It was all anyone could talk about for weeks: the “demise” of Zillow Offers.
That may sound hyperbolic today, but last year, the Seattle-based tech giant shocked the real estate industry when it announced that it was sunsetting its iBuying operation and selling all of the homes it acquired—a hefty amount at the time.
Now it appears that the journey Zillow embarked on to offload all its i-bought homes has come to its conclusion, according to a Zillow spokesperson who told RISMedia on Friday that the company has sold its final Zillow Offers home.
“We no longer have any homes listed for sale,” the spokesperson says, confirming that the final 70 homes that Zillow had left during the summer were either sold or under contract.
This ultimately makes good on the promise that company executives announced on its July call with investors indicating that Zillow planned to complete its Zillow Offers wind-down by the end of the third quarter.
However, the spokesperson didn’t share when and where the company sold its final home.
Zillow had accrued an inventory of 9,790 homes by the third quarter of 2021 while also having 8,172 homes under contract. The company expected to sell its backlog at a loss of around $550 million, or 5% – 7% below purchase price per home at the time.
Zillow didn’t disclose the breakdown of who purchased the homes—individuals or investors—during the year. However, previous reports indicated that rental investment firm Pretium Partners acquired a large portion of the houses.
Zillow agreed to sell 2,000 homes to the New York-based firm, kicking off its wind-down of Zillow Offers. Based on Bloomberg reports, the real estate giant went on to sell more homes to Pretium in February 2022.
At the time, the New York firm bought more than 800 properties from Zillow for around $300 million while also signing a $150 agreement to acquire 400 more homes, bringing its tally to a bit over 3,200 homes purchased from the Seattle company.
“Generally, most news reports were accurate, at least in terms that they were happening,” Zillow’s spokesperson says, adding that they couldn’t comment on the accuracy of the numbers reported.
It was also unknown if any of the homes were purchased by Zillow’s former iBuying rivals. When plans to offload inventory were announced, iBuying giants like Opendoor, Offerpad and Redfin were left to carry the sector as significant players.
One could argue that Zillow Offers’ demise also posed an opportunity for those companies to increase their cache of listings.
Zillow declined to comment when asked if any iBuyers were among the list of buyers that scooped up some of Zillow Offers’ homes.
However, spokespeople from Redfin and Offerpad told RISMedia in emailed statements that neither purchased homes from the defunct iBuying program. Opendoor declined to comment on the matter when RISMedia contacted them for this story.
Once its fiercest rival in iBuying, Opendoor recently announced that it would partner with Zillow to connect the Seattle company’s users with Opendoor offers.
Zillow and Opendoor announced their planned collaboration in August, with a projected rollout sometime next year.
“By bringing together Zillow’s market-leading audience and Opendoor’s e-commerce platform, more consumers will have the option to sell to Opendoor and save themselves the stress and uncertainty of a traditional sale process,” said Opendoor President Andrew Low Ah Kee in an August statement.
Potential sellers on Zillow apps and sites will be able to request and view offers directly from Opendoor. At the same time, a licensed Zillow advisor helps them compare the listing to an open-market sale using a real estate agent.
While the collaboration may appear to be another avenue for Zillow to maintain some presence in the iBuying game, the company’s spokesperson told RISMedia it held Zillow’s position that it was no longer in the Instant Buyer game.
“This is about offering Zillow customers and homeowners that come to the site this option,” they say.
Even as the company was sunsetting Zillow Offers, it’s hard to argue that Zillow hasn’t benefited in some form from selling off its inventory.
Earlier this year, Zillow posted increases in revenue as the company offloaded its inventory.
Heading into 2022, the company reeled in $3.3 billion in Q4 2021—up 1,006% from the same period in 2020—and $5.9 billion annually due to its iBuying operation.
“We are selling homes faster than we anticipated at better pricing levels than we projected,” said Zillow Co-Founder and CEO Rich Barton during a February investors call.
Then, the Seattle-based company saw another uptick in revenue courtesy of its wind-down efforts, according to its Q1 2021 earnings report.
Zillow earned $4.3 billion in Q1 2022—up 250% from last year as its homes segment—which included Zillow Offers—generated $3.7 billion in Q1.
By that point, the company’s iBuying inventory had dwindled to about 100 homes, according to Zillow.
“We felt confident in November, and we feel more confident today that no longer being a principal in the iBuying business was the right decision for Zillow given our desire to serve the full breadth of our audience and the attractive margin profile of our core business,” Barton said during a May call with investors.
By the second quarter, Zillow had reported that it only had about 70 homes left to sell to end its iBuying chapter.
Even with the end of Zillow Offers, the real estate giant is poised to continue profiting from iBuying to some degree through its partnership with Opendoor.
Similar to its agent referral business, Zillow stated in a letter to shareholders that it would receive a referral fee when a customer sells to Opendoor. Customers who opt to sell traditionally will be connected with a Zillow Premier Agent partner.
“We’ll also offer a bundle that allows sellers to buy their next home with a Premier Agent partner, finance with Zillow Home Loans and close with Zillow Closing Services while selling their existing home to Opendoor,” read an excerpt from the letter.
