The Zillow iBuyer program failure is a complicated and nuanced issue.

What was the Zillow iBuyer Program?

The Zillow iBuyer program was a program where Zillow would buy a home directly from a homeowner/seller to allow the homeowner not to have showings, get the home ready to show, etc. Zillow then would own the house after it closed, would potentially do some repairs, and then place the house back on the market to resell.

Many people know Zillow and the Zillow “Zestimate” provided on the website and app for most homes in the United States. I have written multiple times about how sometimes the Zillow Zestimate may not always be a good representation of an actual house’s value.


Zillow Zestimates Still Incorrect

More specifically to Towson Zillow Zestimates:

Towson Zillow Zestimates Incorrect and Problematic

Zillow Zestimate for Towson Real Estate May Be Misleading

Misleading Towson Zillow Zestimates Explained Further

Incorrect Towson Zillow Zestimates Strike Again

Baltimore Zillow Zestimates Still Off 

A New Low for Incorrect Zillow Zestimates

I have been reading a number of articles about the Zillow iBuying program and its’ ultimate failure, and multiple sources refer to the Zestimates as potentially part of the issue.

From a Wired article titled “Why Zillow Couldn’t Make Algorithmic House Pricing Work”:

ZILLOW’S ZESTIMATE OF home values has become a go-to reference for US homeowners. But when Zillow tried to use its algorithm to buy and sell homes, it badly misread the market.

Also in the Wired article, a quote from the Zillow CEO:

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers, the company’s home buying program, would result in too much earnings and balance-sheet volatility,” Zillow cofounder and CEO Rich Barton said.

A MoneyWise article called “Homebuyers and sellers: What Zillow’s fiasco can teach you about property pricing” says:

“Zillow was so confident in its pricing algorithm that it said earlier this year its Zestimates would serve as the initial offer price on eligible homes. That didn’t last.

The company recently announced that it was exiting the iBuying business. In a quarterly earnings call, CEO Rich Barton said Zillow was unable to correctly forecast future home prices amid volatility in the pandemic-driven housing frenzy.”

A Geekwire article titled “Zillow to shutter home buying business and lay off 2,000 employees as its big real estate bet falters” provided information obtained from a letter to shareholders:

Zillow as a result was unable to accurately forecast the price of homes three to six months in the future, and was forced to think about making Zillow Offers an even larger business.

Barton said “the business would only become consistently profitable at scale. We have determined this large scale would require too much equity capital, create too much volatility in our earnings and balance sheet, and ultimately result in far lower return on equity than we imagined.”

There are a number of other articles to review. This reminds me again about just how local real estate markets are.

When considering buying or selling a home, please contact and hire a local real estate professional to help guide you through the process.

When buying or selling a Timonium home or Towson or Greater Baltimore area home, contact me! I would be pleased to be of service!