Zillow says it’s making good progress on home sales as it exits house-flipping business, announces $750M stock repurchase

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Zillow Offers is the company’s “iBuyer” service that aims to digitize the end-to-end home buying experience. (Zillow Photos)

Zillow Group says it is making good progress in rolling out its homes, today’s announcement That it is under contract to sell or sell more than 50% of the homes it plans to sell as part of its decision to wind up its Zillow Offers business unit. The Seattle-based real estate company also announced that the board has authorized the purchase of up to $750 million of Zillow stock.

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Shares of Zillow — which have been hammered over the past six months, fell 51% — rose in after-hours trading. The company’s market value is now $13.75 billion.

The update comes a month after Zillow Group made the surprising decision to wind down its iBuying real estate business, known as Zillow Offerings.

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Rich Barton, co-founder and CEO of Zillow Group, said, “We are pleased with the progress of our wind-down efforts and believe that no longer operating the Zillow Offerings will allow us to have a more capital-efficient balance sheet and business moving forward. Will get it.” A press release on Thursday. “With that, we see today as an opportune time to announce a share repurchase program and to reduce the cash balance created to support the Zillow offer.”

Noting sales momentum at its iBuying unit, Zillow also said it now expects fourth-quarter revenue of $2.3 billion to $2.9 billion in its offers business. This is up from previously estimated revenue of $1.7 billion to $2.1 billion.

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The Wall Street Journal reported last month that Zillow intended to sell about 2,000 homes owned by Pretium Partners, with the aim of turning the properties into rental units. At the time, the Journal reported that Zillow was looking to sell the 9,800 homes it owned, and was in the process of buying another 8,200 properties. Those home sales were suffering losses, which were estimated at between 5-7%.

While Zillow is moving away from iBuying — the process of using algorithms to quickly buy and flip assets — other companies are committing to the model. However, Zillow’s rivals have seen a drop in prices over the past month.

  • Redfin stock is down 16%. Market value $4.1 billion.
  • Offerpad’s stock is down 6%. Market value $1.6 billion.
  • On the other hand, Opendoor’s stock is down 30%. Market value of $8.9 billion.

Zillow is laying off 2,000 employees — or 25% of its workforce — as part of its withdrawal from iBuying. It is also taking a $500 million write-down on the business.

Zillow faced a number of problems with its iBuying business, including a lack of confidence that its algorithms can guide contractors to flip homes in a timely and affordable fashion, including future home price movements, supply-chain issues, and supply-chain issues. Can accurately estimate the inability to secure. a report good It was also suggested earlier this week by Insider that Zillow pressured employees to find ways to reduce the renovations required to flip homes they owned, and paid contractors less than rivals. Too.

Last month, Barton pulled the plug.

Barton said in a statement at the time, “We have determined the unpredictability in forecasting home prices far exceeds what we anticipated and that continuing with the Zillow offer will result in significant earnings and balance-sheet volatility.” “

The sudden change took investors by surprise, as the company touted the prospects of iBuying just weeks before the shutdown. Surely that change has resulted in at least one class action lawsuit that claims Zillow misled investors about the promise of its iBuying business.

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