow Group Inc. is taking a break from buying U.S. homes after the online real estate giant’s pivot into tech-powered house-flipping hit a snag.
Zillow, which acquired more than 3,800 homes in the second quarter, will stop pursuing new home purchases as it works through a backlog of properties already in its pipeline.
“We are beyond operational capacity in our Zillow Offers business and are not taking on additional contracts to purchase homes at this time,” a spokesperson for Zillow said in an email. “We continue to process the purchase of homes from sellers who are already under contract, as quickly as possible.”
Zillow is best known for publishing real estate listings online and calculating estimated home values – called Zestimates – that let users keep track of how much their home is worth. The popularity of the company’s apps and websites fuels profits in Zillow’s online marketing business.
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They are known for their marketing prowess, so if you’re like me, you probably wondered if they just cooked up a great excuse – and/or if was there any more to the story.
I know one homeowner who got a quote from ZO about a month ago that was around the retail value of the home. Two weeks later, ZO revised their quote downward by 5%, and claimed it was due to ‘market conditions’, not a pipeline backlog. But there’s no obligation for them to tell the same story everywhere.
Let’s check their market conditions.
These are the MLS stats for the broker from Corona who has 91 agents handling the bulk of the Zillow listings for Southern California:
Solds between April 18 – July 18th: 174
Average Days on Market: 14
Median Days on Market: 6
Solds between July 19 – Oct. 18th: 273
Average DOM: 26
Median DOM: 22
ACTIVE LISTINGS TODAY: 294
Average DOM: 29
Median DOM: 21
They were in love with the frenzy, and were able to sell half of their listings in the first 6 days on the market. But today, most of their active listings have been on the market for weeks, and are still unsold.
When their home isn’t selling, amateur sellers cancel their listing and wait for a ‘better market’.
Comments on this topic here:
https://seekingalpha.com/news/3753456-zillows-home-flipping-service-pauses-to-work-through-backlog-bloomberg
Z needs to build teams like Walmart and Amazon that go from place to place and take care of preparing properties for new Walmarts, Amazon warehouses and now Zill houses.
What scares me is if they switch from used houses to new houses.
Well…Zillow has cut about 250K off our Zessitimate in the last 2 months. It has now only gone up according to them a paltry 20% in 21 months. What nerve!
This is a good one:
http://sacramentoappraisalblog.com/2021/10/18/will-appraisers-use-zillow-purchases-as-comps/