Zillow, the sometimes parodied online real estate service, has run into a big of a snag: According to Bloomberg, the company accidentally bought way too many homes and is now looking to sell them. How many homes? About 7,000.
It’s the result of bad timing and a technical hiccup caused. After the company tweaked their algorithms, they wound up making a large number of winning bids. Unfortunately that came right as the home-price appreciation cooled. Now they have too many homes. As one analyst said, the company “leaned into home-price appreciation at exactly the wrong moment.”
Now Zillow is seeking about $2.6 billion combined for the surplus of houses. A number of them are priced for less than they were purchased.
The company purchased a whopping 8,000 homes in the third quarter of this year. They are reportedly not buying any more homes for the remainder of 2021, apart from ones for they’ve already started a contract.
Founded in 2006, Zillow began as an online real estate listings hub. But recently it began buying houses and flipping them, in a practice that has become known as “iBuying.” As Bloomberg puts it:
Zillow invites owners to request an offer on their house and uses algorithms to generate a price. If an owner accepts, Zillow buys the property, makes light repairs and puts it back on the market.
The company won’t be backing off of house purchasing. By 2024, they hope to buy 5,000 homes a month. But technical fumbles aren’t the only thing standing in their way. There’s also the pesky fact that millennials still aren’t becoming home-owners.