Zillow announced yesterday that the company will not contract to buy any more homes through Zillow Offers for the remainder of 2021 in order to work through the backlog of homes it has already purchased. The company will still market and sell the homes acquired prior to Monday through Zillow Offers, which has been on a purchasing frenzy this year, purchasing 3,805 homes in Q2 — more than double the number of homes bought in the first quarter.
Zillow’s iBuyer program, Zillow Offers, was introduced in 2018. The model entails purchasing homes directly from sellers, then re-listing them after doing minor work. Currently, the model operates in 25 cities and it’s technology is similar to other iBuyer programs, such as Opendoor, RedfinNow and Offerpad, all of which use data and algorithms to make cash offers on off-market homes based on the property and market value.
Zillow’s Chief Operating Officer Jeremy Wacksman said in a statement on Monday, “We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces. We have not been exempt from these market and capacity issues and we now have an operational backlog for renovations and closings. Pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory.”
The iBuying process is appealing to home sellers because closings typically take place within 7-90 days after the contract is signed, providing certainty and control. It also removes the need for a seller to find a real estate agent and prep a house for sale in the market.
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