Inside Zillow's housing market play: Over 30,000 homes acquired, 5,000 sold to institutional buyers

In a sprawling desert community just seven miles southwest of the Las Vegas Strip, Zillow closed a sale on a 4-bedroom home at 7456 Grizzly Giant Street on October 12, 2021. Just five days later, on October 17, 2021, Zillow paused its iBuyer program, and on November 2, 2021, it shuttered the program altogether.

Not long afterward, sources told me that Zillow was selling many of the homes from their books to institutional homebuyers. However, until today, the final figures haven’t been reported.

To find out how many of these homes Zillow sold to large single-family landlords, ResiClub reached out to SFR Analytics, a residential real estate analytics firm.

We found that Zillow closed 32,292 home sales between January 2019 and March 2022. Zillow sold 5,013 of those homes to institutional homebuyers, with the majority of the sales occurring after Zillow announced it would shutter its iBuying business.

Those institutional sales included the 4-bedroom home at 7456 Grizzly Giant Street. Zillow bought it for $381,614, only to sell it two months later to an LLC owned by Pretium Partners for $354,053. It was part of a portfolio sale that totaled over $4 million.

Among the 5,013 sales from Zillow directly to institutional buyers, 86% (4,319 homes) occurred between October 2021 and April 2022, according to SFR Analytics.

In other words, most of the Zillow sales to institutional buyers occurred as the listing giant was exiting the program.

Of the 32,292 homes bought by Zillow, 15.5% were sold to institutional buyers.

By comparison, according to John Burns Research & Consulting, institutional homebuyers—those owning at least 1,000 homes—made up 2.4% of home sales at the peak of the Pandemic Housing Boom in Q2 2022. That figure decelerated to 0.4% of home sales in Q2 2023 after spiked mortgage rates coincided with an institutional pullback.

Among the 5,013 homes Zillow sold to institutional homebuyers, 3,294 went to Pretium Partners, which formed its single-family rental platform Progress Residential in 2012.

Pretium was followed by Tricon (which bought 639 homes from Zillow) and My Community Homes (which bought 359 homes from Zillow).

After finding success with its pilot home flipping business in Phoenix and Las Vegas, the real estate listing site took the program, known as Zillow Offers, nationwide in 2018. At the time, Zillow CEO Rich Barton, told investors within three to five years the home flipping business could bring in up to $20 billion in annual revenue for Zillow.

Of course, it didn't go as planned, as Zillow lost $881 million on home flipping in 2021 alone.

What went wrong for Zillow Offers?

When I spoke to Zillow COO Jeremy Wacksman in May 2022, he told me they closed Zillow Offers because:

1. iBuying is a risky business

2. Zillow wasn’t doing a great job predicting the market/prices

3. Zillow executives decided the capital requirements/risk were too high

Wacksman told me in 2022 that Zillow Offers could only be profitable, and worth the capital risks, if done on a massive scale, and even then, it’s a low margin business. Wacksman told me “the thesis of [Zillow’s] ibuying is that you can automate transactions so efficiently that you can cover the fixed cost required to run that operation, which requires a lot of technology, a lot of data, a lot of automation, and again, a lot of capital.” Ironically, the algorithm that was supposed to give Zillow a competitive advantage is one reason the operation sank.

"It’s a part of business. You’re going to take some big swings. Some work out, some don’t,” Zillow president Susan Daimler told me in May 2022.

While Zillow shuttered its iBuyer program in late 2021, it still maintains a small presence in the iBuyer space.

Zillow and Opendoor Technologies announced in February 2023 that they would pilot offerings for homeowners in Atlanta and Raleigh, allowing them on Zillow.com to request an iBuyer cash offer from Opendoor. That program was expanded to another 43 markets in October 2023.

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