Zillow Offers iBuying algorithm

November 2021

Property and technology company Zillow Group is shutting down (pdf) its i-buying home flipping business. Zillow Offers uses big data and algorithms to make offers on homes across the US. These acquistions are quickly sold for a profit.

At least, that is - or was - the theory. In reality, 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.

Having overpaid for thousands of homes, Zillow Group expects to lose over $500m on the business in the second half of 2021, and says it will lay off 2,000+ employees. The company was promptly hit with a proposed class action lawsuit claiming it has misled investors about the true nature of its financial performance.

The company's stock is down 50% over the past year.

Operator: Zillow Group
Developer: Zillow Group
Sector: Real estate
Estimate and predict real estate value
Zestimate algorithms
Issue: Accuracy/reliability; Marketing - hype
Opacity: Black box