In 2018 Zillow announced “Zillow Offers” which gave home sellers an opportunity to sell their home directly to Zillow without listing their home for sale on an MLS. With the Covid-19 pandemic leading to restrictions on holding open houses it would seem that 2021 would be a great opportunity for the program. Zillow would use its Zestimate to begin the offer price and use an in-person visit to adjust for the cost of needed repairs.
Zillow’s Nov 2, 2021 earnings report and discussions indicate 2021 was not a great opportunity. The company posted a $304 million inventory write down in its third quarter and said that the total write down would be more than $540 million. Zillow will shut down its Zillow Offers division, leading to a 25% reduction in employees.
One of the eye-opening statements made in the company’s shareholder letter written by CEO, Rich Barton, and chief financial officer, Allen Parker, was “Our aim was to become a market maker, not a market risk taker.” The Zestimate apparently did not give them adequate short term future prices.
Does “market maker” bring up comparisons to the Hunt brothers effort in 1979 to become a market maker for silver which drove up the price of silver from $6 per ounce in early 1979 to $50 per ounce in January 1980?
Read more at Zillow Zestimate.