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Zillow owned $1.17 billion in houses at the end of Q2, after having bought 3,805 houses during Q2, but now it’s suddenly trying to sell 7,000 houses for $2.8 billion?ĭidn’t it sell houses in Q3? Did it just buy houses and overpay so much that it couldn’t sell them without losing a ton of money, and it didn’t want to show those losses on its upcoming Q3 earnings report? “Zillow may have leaned into home acquisition at the wrong time, and we believe earnings may be at risk due to its current home inventory ($1.17 billion at 2Q21),” the analysts said, cited by MarketWatch. KeyBanc Capital Markets came out with an analysis of 650 homes owned by Zillow that are currently listed on the market, and found that 66% of them were listed below what Zillow had paid for them, with the average listing price being 4.5% below the purchase price.Įven if it can sell those houses at 4.5% below the purchase price, there are still all kinds of costs involved in flipping a house, and so, even if it can sell at asking price, it would pocket some big losses. Two, it overpaid for many houses and is trying to sell at a loss. But selling them without losing your shirt is suddenly hard, it turns out. And the price didn’t matter for Zillow after it tweaked its pricing algo – the power of AI – to where it was the high bidder in red-hot markets that may have slowed down since then. I mean, how can a house flipper get stuck with 7,000 houses? I mean, buying houses is easy if price doesn’t matter. Zillow is likely to sell the houses to a multitude of investors, rather than selling all of them in a single transaction, the sources said. Instead, it’s pitching these houses to institutional investors, trying to get $2.8 billion in total, according to sources cited by Bloomberg. One, Zillow is now trying to dump about 7,000 houses, but not to individual homebuyers as originally planned as house flipper, which is obviously too hard and painful. When real-estate-listing-site-turned-house-flipper Zillow announced on October 18 that it suddenly stopped buying houses, it blamed the labor and supply shortages “in the construction, renovation and closing spaces.” That turns out to have been a joke, it seems, as two things have emerged today: How Zillow helped whip house prices higher and got caught with its pants down (AI = artificial idiocy?).