Zillow has announced that it is getting out of its home flipping business and will probably close down its Offers division and will fire approximately 25 percent of its staff.
The company said in its quarterly earnings report on Tuesday that it will see a loss of approximately $540 million as a result of its exit from the business. As a result of closing down its Zillow Offers, which offers buy and resell homes, the company said that it would be letting go of its near about 2000 staff.
In the earlier month, the company said it was pausing buying of new homes due to the labor deficiency and supply chain interruptions that were affecting them to get backlogged on the homes it as refurbishing and formulating for sale.
Moreover, the company said it has recorded about $340 million loss in the third quarter for its home segment that includes Zillow Offers as it has purchased these homes during the last quarter with a higher price in the thought of it would sell them.
Barton and Allen Parker, the chief financial officer, said that they welcome the increase in prices but a decline in the home prices might expose them to too much higher risk. They said that they want to become market makers, not market risk-takers.
Zillow Offers has been launched in 2018, since then the real estate market has experienced a major interruption containing temporary freezing of the housing market, the 2019 pandemic, and finally trailed by supply and demand difference, which led to extraordinary growth in home prices.