Nov. 3 (UPI) — Digital real estate business Zillow says it’s getting out of the home-flipping business and laying off a quarter of its workforce.
The company said it’s closing Offers, its business that bought and resold homes, partly because of the difficulty in predicting the market climate.
Offers appealed to homebuyers by offering to buy their properties for cash, thus removing the often cumbersome sales and closing process.
“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated,” Zillow CEO Rich Barton said, according to CNBC. “Continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility.”
Zillow said it will stop signing new contracts and focus only on operations for existing deals.
The company also cited a “backlog in renovations” and “operational capacity constraints.”
“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” Zillow Chief Operating Officer Jeremy Wacksman said in a statement.
Zillow said the flipping business, which began two years ago, posted a loss of $422 million in the third quarter.
Overall, Zillow reported $1.74 billion in earnings for Q3. Most analysts expected that figure to be closer to $2 billion.