While Zillow has made its brand well known in the marketplace and has suggested to some it planned to upend the real estate business as we know it; seems the company also knows how to take a loss in real estate specifically in their Zillow Offers iBuyer program. As of this afternoon on CNBC the company has announced the elimination of their IBuyer service: https://www.cnbc.com/2021/11/02/zillow-shares-plunge-after-announcing-it-will-close-home-buying-business.html

Yet below is my personal experience concerning a listing I am showing tomorrow. Based on the following, I am not surprised as not only did Zillow overpay for the house based on comps, subsequently the profit margin, if any was marginal at best unless they could convince Opendoor to purchase (of which I recently tried to set a showing for a client, an absolute unprofessional nightmare and subsequently disconnected the call.) When the company is too frugal to engage a showing service for co-op brokers to access their listings that is just poor customer service i.e. penny-wise and pound foolish. If Opendoor is still in business in 5 years, I will be surprised.

A few weeks ago the following headline crossed the news ticker:

Zillow tumbles 11% after halting home purchases through year-end as it works through a renovation backlog made worse by staffing shortages

Clients of mine came across a home in Aurora that looked interesting to them. Granted not their first choice but I said "sure let's preview via video and then set an in-person showing". The address: 18235 E Tanforan Place, Aurora, CO 80015

Doing my due diligence, I was a bit concerned that the home has been on the market for over a month (33 days and counting). Coming on the market at $514,900 the home is presently priced at $484,900 (ZEstimate is $490,937) per image below:

Zestimate for 18235 E Tanforan Place, Aurora, CO

Thus I was curious concerning the past sales history as I am a believer in the old Wall Street saying which is:

"Pigs get fat, hogs get slaughtered". 

I do a look back and low and behold….

5/31/18:          The home sold for $365,000

Now in 11/2021 asking $484,900 seems aggressive i.e. 25% profit however not so out of the market norms as Metro Denver has experienced an average 20% gain per Case-Shiller over the last year. Thus in actuality; maybe a good price.

Yet I dug a little deeper:

8/25/01:          The home sold for $529,856

I assume the home was purchased through their iBuyer program. Granted I am not a renovation expert nor an economist however from how I do simple math, the asking price is almost $45,000 BELOW what Zillow paid for the home. Even if sold at asking, add in the 2.5% commission being offered by Zillow, there is an additional $12,000 loss.

Let's just hope for Zillow and their Zillow Offers iBuyer program becomes a little more adept at valuations and offers. Based on the transaction noted above someone is losing some serious money.

Could this situation be a precursor for the overall market? Only time will tell. It was fatal to Zillow leading to $442 Million is losses and a reduction of 25% of their staff.

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