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Listings giant Zillow lost more than $880 million on its failed home-flipping business in 2021, the company reported late last week.
According to the Wall Street Journal, the otherwise profitable home-listing and real estate advertising company ended up losing nearly $530 million overall, with the bulk of the losses coming from its since shut-down Zillow Offers, which was responsible for the majority of Zillow’s income — $6 billion of ithe $8.1 billion it generated — but none of its profits.
The company took its algorithmic-driven home-flipping business off the market last November when the tech platform failed to precisely forecast changes in home prices.
In doing so, it let go 2,000 workers — a quarter of its staff — and wrote down more than a half-billion dollars in losses on the value of the homes it owned as part of the venture.
The newspaper reported Zillow had already sold or were in agreement to sell more than 85% of its remaining inventory of homes from the defunct business. On average, Zillow lost about $25,000 on every home it sold before interest expense. But it sold those homes faster and at much smaller losses than it had expected, the company said.
Zillow still has more than 8,500 homes on its books, according to the report, which added it has already sold some homes to big investors such as Premium Partners, the large rental landlord that purchased 2,000 Zillow homes back in November.
Planning for the company’s future during an earnings call last week, Zillow executives discussed doubling the share of American home sales that happen on Zillow, investing in new products for home-sellers and building a “housing super app.”
“Our company was built on big swings and we’re going to keep taking them,” chief executive Rich Barton told the publication.
[Wall Street Journal] — Vince DiMiceli
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