Saturday, December 4, 2021

Zillow to fire 47 people in Washington after closing home business

Zillow will lay off 71 employees in Washington and Arizona as part of the initial fallout from its failed home relocation business. Hundreds of more layoffs are expected in the coming months.

The Seattle-based company said this week that it plans to close its Zillow Offers division, where Zillow itself bought and then resold homes in selected American cities, and also laid off a quarter of its employees. The company said on Tuesday that the “roll-out” will occur “within a few quarters.”

Zillow will fire 47 people in Washington on Jan.3, according to notices filed on Thursday. Another 24 people will be laid off in Arizona. (The Arizona notice does not indicate when the layoffs will take effect.)

The company currently employs about 6,400 people, of which 2,300 are in Washington state. After the outbreak of the pandemic, the company allowed most employees to work remotely indefinitely.

Zillow’s announcement this week came as the company has listed thousands of homes that may now have to sell at a loss due to mispricing the costs of selling homes in a historically hot but recently cooling housing market.

CEO Rich Barton said during a teleconference this week: “Basically, we have not been able to predict future home prices with the degree of accuracy that makes this business safe.”

Zillow shares fell 23% the day after the announcement.

While Zillow is known primarily to the general public for its list of viewable homes, the company has many other avenues, from selling leads to real estate agents to offering mortgages.

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Zillow Offers are betting on iBuying, an increasingly common algorithm-driven practice similar to a house revolution. Zillow Offers did not buy or sell homes in Seattle, but worked in Portland, Denver, Los Angeles and Phoenix, as well as other cities.

Seattle-based Zillow rival Redfin is relocating homes in Seattle, creating its own iBuying division, RedfinNow.

Redfin CEO Glenn Kelman said Thursday during a teleconference that the company will continue to renovate homes and expects to generate an unspecified “average gross margin” from homes sold by RedfinNow.

However, due to supply chain problems and a shortage of manpower, RedfinNow is spending nine days more time preparing homes for resale, which will reduce the company’s profitability, he said.

Redfin reported third-quarter revenue of $ 540 million, up 128% from a year earlier. The company’s net loss of $ 18.9 million decreased from $ 34.2 million in the third quarter of 2020.

Kelman said Redfin expects the iBuying trend to continue, but has approached it with caution.

“We think that a lot of people, before listing their home for sale, wonder what they can get in the form of a cash offer,” he said. “I think the problem with iBuying is just not overreacting. That’s not all, the future of real estate. “

Redfin’s flipping operation is much smaller than Zillow’s. RedfinNow sold 388 homes in the third quarter of this year, up from 3,032 in Zillow Offers.

Nation World News Desk
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