Zillow to kill its iBuying program

Zillow plans to lay off 25% of workers due to wind down

Zillow CEO Rich Barton announced Tuesday that his company is exiting the iBuying business, a mind-boggling about face that completely changes Zillow’s business model and will result in the loss of about 1,605 jobs.

The wind-down of “Zillow Offers” is expected to last several quarters and will reduce the Seattle-based company’s workforce, reported at 6,420 employees as of June 30, by 25%. Barton did not specify beyond the percentage how many people might lose their jobs on a dramatic and at times surreal earnings call Tuesday afternoon.

Zillow reported a brutal net income loss of $328 million in the third quarter, mostly due to a $421 million net loss before taxes on Zillow Offers. The company reported $1.73 billion in total revenue with 68% of the total coming from Zillow Offers, through which the company sold 3,036 homes in the third quarter.

However, Zillow also purchased 9,680 homes for cash in Q3. The company had already announced Oct. 17 that it was pausing iBuying purchases for the rest of 2021, citing operational capacity constraints.

The prior announcement was stunning in its own right, and led to revelations that the company bought homes for well above market value, and re-listing homes for less than what they were bought for.

But it was nothing compared to Tuesday’s news, particularly since during the company’s prior earnings call, Barton discussed Zillow Offers in purely glowing terms. He said then that the program was “more than durable” and planned to accelerate its expansion.

Barton, who took over Zillow from Spencer Rascoff in early 2019, and spurred Zillow’s reinvention as an iBuyer, was evidently rattled during Tuesday’s call. He acknowledged that ending Zillow Offers and laying off a quarter of the company’s workforce affected his emotions.

His voice cracked, and he continually cleared his throat, while sucking on cough drops. During questions from Wall Street analysts, floored in their own right after the rosy Q2 earnings call, Barton sometimes deferred to Allen Parker, the chief financial officer.

Barton did acknowledge that the Seattle-based business has been, “Unable to accurately forecast home prices” with “Zillow Offers unit economics swinging approximately 1,200 basis points from Q2 to an expected -500 to -700 basis points in Q4 2021.”

“Because of this price forecasting volatility, we have had to reconsider what the business might look like at a larger size,” added Barton, who also co-founded Zillow in 2005.

In short, Barton lamented that iBuying was too risky a way to spearhead Zillow monetizing its 220 million average monthly unique users.

So what might be a better way? The CEO pointed to existing Zillow programs including Premier Agent (which, up until relatively recently, was the company’s cash cow), mortgage origination, and the recently acquired ShowingTime. Premier Agent generated $359 million in Q3 revenue and the mortgage division raked in $70 million of revenue, and both divisions turned a profit.

Zillow closed in October its $500 million purchase of ShowingTime, a company that helps real estate agents schedule home showings for their clients. The purchase has triggered a Federal Trade Commission inquiry regarding Zillow’s array of agent and consumer data.

Barton and Parker repeatedly mentioned ShowingTime, but did not specify how Zillow might monetize the home showing platform.

If the call was difficult for Barton, it was also tough for analysts used to congratulating the CEO on a job well done and asking often technical questions. One analyst after another politely asked Barton how he could “reconcile” closing Zillow Offers with prior quarter’s statements.

“The way you’re talking about Zillow Offers is a little different from the way you talked about it in the past,” said Ygal Arounian of Wedbush Securities.

Barton’s answers largely referred back to his opening statements, adding occasionally that ZIllow has a “lot more potential” as an “asset light” business.

The CEO’s answer did not address how Zillow will move off the homes it has either purchased or agreed to buy. There are 8,200 homes in contract alone that Zillow has agreed to buy, Bloomberg first reported Monday, and the firm expects to lose 5 to 7% on these homes.

By close of the market Tuesday, the company’s stock price had tumbled 12% during the day, trading at $87.20 a share with a market value of $22.7 billion.

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Habitat for Humanity sees success with aging in place program

