Here’s more information about Zillow’s recent move to halt purchases.
If you’re watching the housing market at all and have any interest, you have probably seen that Zillow has stopped purchasing homes for the remainder of 2021.
What does that mean for the housing market? Zillow’s initial press release said they stopped buying because they hit their goals for the year and weren’t going to be able to get all the homes on the market. It made perfect sense at the time.
However, we come to find out that there’s a little more to the story than that. On average, Zillow has lost $29,000 on every house they bought. How did that happen?
In short, they leaned on their algorithm, and it ended up costing them big. I’ve talked in the past about how Zillow adjusts their Zestimates based on the list price of the house, then they give you their accuracy statement based upon that new Zestimate.
Zillow’s Zestimates may end up being the company’s downfall.
Basing their Zestimate on the home’s list price, in most markets, keeps them within 5% of market value. When buying houses that weren’t on the market, their algorithm was so far off that they ended up paying over market value for most of their inventory.
They’ve laid off 25% of their staff, and there is talk of the company being in jeopardy. Zestimates may end up putting Zillow out of business.
What does this mean for you? Zillow’s not going to buy your house, even if you’re under contract. However, we can help. We may not be able to get you the price they were offering, but we do work with iBuyers that will buy properties with cash and offer a quick closing.
Second, Zillow still has 7,000 houses in their inventory that they’re going to sell to a bulk investor. If you’re looking to rent a property in one of those markets where they bought a lot of homes, this is great news. If you’re looking to buy, this will cause prices to increase.
If you have any questions about this topic or anything else related to real estate, don’t hesitate to reach out via phone or email. I look forward to hearing from you soon.