If you’re looking to buy a house these days, you may want to turn to Zillow — and not just for window shopping.
Zillow Group Inc. has been using algorithms to power a mass home-flipping business it launched in 2018, depending on digital analysis to predict future home prices.
But after buying more homes than ever in the third quarter, the company now has a backlog of houses and is preparing to sell many of them at a loss, according to a report from Bloomberg.
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Zillow and other major corporations have made headlines by buying up houses at a large scale, in some cases competing against individual homebuyers already dealing with steep price appreciation.
After putting a record number of homes on the market in September, an analysis from YipitData found that it had cut prices on nearly half of them, signaling that the homes were selling for lower prices than the company expected.
In the Phoenix market, Zillow’s homes are priced at an average of 6% lower than what it initially paid. The flipping business, which Zillow launched in 2018, has yet to turn a profit.
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Even so, the company brought in an estimated $2 billion in the third quarter, so it should be able to withstand losses on a few houses.
“They probably don’t care so much,” RBC Capital Markets analyst Brad Erickson told Bloomberg. “It’s not as important at this stage of the game to make money.”
