Zillow (NASDAQ:ZG), the digital real estate company, said on Tuesday that it’s exiting Offers, its business that buys and flips homes, and eliminating 25% of its workforce.
The announcement was attached to Zillow’s third-quarter earnings report. The company’s revenue and earnings missed analysts’ estimates.
"We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated," Zillow CEO Rich Barton said in the release. "Continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility."
For the quarter, ZG lost 95 cents per share, as opposed to profit of 16 cents per share expected in a survey of analysts. Revenue proved to be $1.74 billion vs. the expected $2.01 billion.
Zillow launched Offers in December 2019, starting with Southern California markets. The iBuying, or instant buying, product allowed homeowners to sell their home to Zillow for cash, eliminating a lengthy bidding, sales and closing process. They also didn’t have to worry about costly repairs before putting their house on the market.
"After closing on a home, Zillow will take care of necessary repairs, working with local contractors to complete projects like a fresh coat of paint, servicing HVAC units and other work a typical homeowner would do to get their home ready for sale," Zillow said in a press release at the time.
ZG shares tumbled $14.68, or 17.2%, to $70.80.
