Over a year ago when Zillow started getting into the home buying and flipping business I said wait till the market turns down and watch them take a hit. It didn’t take that long. The real estate market is still solid, and they blew up.
Real estate is very local. Zillow’s perception that they could just be aggressive, buy properties, and sell them at a profit is every property flipper’s dream… but it was pure ignorance.
Zillow is licking their wounds and getting out of the property buying business, laying off 25% of their employees, and selling off their accumulated real estate at a loss. They’re indicating they’re taking a $500 B write-off.
Zillow believed that using artificial intelligence to determine pricing, and needing to be aggressive to dominate the market would work. Even for local flippers, if they don’t buy right, have reliable tradesmen that can turn around properties fast, stand a chance of taking a hit.
I’ve seen many flippers go bankrupt being aggressive when it took too long for them to flip properties, and the market turned on them. Just like the stock market. All financial managers look like geniuses when the market’s going up, but how do they do when the market changes?
Zillow is a good marketing platform, but nothing more. Let’s see what happens with Open Door, Redfin, and other iBuyer systems going forward. Old school local real estate brokerages may have a new life, and show how they’re valid.
There is something to be said about buying and selling real estate and keeping the assets on the local level, instead of sending the profits to Wall Street or Seattle.
Zillow getting out of the buying business is not an indication that the real estate market will be crashing. It’s only an indication that Zillow made bad business decisions, and is smart enough to realize it before the market worked against them. Liquidate what you can, and minimize your losses.
I have a lot of seasoning working with real estate investors and flipping properties. There are several moving targets you have to be aware of. Supply chain issues, and getting appliances and materials; quality labor and tradesmen are in tight demand, the market and tax structures may be changing… Be careful. You don’t want to end up as another Zillow…
If you are in the Los Angeles area, have any questions or real estate sales or financing needs, feel free in contacting me
Ron Henderson GRI, SRES, SFR, RECS, CIAS
President/Broker
Multi Real Estate Services, Inc.
Gov’t Affairs Chair – California Association of Mortgage Professionals (2017-2018)
Chairman – OutWest Marketing Meeting (Real Estate Education)
BRE #00905793 NMLS #310358
www.mres.com
ronh@mres.com
Specialist in the Art of Real Estate Sales and Finance
Real Estate market, mortgage rates, Los Angeles, San Fernando Valley, Conejo Valley, Simi Valley, Woodland Hills, West Hills, Calabasas, Chatsworth
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