On Sunday we reported that Zillow Group's AI-powered house flipping operation was a dismal failure - with 93% of homes in their Phoenix, Arizona portfolio (the company's second largest) currently listed at less than what the real estate company had paid, as revealed by an Insider investigation.
Today, Bloomberg reports that Zillow is looking to unload approximately 7,000 homes for $2.8 billion after halting their iBuyer program, according to people familiar with the matter.
Zillow is likely to sell the houses to a multitude of buyers rather than packaging them in a single transaction, said the people, who asked not to be named because the matter is private.
Zillow recently said it would stop making new offers in its home-flipping operation for the remainder of the year. The decision came after the company tweaked the algorithms that power the business to make higher offers, leaving it with a bevy of winning bids just as home price appreciation cooled off a bit. -Bloomberg
In September, Zillow put a record number of homes on the market - with the lowest markups since November 2018 according to research firm YipitData, which also noted that the company had cut prices on almost half of its US listings in the 3rd quarter.
In the second quarter, Zillow bought over 3,800 houses towards their stated goal of acquiring 5,000 homes per month by 2024.
In Phoenix, 36.5% of properties currently for sale were listed below their purchase price, while the remainder of the 93% started higher, only to have price reductions.
Launched in 2017, Zillow's iBuying arm uses a wide array of real-estate data with the goal of quickly and efficiently acquiring properties to flip for a profit. The program has vacuumed up properties across the country to flip, only to be met with fierce competition from services such as Redfin, Offerpad and Opendoor.
As we noted on Sunday, Zillow reports earnings on Tuesday.