Zillow Offers house price automation

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

Zillow Offers uses big data and automated valuation algorithms to make offers on homes across the US. The aim is to sell 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 says it will lay off 2,000+ employees. The company has also been hit with two class action lawsuits claiming it had misled investors about the true nature of its financial performance.