MURFREESBORO, Tenn. (WKRN) — A broken deal has left a Murfreesboro couple with a broken dream after a case of iBuying went bad.
Zillow Offers first launched in Nashville in 2019. With the program, Nashvillians looking to sell their home were able to go online and request a cash offer from Zillow to buy their home.
Two years later, the company announced that the program would be winding down, and it’s not sitting well with some.
“They got an email from Zillow Friday that says, ‘yes, we’re canceling the deal, we’re out,'” said Zach Griest, Owner of Zach Taylor Real Estate, on behalf of his clients. “They said ‘we’re not going to make new offers, but close what we currently have and be done.'”
Zillow first started its home-flipping program in 2018, hoping its algorithm-based approach would be a profitable way to buy and sell homes. Through a pandemic and crazy housing market, it proved otherwise.
The company is now reporting hundreds of millions of dollars in losses due, in part, to purchasing homes at a higher price than future sales delivered, announcing in November that their iBuying program would be no more.
“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too many earnings and balance-sheet volatility,” said Zillow Group co-founder and CEO Rich Barton.
Griest says his clients are upset, counting on Zillow to close. They went under contract with them in September and planned to close in May 2022.
Before they were aware Zillow Offers was being terminated, they went under contract for a newly constructed home, putting down a $5,000 non-refundable deposit. Now, they’re stuck.
“As we wind down Zillow Offers, we’re working to ensure our internal teams can support as many closing dates as possible. For a small subset of customers closing later in 2022, we determined we can no longer support their closing and are releasing our earnest money to them,” a Zillow spokesman said, adding that the small subset is less than 400 customers nationwide.
Griest said he spoke to a representative on the phone who told him a similar story.
“I said, ‘we can close we can close tomorrow, let’s move up the closing date,’ and she said, sorry ‘we’re at capacity, we’re not going to do it,'” Griest said.
Griest’s buyers will now have to move on to plan B.
The wind-down is expected to take several quarters and will include a reduction of Zillow’s workforce by approximately 25%.