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Zillow closes Zillow Offers, announces layoffs

by Emily Mack

Zillow closes Zillow Offers, announces layoffs

Zillow announced today it’s ending its iBuyer service, Zillow Offers, and cutting roughly a quarter of its workforce, citing the volatility the service created for the online brokerage as the motivation for the move.

Recently, Zillow paused its iBuyer service, Zillow Offers, for the remainder of 2021. This news came following a “backlog in renovations and operational capacity constraints” and stunned the market. Zillow’s stock dropped more than 10% in a single day.

When announcing the company’s third-quarter earnings today, Zillow Group co-founder and CEO Rich Barton revealed a long-term plan to slowly terminate Zillow Offers. “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,” he said. “While we built and learned a tremendous amount operating Zillow Offers, it served only a small portion of our customers. Our core business and brand are strong, and we remain committed to creating an integrated and digital real estate transaction that solves the pain points of buyers and sellers while serving a wider audience.”

During the second quarter, however, Zillow Offers accounted for more than half of Zillow’s total revenue. But trouble was on the horizon. Zillow acquired nearly 8,000 homes during the third quarter, and yesterday, Bloomberg reported that the company was seeking to offload 7,000 of them on investors for a total of $2.8 billion.

Now, Zillow Offers is set to wind down in a move that will require cutting the Zillow workforce by roughly 25%. “The most difficult part of this decision is that it will impact many of our colleagues,” Barton said. “This is not something we take lightly. We are grateful for their efforts, and we are committed to providing a smooth transition.” He also tweeted, “Today is a rough day at Zillow.”

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