Finally Some Good News for Zillow! Homes Sell-off Going Well and Company to Buy Back $750m Worth of Shares

December 3, 2021
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Zillow has been taking a battering recently. Since revealing its decision to wind down its iBuying business along with a set of disappointing quarterly figures in early November, Zillow has taken a pasting on Wall St and in the press and now has lawsuits and competitors circling overhead.

The Seattle based company experienced some overdue good news today though as it released a statement announcing that its Board of Directors has authorized the repurchase of up to $750 million worth of stock and that its efforts to sell off owned housing inventory are going well.

On announcing the wind-down of its iBuying 'Offers' service, the company committed to selling off an estimated 18,000 homes that it either owned already or had entered into an agreement to buy. Zillow's efforts to sell off the properties that have been burdening its balance sheet have not been without controversies.

Rumoured plans to sell as many as 2,000 homes in bulk to institutional investors such as Pretium have caused a stir in the media and the news that Zillow was set to back out of some purchase contracts it signed and leave some movers in the lurch have also been covered negatively in the press.

Yesterday evening's missive from company executives sparked a very welcome mini-revival of Zillow's share price as its stock rose around 8% to a price of $58 per share in after-hours trading with investors welcoming the news that over half of the company-owned homes have been sold or have agreements.

"We are pleased with the progress of our wind-down efforts and recognize that no longer operating Zillow Offers will allow us to have a more capital-efficient balance sheet and business moving forward," said Zillow Group co-founder and CEO Rich Barton. "With that, we see today as an opportune time to announce a share repurchase program and reduce the cash balance we built up to support Zillow Offers."

In terms of the financial implications of the operation to sell off its housing inventory, Zillow expects the net impact to be at least cash-flow neutral, including after repaying all Zillow Offers secured debt, which was $2.9 billion at the end of September.

"We are pleased with the significant Zillow Offers inventory wind-down progress we've made in such a short time," said Zillow Group CFO Allen Parker. "We will continue to be disciplined in our inventory wind-down strategy and evaluate a variety of options to best optimize net cash flows to the company."

According to a report this week by alternative buyer marketplace Zavvie, iBuyers have never been bigger despite Zillow leaving the market. Although the share prices of both Opendoor and Offerpad currently sit at historic lows with Wall St investors spooked out of iBuying by Zillow's exit, it does seem that at the very least Zillow's failure has led to greater awareness of iBuying as an alternative with many more consumers googling the term since the news broke:

December 3, 2021
Edmund got to know the world of portals and marketplaces working at Mitula Group (which became Lifull Connect after the buyout in 2018). He worked directly with hundreds of portals across the world in his role in the content department for three and a half years before transferring to the SEO department to understand the inner workings of listings sites. He joined Online Marketplaces as Head of Content in March 2020.

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