Zillow has dropped its iBuyer program, but what does that mean?
Why is Zillow canceling their iBuyer program, and what does it mean for our Phoenix real estate market? As you may or may not know, Zillow has been essentially running a flip business, purchasing homes directly from consumers and reselling them. However, they’ve now dropped that program entirely and are laying off much of their staff. It turns out that human real estate agents who have specific market knowledge are better than algorithms at predicting what a market is going to do.
When you’re running a flip business, you need to buy a house at a discount. On a home I looked at recently, Zillow paid $20,000 more than any other home had been bought for in the entire neighborhood. They’re now trying to sell that home for the same price they paid for it, but when you factor in resale, holding, and staff costs, it’s no mystery as to why they’re shutting down the program; it’s losing quite a bit of money. Their model proved unsustainable.
So what does all this mean for our market? We remain in a seller’s market, though it’s cooled down from the absolute frenzy of this spring and summer. Properties are currently taking 30 to 45 days to sell. Zillow’s news likely won’t have very much of an impact on our market, so you can rest easy.
If you have any questions about buying or selling, please give me a call or send an email. I’d be glad to schedule a free consultation to discuss whatever you need.