3 Nov 2021
Zillow Exits from Its Home-Flipping Business Due to Algorithms
The Index Today
U.S Real estate group, Zillow Inc. has announced plans to exit from the home-flipping business unit after stating that its current algorithms will not work as expected. The tech-enabled home flipping unit named “iBuying,” will be terminated and all new deals will be halted.
Zillow has also mentioned shortage of labor as another impacting factor which has reduced the company’s ability to flip houses rapidly and keep up with demand. Rich Barton, Chief Executive of Zillow said, “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.”
Zillow estimates the prices of homes using an algorithm called the “Zestimate.” The prices of homes have increased all across the U.S in the previous year due to higher work-from-home demand. Real-estate Professor Benjamin Keys at the Wharton School of the University of Pennsylvania said, “If feels like this would be a hard time to lose money buying and selling houses. This is a time frame where prices have gone up in a lot of places dramatically.”