Zillow Group announced it is making strides in selling about half of the about 18,000 homes that were part of its now-shuttered Zillow Offers program, once one of the nation’s largest instant cash buyers. But some lawmakers are raising concerns that some of these properties are going to institutional investors at a time when the housing market is starved for more inventory.
“We are focused on making the homes we are listing for sale available to movers as quickly as possible,” a Zillow spokesperson told REALTOR® Magazine. “As we wind down our iBuying operations, we continue to sell homes the way we always have, which includes marketing them on the open market to sell them to all types of buyers such as individuals and families, institutional or individual investors, and nonprofits.”
Zillow abruptly announced last month that it was ending Zillow Offers. That put thousands of properties it already owned or had agreed to buy in limbo. At the end of the third quarter, Zillow had 9,790 homes in its inventory and 8,172 homes under contract.
Zillow said last week it had made “significant progress” in winding down its Zillow Offers inventory and had either sold, were under contract to sell, or had reached an agreement on terms for more than half of the homes it owns.
But a recent bulk sale to an institutional investor has sparked concern in the industry over how many more of these homes could go to institutional investors. In November, The Wall Street Journal reported that Zillow sold 2,000 of its homes to Pretium Partners, a New York City investment firm. Pretium owns about 70,000 single-family home rentals across 20 markets.
U.S. Senators Sherrod Brown, Tina Smith, and Jack Reed sent a letter to Zillow’s CEO Rich Burton on Nov. 8 to raise “serious concerns” over the deal as well as the growing news reports that Zillow had plans to sell 7,000 of its properties for about $2.8 billion to institutional investors—a claim that Zillow says is untrue. The lawmakers wrote that they were concerned Zillow Offers’ housing stock would be sold to institutional investors and turned into rentals at a time when many housing markets are starved for greater housing inventory.
Zillow officials said they are considering many options.
“We are pleased with the significant Zillow Offers inventory wind-down progress we've made in such a short time,” Zillow Group CFO Allen Parker said in a recent statement. “We will continue to be disciplined in our inventory wind-down strategy and evaluate a variety of options to best optimize net cash flows to the company.”
In November, Zillow announced it was shutting down Zillow Offers and eliminating a quarter of its workforce. At the time, CEO Rich Barton pointed to “unpredictability in forecasting home prices far exceeds what we anticipated” and said Zillow Offers was causing “too much earnings and balance-sheet volatility” for the company. Barton said in a statement last week that ending Zillow Offers will allow the company to have “a more capital efficient balance sheets and business moving forward.” Zillow also announced a repurchase program, buying up to $750 million of its stock.
Zillow launched Zillow Offers in December 2019 and grew it quickly, giving homeowners an option to sell their homes instantly to Zillow for cash.