Zillow Offers automated house flipping system is shut down

Property and technology company Zillow Group shuttered its i-Buying home flipping business, saying it had lost USD 881 million on the business.

Zillow Offers used big data and automated valuation algorithms to make offers on homes across the US, with the aim of selling acquistions quickly for a profit. 

However, the company appeared to lose faith in the ability of its algorithm to make reliable predictions, including during so-called 'black swan' events such as COVID-19.

In a letter to shareholders, CEO Rich Barton explained Zillow Offers was 'too risky, too volatile to our earnings and operations', and provided 'too low of a return on equity opportunity, and too narrow in its ability to serve our customers.'

Zillow said it would lay off 2,000+ employees. The company was also hit with two class action lawsuits claiming it had misled investors about the true nature of its financial performance.