"iBuying refers to the process in which deep-pocketed tech-enabled companies buy up homes, complete light renovations, and then sell them for a gain."
Zillow admittedly is virtually a household name at least for people looking to purchasing real estate. Their website showing the catalog of homes for sale and slick app woo-ed home buyers into their fold. One needs to remember (or realize) that they are solely a marketing company presenting the real agents' current listing trove and the awaiting perusing buyers in a handy, easy to use website. They did very well and had high
profits playing this role.
Then the company decided to enter the market essentially as flippers with Zillow Offers. They had tons of cash, ready buyers and thought that buying and selling real estate would be a relatively easy, profitable venture. (What could go wrong?) What they apparently never watched was the perils and trials that were readily available to see on cable home flipping shows and were rapidly overpaying for properties. Real estate agents sat out watching
this, reporting cases of Zillow paying well above expected reasonable market value for properties.
Now after buying oodles of homes they've come to find that holding costs, finding contractors to do fix-ups, and not doing thorough investigations into the condition of what homes they were buying, along with overpaying has put them in a money losing situation. On November 2, 2021 Zillow announced it was shutting down Zillow Offers and laying off 24% of its staff.
Our takeaway ... IBuying has been talked about for several years and what we've always thought was that the lack of an on the ground person (like a seasoned real estate agent) to help the Buyer, in this case Zillow, to purchase properties in large quantities could land that company in a world of hurt. The big problem is that Zillow just looked at numbers and statistics and didn't evaluate each home on its own merits. Very important
considerations are the home condition, design & functionality, obsolescence, datedness, views, neighborhood eyesores, location specific limitations like zoning, covenants, and HOA problems weren't thoroughly evaluated like it would be with a real estate agent or a local person with expertise involved. It didn't surprise us this model didn't work out so well.
