Apparently the housing market was too unpredictable for Zillow’s ibuyer program. Zillow determined “being an ibuyer was too risky, too volatile, and ultimately addressed too few customers, too narrow.” It’s now offloading 7,000 houses worth $2B, in multiple markets across the county so unlikely to have much effect on the market.
Personally, I’ve never been a big fan of Zillow. Residential real estate is one of the largest asset classes in the world and Zillow went hard on trying to control the entire house hunting process. It started with a strong ad tech product that disrupted many real estate agent businesses, and their notoriously inaccurate “Zestimate” product created many false value expectations. The real estate agent was often left trying to clean things up and get the property sold.
However, I believe this is a real loss for the consumer. Albeit messy, Zillow was trying to address a real problem and that is the real estate buying and selling process remains incredibly inefficient. While there are some standout organizations doing it well, by and large we as an industry have not risen to the expectation of the consumer in bettering the process. If you have purchased or sold real estate lately, you know what I mean. It’s too complicated, unpredictable, and inconsistent.
Zillow will be fine. It has $3B on the balance sheet and low debt but I can’t help but wonder, where do we go from here? One thing is for sure, we are still a long way from algorithms mimicking what can only be done locally. Now and for the foreseeable future there is still tremendous value in walking the property, seeing how the sun hits, observing the actual repairs needed, talking about the local dynamics that affect the direction of the market.
That means the local real estate agent won again, but unless we are front and center to solve the process problems, our victory will be short lived.
