Zillow is closing down its home buying and selling business and laying off 25% of its workforce after the online real estate company missed its third-quarter earnings estimate.
The company announced in a statement attached to its earnings report Tuesday that it would be shutting down its Offers program, which buys and sells houses, after the company reported a net loss, partly due to failures in its Offers division. Zillow attributed the change to its inability to accurately forecast the housing market.
“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 Group chief executive Rich Barton said in the announcement. “While we built and learned a tremendous amount operating Zillow Offers, it served only a small portion of our customers.”
As part of the change, Zillow will also lay off 25% of its employees, or around 1,500 workers, over the next several months. (RELATED: Wall Street Firm Blackstone Invests $6 Billion In Single-Family Homes)
A “for rent” sign is posted in front of a house in Richmond, California. (Photo by Justin Sullivan/Getty Images)
“The most difficult part of this decision is that it will impact many of our colleagues,” Barton said. “This is not something we take lightly. We are grateful for their efforts, and we are committed to providing a smooth transition.”
The company had announced a pause to its Offers operations in October, attributing the move to supply chain dysfunction and larger economic problems.
“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” Jeremy Wacksman, Zillow’s chief operating officer, said at the time. “We have not been exempt from these market and capacity issues and we now have an operational backlog for renovations and closings.”
In upcoming months, Zillow will reportedly try to offload $2.8 billion in real estate inventory, or 7,000 homes, according to Bloomberg.
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