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Tech Firms Flip-Flop on Fixer Uppers


Demise of iBuyer. What is iBuy and why did it fail.

Zillow; Samantha Lee/Insider

Demise of iBuyer

Nov 02, 2021

  • “It's been a rough few weeks for the real-estate giant. On October 18, the company announced that its instant-buying (iBuying) division, Zillow Offers, would cease buying up homes for the rest of the year.”
  • “The winding down of Zillow Offers was announced after the market closed on Tuesday when Zillow's share price dropped about 12% to about $85.”
  • “But the true losses were dire than anyone expected.”
  • “Zillow's stock took a beating in the days following the announcement.”
  • “Zillow might have made mistakes and what its iBuying halt could mean for both buyers and sellers.”
  • “Before Zillow shut down its iBuying arm, it was looking to offload 7,000 homes to an unnamed buyer — or buyers — for $2.8 billion, Bloomberg reported.”

Source: James Rodriguez, Insider

What is iBuy and why did it fail

  • “An iBuyer (short for an instant buyer) is a real estate company that purchases a house from a homeowner in a quick cash transaction, makes any necessary improvements to the home, and then resells it.”
  • “You may also be expected to pay closing costs which can range from 2-5% of the home’s sale price.”
  • “Key takeaways about selling your home to an iBuyer Selling your home to an iBuyer may be the right fit if you need to sell your home quickly, you require access to your home’s equity, or you just don’t have the time to prepare your home for sale.”
  • “Whether you choose to sell your home to iBuyers or in a traditional sale, it’s important to weigh all the pros and cons and your own personal situation to make your home selling process a breeze.”

Source: Alison Bentley, Redfin

  • “The US residential real estate market is like a $2 trillion market nearly. It's massive. And as of now, iBuyers only have 1% market share.”
  • “The biggest problem these iBuyers have had is that they have been historically losing money.“
  • “Having said that in recent months the market has appreciated so much and so quickly that they've actually made money, but it's just something that's not going to last.”

Source: Laura Forman, WSJ Podcasts

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