By Didier Malagies • January 22, 2025

A dedicated aging in place (AIP) program offered by the Oswego County Habitat for Humanity (OCHFH) in New York says it is seeing success by incorporating family, community and local resources to ensure older homeowners can remain where they prefer. “It’s been projected that, over the next 20 years, households led by individuals in their 80s will become the fastest growing age group , which provides stability within their communities,” said Samuel Raponi, OCHFH executive director. Through the organization’s AIP program, Habitat collaborates with families, local organizations and other community members in an effort to provide homes that prioritize living for older adults, he said. “This ultimately enhances their quality of life. We employ two different assessments in each case to ensure that the homeowners’ needs are clearly understood,” he added. An initial assessment of the client’s living situation aims to assess each person’s daily living activities, which are scrutinized by a “health or human services professional,” the organization said. This includes how they manage regular tasks like cleaning, shopping, paying bills or interacting with their community. A second evaluation specifically assesses home repair needs, and how to make a dwelling more livable for the needs of an older person. “These assessments enable OCHFH to provide modifications to their homes tailored to each homeowner’s specific lifestyle,” Raponi added. “Among the kinds of modifications we make are installing lever door handles, ramps, railings, grab bars, walk-in showers with a low threshold, and raised toilets to make homes more accessible for older adults.” Other resources, including Meals on Wheels , may be seen as necessary to deploy depending on a person’s circumstances, and all combine into a living situation that is aimed at being more generally beneficial for someone seeking to age in their own home. AIP is actively seeking more collaborative partners in the health care sector, owing to unique challenges visited upon older people who may not be able to adequately address their health needs. “Low-income older adults face a higher risk of chronic diseases and disabilities due to limited access to primary care and a greater likelihood of living in substandard, deteriorating housing,” Raponi added. A recent study from Carewell suggested that many older adults see aging in place as a financial necessity considering the costs of other kinds of living arrangements older people may choose. Nearly half of respondents (47%) characterized aging in place as both a preference and a financial necessity in tandem.

Is it time to prequalify for a mortgage now

By Didier Malagies • January 20, 2025

1. Assess Your Financial Health Credit Score: Check your credit score (usually 620 or higher is required, though higher scores get better rates). Debt-to-Income Ratio (DTI): Calculate your monthly debt payments compared to your gross monthly income (lenders typically prefer a DTI below 43%). Savings: Ensure you have enough for a down payment (typically 3-20%) and closing costs. 2. Gather Financial Information Lenders will need the following: Proof of income (pay stubs, tax returns, W-2s/1099s). List of assets (savings, investments, retirement accounts). Details of current debts (credit card balances, student loans, etc.). 3. Choose a Lender Research different lenders, including banks, credit unions, and online lenders. Compare prequalification options (many allow online applications). 4. Complete the Prequalification Process Fill out the lender’s prequalification form (online, over the phone, or in person). Provide basic details about your income, debts, and assets. 5. Review Prequalification Results The lender will give you an estimate of the loan amount and potential interest rate. Remember, prequalification is not a guarantee of approval and doesn’t involve a hard credit inquiry. 6. Follow Up with Preapproval If you’re serious about buying, consider getting preapproved, which involves a more in-depth review and is stronger than prequalification. Tips: Use online calculators to estimate affordability before reaching out to lenders. Avoid large purchases or opening new lines of credit during the prequalification and preapproval process. Would you like details on specific lenders or tools to compare mortgage options? tune in and learn at https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

USA Today: If Social Security falters, reverse mortgages could be worth a look

By Didier Malagies • January 13, 2025

Many retirees have said they rely largely — and sometimes entirely — on Social Security benefits as their primary income stream in retirement . But in instances where these payments may not be enough to make ends meet, other options should be considered — and in the right situation, a reverse mortgage could be one such option. That’s according to a column published this week by USA Today , which assessed reverse mortgages in tandem with options such as personal savings, a part-time job and other benefits programs. “A reverse mortgage is a possibility for seniors with substantial equity in their homes,” the column stated. “It essentially enables you to borrow against your equity, and you aren’t required to make any payments while you’re still alive as long as you live in the house.” The column is likely referencing the Home Equity Conversion Mortgage ( HECM ) program insured by the Federal Housing Administration (FHA). Loan proceeds are dependent on the amount of equity in the home and current interest rates, the column noted, and there are multiple disbursement options available, the column noted. The minimum age requirement of 62, a core tenet of the HECM program, was also mentioned. “There are closing costs and other fees, and you’ll still be responsible for maintaining the property and paying the property taxes and homeowners insurance,” the column noted. It characterized the loan as a “solid option” for those who have few other assets beyond their homes, adding that “it might not be the right move if you intend to pass the property on to your heirs someday. After you pass away or move out of the home, you or your estate will have to repay the loan. This will reduce how much your heirs receive.” Recent survey data from Clever Real Estate highlighted some realities of relying on Social Security benefits in retirement. Roughly one in five respondents in the 1,000-person survey said they rely exclusively on Social Security benefits as their sole income stream in retirement, with nearly 30% saying they believed they would be able to rely on them. Last year, data from Nationwide suggested that an increasing number of older investors believe that retiring at the age of 65 is no longer a realistic option . This is largely tied to higher levels of stress they’re feeling about the economy and the cost of living.