Zillow is Shutting Down Their iBuyer Program

Filed under: Market Comentary

There’s a big headline in the news: Zillow is shutting down their iBuyer program. It’s interesting to see how Zillow stepped in confidently – following the algorithms (their “Zestimates”), making blind offers on properties, sending someone to do a quick inspection, and then buying up the market. They’ve bought thousands of homes in the last year.

Now, one analyst looked at 650 of their purchases. It turns out that 66% of them are currently under water. Zillow is saying that they are losing a lot of money on these investments. You can find more information about this breaking news on CNBC, MSN, and Bloomberg.

Why You Always Need Personalized Help for a Home Purchase

To me, this is more evidence that real estate is too big of a purchase and emotionally charged, which is why a good Realtor will never be replaced in this market. There is so much that goes into the analysis of a home and the transaction process. Both parties (the buyer and seller) need to come together to find a win-win situation.

It’s laughable to me that a large corporation thinks that they can just create an algorithm-based program and change the way real estate is done. I believe that it isn’t going to happen in real estate any time soon. If you’re a Realtor, then it’s a time to celebrate because this Zillow news improves your job security!

Zillow has been a great place to go for Zestimates and neighborhood information. But what people don’t realize that Zillow’s model is to attract buyers and sellers to their website, then selling that data to Realtors and lenders. Up until recently, the profit model was focused on charging Realtors to pay for leads. It’s been a great setup for Realtors because Zillow brings the leads and agents can earn a ton of money by helping people find the right homes.

Zillow Undermined Realtors

What bothers me about the situation is when Zillow came in with the iBuyer program and opened a brokerage – it completely undermined the Realtors that made Zillow into what it is today. It could be a little bit of a lesson on turning your back on core customers.

This situation is further evidence that real estate requires human beings to be involved and nurture through the process. It’s no surprise that Zillow is getting out of the iBuyer business model.

For personalized recommendations on your home purchase or refinance, I’m always here to help! Call me any time to discuss your financial situation.

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