The Strategist

Real estate service Zillow to write off half a trillion dollars and stop reselling homes

11/03/2021 - 02:54

US company Zillow, which allows users to sell properties online, will stop buying houses for resale on its own due to unpredictable prices.

Brad Coy
Brad Coy
The company said it would lay off about 25% of its staff over the next few quarters due to the dissolution of the relevant division. Zillow has already written off $304m spent on resale homes and will write off another $240m to $265m in the fourth quarter of 2021.

"We have found that the unpredictability of house prices far exceeds our expectations and attempts to develop Zillow Offers will result in excessive volatility in revenue and balance sheet," Zillow co-founder and CEO Rich Burton is quoted as saying in the company's third quarter earnings announcement. The offering was in demand "only from a small fraction of customers", he said. Resale homes generated the most revenue for Zillow but were never profitable, The Wall Street Journal notes.

Zillow shares on the New York Stock Exchange (NYSE) were down 10.24 per cent to $87.70 by the close of the exchange. In after-hours trading, the paper was selling at $79.26 (-9.11%).

On the eve, Bloomberg reported that the company intends to sell about 7,000 houses bought for resale to individuals. The agency noted that much of the real estate Zillow bought is worth less than it paid for it. Zillow expects to sell the homes for $2.8 billion and is already offering them to institutional investors.