Zillow’s push into instant homebuying has led to both soaring revenues and losses for the listing giant, and CEO Rich Barton wants to set the record straight on how it makes money from the iBuying craze.
At the firm’s Unlock event on Monday, Barton insisted that the iBuying service it launched last year, Zillow Offers, is fundamentally different from a house-flipping business.
“We’re not flipping this property,” Barton told Inman at the event. “We’re not trying to get an artificially low price, we’re not trying to take advantage of anyone in a bad situation, we’re not looking to hold it and do a big renovation.”
Rather than trying to profit from home price appreciation, Zillow says it uses data to dynamically generate a fee that represents its own costs.
“We’re looking to move it as quickly as possible and earn our money off the transaction fee,” Barton said. “And ultimately because this transaction sits at the nexus of all of these adjacent markets that we know so well, that are big businesses in and of itself, they’re dying to be integrated into one thing.”
One of those businesses is mortgage lending. Zillow rolled out a home loans division in April, after acquiring Mortgage Lenders of America, a 300-person mortgage brokerage, in August 2018.
Earlier this month Barton told The Information in an interview that ibuying represented “an existential threat” for the industry, “because if it works and we don’t do it, we get displaced as the marketplace, theoretically.”
More than a few investors think the firm will take a hit. As of June, Zillow was among the top 30 short positions by dollar volume, with investors shorting $1.27 billion worth of Zillow stock, according to Nasdaq. Steve Eisman, who famously made hundreds of millions of dollars betting against the subprime market, told TRD in July he believes the firm has run out of ideas to grow its stagnating home-listing business.
But Barton said Zillow is responding to demand.
“We are doing this as a service to sellers because sellers are telling us they are frustrated,” the CEO said. “They are telling us they want it simpler.” [Inman] — Kevin Sun