Zillow Offers house price automation
Occurred: November 2021
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.
Operator: Zillow Group
Developer: Zillow Group
Sector: Real estate
Purpose: Estimate and predict real estate value
Technology: Automated valuation model
Transparency: Black box; Marketing