When Exploiting Home Buyers Backfires...Zillow Loses Big

In 2021, Zillow went allin on “iBuying,” pouring billions into Zillow Offers with the goal of hitting $20 billion in revenue by buying and flipping tens of thousands of homes each quarter. What began as a modest pilot—686 homes and a $27 million loss—quickly morphed into a frenetic push to acquire up to 15,000 houses per quarter. In the rush, Zillow removed human oversight, trusting an overaggressive pricing algorithm that paid 10–20% above market and triggered a destructive feedback loop that inflated valuations and losses alike. When the housing market cooled and mortgage rates climbed, Zillow was stuck holding inventory it couldn’t sell without steep discounts. By mid2021, they were buying nearly 10,000 homes per quarter but only selling around 3,000, culminating in an $881 million loss on Offers and a $528 million net loss for the company. In November 2021, Zillow shuttered the program and cut 25% of its workforce. This video explores how aggressive targets, blind automation, and poor timing combined to create one of the costliest misplays in corporate history—and what every investor and tech disruptor should learn from Zillow’s fall

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Timestamps:

0:00Zillow Loses Big

0:32Scaling Fast

5:08Blind Trust

8:11Bad Place, Bad Time

Resources:

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This video is not a solicitation or personal financial advice. All investing involves risk. Please do your own research.

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Logically Answered is centered around explaining the economics of tech and social media. These sectors are generally analyzed through the lenses of finance and economics to determine which industries and companies will thrive and which will fall. In addition to this analysis, the content is often focused on the stories of various famous entrepreneurs such as Elon Musk, Steve Jobs, and Jeff Bezos. Logically Answered also cover the rise and fall of several interesting companies and services that we come across on a daytoday basis. There have been so many companies that have risen to fame and then died out in a single generation. The most interesting companies are the ones that were able to save themselves and avoid bankruptcy. Feel free to follow the podcast if you would like to see any of these topics Logically Answered.Find Logically Answered on YouTube: https://www.youtube.com/@LogicallyAnswered/Disclaimer: This podcast is an independently created audio adaptation of content originally published by Logically Answered. This is a fan made podcast that appreciates the channel’s insightful approach to knowledge and aims to make it accessible to those who prefer listening over watching. This podcast is not affiliated with, endorsed by, or officially connected to Logically Answered in any way. All rights to the original content belong to Logically Answered. If you have any concerns, please reach out.