Zillow discovered that innovation costs, as was apparent from its third quarter filing with the SEC.

It seems that so many of the iBuyer platforms are running into the market as long as it stays hot and inventory is on short demand. This past week Zillow reported its earnings to Wall Street, and though revenues were up, profitability seemed to elude them at an even greater pace.

Up until this point Zillow appeared to be building their platform and becoming one of the most powerful forces in real estate, digital and otherwise.

It appears that Zillow’s iBuyer program, also known as Zillow Offers, is putting a lot of financial pressure on the company.

Revenues climbed year-over-year to $745 million, which represents a 117% increase from 2018.

Zillow’s iBuyer program represents an attempt to provide buyers and sellers with a simpler way to purchase and sell a property.

For the third quarter of 2019, Zillow reported a net loss of $64 million, which is a significant increase over the net loss of $292,000 reported for the same time in 2018.

According to Zillow’s filing, the company has lost in excess of $204 million, most of which is attributable to its home buying segment. The company’s total overall loss was $204.15 million, which obviously is a direct result of this leap of faith to create a new model within the real estate market. In a shareholders letter, Zillow identified that the average sale price was $317,610; this compares to the average cost of the house, which was $317,723. Not much margin of profit.

In the third quarter Zillow purchased 2,291 homes and sold 1,211 of them.

In just the third quarter alone, Zillow obtained over 80,000 homeowner requests for an offer. The company has launched in eight new markets, which includes Portland, Nashville, Miami, San Diego, San Antonio and Austin, Texas, Fort Collins and Colorado Springs. By mid 2020 the company is expecting to be offering the iBuyer programs in 26 separate markets.

Obviously the drawing board is going to be revisited by company executives.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

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