Zillow is getting out of the buying business and will shut down its Zillow Offers division, resulting in a 25% reduction in its staff.In its quarterly earnings report on Tuesday, the company said it will see a total write-down of more than $540 million as a result of its exit from the business, which buys homes and resells them.
As a result of shutting down Zillow Offers, the company said it will be cutting some 2,000 jobs. The company said it was halting new purchases of homes because supply chain disruptions and the labor shortage were causing it to get backlogged on the homes it was renovating and preparing for sale.
The company said on Tuesday that the $304 million inventory write-down is recorded in the third quarter from its Homes segment, which includes Offers, was because it bought homes during the last quarter for prices higher than it believes can sell them.Since Zillow Offers launched in 2018, real estate markets have experienced major upheaval, including a pandemic, temporary freezing of the housing market, followed by a supply and demand imbalance that led to an unprecedented rise in home prices.
While the big price swings up were welcome, the swings down would expose Zillow to too much risk, Barton and Allen Parker, the chief financial officer, wrote in the company’s letter that they aimed to become a market maker, not a market risk-taker.