Zillow is getting out of the iBuying business and will shut down its Zillow Offers division, resulting in a 25% reduction in its staff.
In its quarterly earnings report on Tuesday, the company said it will see a total write-down of more than $540 million as a result of its exit from the business, which buys homes and resells them. As a result of shutting down Zillow Offers, the company said it will be cutting some 2,000 jobs.
Last month, the company said it was halting new purchases of homes because supply chain disruptions and the labor shortage were causing it to get backlogged on the homes it was renovating and preparing for sale. However, the company said on Tuesday that the $304 million inventory write down it recorded in the third quarter from its Homes segment, which includes Zillow Offers, was because it bought homes during the last quarter for prices higher than it believes it can sell them.
“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,” said Rich Barton, Zillow’s co-founder and CEO. Since Zillow Offers launched in 2018, real estate markets have experienced major upheaval, including a pandemic, a temporary freezing of the housing market, followed by a supply and demand imbalance that led to an unprecedented rise in home prices.