While some people are still bothered by the five-dollar bill that dropped out of their pocket last week, Zillow is shouldering a $312 million loss before taxes in its iBuying segment from last year. The company touted the success of its newest venture, Zillow Offers, pointing to the increase of homes sold through the platform as the number jumped from 177 homes in 2018 to 4,313 in 2019. But all the while, Zillow Offers was losing money fast. The real burden comes from the renovations that the company needed to invest in so that they could sell the properties. As it scales into more markets and expands its operations, Zillow hopes to regain its footing. But only time will reveal if these are growing pains or warning signs for the iBuying market.
iBuyers first entered the Houston market in the summer of 2018, and have since taken the city by storm. The share of Houston homes purchased by iBuyers such as Opendoor, Offerpad, Zillow Offers and RedfinNow has reached 3.8 percent in the Houston area, according to a Redfin analysis of public records, making Houston the leading market in the nation for iBuyer market share growth.
But the sustainability of the model remains a question for some investors and real estate agents. Most iBuyers are not public companies, and so their financials are not readily available, but Zillow is and its most recent financial report suggests the model is not yet profitable.
The real estate company's iBuying segment lost $312 million before taxes in 2019.