Does Zillow think the housing market's gonna crash?
If you've been listening to the news about the real estate market lately, you've probably heard a lot about Zillow and their iBuyer program, and how they've stopped buying homes. And if you haven't heard about that, let me take a step back and explain to you what that means. So Zillow, since 2018 has been one of the few other companies who are what are called iBuyers. That's basically a fancy term for the use technology and an algorithm, and they are buying homes directly from sellers. So Zillow, on their website previously could put in your property address and they would make you an all-cash offer. This would allow sellers to pick their closing date, they're getting a cash offer.
Zillow is still doing an inspection, and all these other iBuyers are still doing inspections. But you don't have to deal with appraisals, do the open house, and do the staging, and all that kinda stuff. It made the process a lot easier for sellers. Now, there are a couple other companies in the space who are also iBuyers. They, a little bit earlier in the year, started slowing down their purchases. And as they did that, Zillow increased the number of homes that they were buying. What it turns out is that Zillow is actually greatly overpaying for homes. In some cities like Phoenix and Dallas specifically, over 90% and over 80% in Dallas of the homes that they were buying, when they put them back on the market, they were selling them for less than the price that they bought it for. So, Zillow was losing money on every deal that they were buying. Zillow's third quarter financial reports just came out on November 2nd. And it turns out that in 2021 alone, Zillow lost over $300 million dollars.That's million with an M. $300 million dollars on iBuying. So what they've decided to do, they paused iBuying on October 18th. They said, "Well, we have too many houses. We have a backlog of homes that we need to fix up a little bit and put on the market." And they had already promised over 9,000 buyers across the country to buy their home in the fourth quarter of 2021 alone.
Zillow's having the same problem that a lot of companies are having, where they can't get trades people to come in and paint the homes, and clean the carpets, and replace the carpets, and things like that. That's what they were doing between when they bought them, and when they put them on the market. They were having a hard time getting that done in a quick enough timeframe. And that, plus the combination of them losing money on every home that they were buying, decided... Zillow decided to put a pause on the iBuying. But CEO Rich Barton came out and said in the third quarter financial reports that they still see the housing market as being very strong for the foreseeable future, for the next couple of years. So even Zillow, the biggest name brand in the industry, thinks the housing market is going to continue to roar for the next couple years. But they said that they were having a very hard time using their algorithm. Their algorithm was not good at predicting home values, and getting them good deals on these properties.
After losing 300-something million dollars in 2021, they decided they're no longer going to do this iBuying program. You used to be able to go to Zillow, and there was a button on every listing that they had there that said, "Sell your home directly to Zillow." That's gonna be gone, they're not doing that anymore. There are other companies that are in that space that are doing that, but they've been much more conservative. So, statistically speaking, going through the hassle of, you know, staging the home, and getting pictures, and doing the open house, and listing it the traditional way with a realtor, especially with our team, is going to net sellers more money. Even after commissions and closing costs, and the whole thing. Typically sellers make more money by putting their home on the market the quote unquote, traditional way. These other companies, they have to make a profit. And they've been better at making a profit, or at least not losing money, than Zillow was. If you are thinking about selling your home and you wanna get a cash offer on your property, we buy properties ourselves if it's a good deal. We have investors lined up.
If you wanna cash offer on your property, just reach out to us. We have investors lined up, ready to make cash offers. And if you wanna get the most money for your property, give us a call, shoot us a text, send us an email. We'd love to show you what it's worth, and what we can do to sell it for top top dollar in this crazy sellers market that we're still in. Thanks for tuning in. If you have any questions about the housing market here in south Florida, give us a call, shoot us a text, or send us an email. We got your back when moving to south Florida.Posted by Andy Mandel on