DENVER (CBS4) – The popular real estate listing website Zillow announced it will stop buying homes and flipping them for resale. The company owns several thousand properties across the country and dozens in the Denver area.
For the last two years, Zillow has bought homes directly from sellers.
“What they do is they kind of sidestep the real estate broker in the transaction and they make a deal directly with the seller. Sometimes they rehab them, sometimes they don’t, but by and large, they are a wholesale home purchaser,” said Matt LePrino of the Colorado Association of Realtors.
The country’s current shortage on labor and materials hit Zillow hard. The company has struggled to renovate and resell the homes it purchased fast enough, creating a huge backlog. Zillow stopped contacting sellers with offers last month.
This week, Zillow says the unpredictability in forecasting home prices is why they’re creasing their home flipping operations. The company reports a third-quarter loss of over $328 million related to its home buying unit.
“When you’re not able to buy low and sell high, because our market is doing so phenomenally, that really eliminates the ability for for companies like Zillow, or any other ibuyer to turn a profit,” said LePrino.
Zillow says the company is still closing on the homes they have that are under contract. A pitch has been made to investors to acquire the thousands of available homes the company still owns.