The big Zillow news, the “Zillow Offers” program is shuttering after only a few years due to disappointing profits and shareholder pressure. Zillow acted as buyer, appraiser, bank, flipper, then broker in their Zillow offers model, leaving the company exposed to all the risk that comes with the territory of each one of its assumed professions. Turns out this style of house flipping isn’t easy and doesn’t always return a profit.
Before we all bag on Zillow, we should consider what positive impacts Zillow has had on the real estate industry and what they do really well. First, Zillow has brought the power to search for homes to the masses- in a user-friendly, beautiful format. This alone has turned so many people into homeowners, investors and home dreamers. Second, Zillow provides tons of jobs, from their in-house analysts, development teams, tech support, etc. to their partnerships with agents, title companies, etc. They truly have changed the real estate landscape and I believe, at least in part, for the better.
So, how can a company that has brought about so much positive change, have made such a grave error in judgment about expanding into the I-buying sphere? There are a lot of factors at play here- consider all the ways in which a flip can go wrong, consider the supply chain shortage felt worldwide, consider market changes that affect interest rates, consider the dwindling supply of homes, bidding wars, and so much more- all this volatility affects corporations at a huge level. Instead of scaling back and taking a cautious approach, Zillow doubled down, aggressively purchasing homes especially in Phoenix and Atlanta. Scaling up didn’t produce the kind of win the company and its shareholders were expecting. Now, instead of scaling down, being conservative, and staying the course, Zillow has ultimately decided to bow out of the I-buyer rat race and instead focus- hopefully on its core business.
For more on I-buyers please visit our previous article explaining how they interact with the market and consumers HERE.
After the Zillow Offers news broke, the company began slashing the prices of its Zillow owned homes; many homes now marketed below what Zillow bought them for. In a market where buyers are left begging for homes, this may be a little reprieve for those looking for a small deal and if you act quickly that deal could be yours. Whether an investor or an end user, definitely look into Zillow owned homes that are within your search boundaries to see if a deal is there for you. In a market where there are literally NO deals, there is a sliver of opportunity here for those that are ready!
While this news isn’t likely to have lasting impacts on our market in terms of supply and pricing, it will have a small one, especially in the $350,000-$550,000 price points. After running a quick check on Zillow owned homes in Maricopa County we found over 800 homes that may be ready for a deal. Contact the Neighborly to get access to the list of homes owned by Zillow.
Written by Michelle Renteria
Contact us today!