On Monday, Zilliow announced that it was pausing its home buying operations as it had a huge numbers of properties in its possession and would concentrate on flipping them before acquiring new ones. It has been said that new buys will be on pause till the end of the year. However, Opendoor, a competitor said that it was “open for business.”
Zilliow publishes estimates of values of homes called “Zestimates,” online. The popularity of its app and website with its home estimates and online real estate ads have kept the company afloat in over a decade.
In 2018, it joined the buy and sell business called iBusiness. This tech-enabled business requires homeowners to ask for an estimate of their properties. The site used an algorithm and if the owners are amenable, the property is sold to Zillow, which conducts minor repairs and puts it back in the market.
The Seattle-based firm bought more than 3,800 houses in the second quarter of the year. The company said that it would focus on its current home inventory. It would market and sell the homes that it has already acquired. It also said that those homes that were under contract would be acquired, according to a statement by Jeremy Wacksman, who is the chief operating officer of Zillow.
Although it uses an algorithm to purchase properties, Zillow needs human inspectors and skilled workers to inspect a property and make the necessary changes. Due to the pandemic, there is worker shortage and the algorithm does not seem to have factored in the human component needed to flip houses.
The company said that it will refer customers to real estate agents as it continues to deal with its current issues. The stocks have fallen by 31 percent through Friday close as per a report on the Seattle Times. The outlet also said that its stocks had almost tripled in 2020.