The supply chain challenges that are straining the housing market are having the same effect on iBuying giant Zillow.
The real estate platform announced on Oct. 18 that its home-flipping business, Zillow Offers, will be taking a break from signing new contracts as the company addresses a backlog of its properties still in its renovation pipeline.
“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” said Jeremy Wacksman, Zillow’s chief operating officer, in a statement.
According to Wacksman, Zillow hasn’t been exempt from the mix of challenges straining home builders and real estate professionals over the past couple of years.
“We now have an operational backlog for renovations and closings,” he continued. “Pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory.”
While Zillow plans to halt new acquisitions for at least the rest of 2021, the company noted that it would continue purchasing homes that already have signed contracts but haven’t closed yet.
Zillow Offers lets homeowners sell without having to coordinate repairs or host open houses or showings. After buying the home, Zillow prepares it for sale by doing the same type of projects a typical seller would, then lists it on the open market.
According to reports from Wall Street Journal, the real estate platform acquired more than 3,800 homes in the second quarter, after expanding into the home-flipping business in 2018 through its Zillow Offers unit.
While Zillow addresses its backlog, the company also said it would connect prospective sellers from Zillow Offers with a local Premier Agent partner.
As Zillow sorts things out with its backlog of properties, Wall Street Journal reports indicate that the pause may prove to be a boon for the company’s iBuying rivals.
A recent statement from Opendoor following Zillow’s announcement insists that the company is still “open for business and continues to scale and grow.”
“We know how important certainty and convenience are to homeowners seeking to move, and we’ve worked hard over the past seven years to ensure we can continue to deliver our experience at scale,” said an Opendoor spokesperson.
A Redfin spokesperson echoed similar sentiments, adding that RedfinNow, its iBuying business, continues to make offers in all 29 of its markets as the company moves forward with expansion plans.
“We are confident in our ability to meet demand from our customers who want a convenient and flexible home-selling option, despite challenges with the construction labor market and supply chain,” said a Redfin spokesperson. “We’re building our iBuying business in the same methodical way we’ve grown our brokerage over the past 15 years, focusing on sustainable expansion, financial discipline and great customer service.
This is a developing story. Stay tuned to RISMedia for updates.
Jordan Grice is RISMedia’s associate online editor. Email him your real estate news to firstname.lastname@example.org.
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