According to local press reports from Phoenix Arizona, Zillow's iBuying division is cancelling agreements to buy around 400 homes and throwing the moving plans of many into chaos.
The Phoenix Business Journal reported last week that many contracts Zillow entered into to purchase homes have now been cancelled with owners offered severance packages and left to find alternative buyers. The Seattle based company entered into the contracts before announcing that it was terminating its iBuying 'Offers' program in November.
In July 2020 Zillow entered into an agreement with home builder D.R Horton to promote its iBuying services to people looking to move into the company's new-build homes and it would appear that many of those whose contracts have been cancelled are those waiting to move into new build homes.
The news that Zillow will not be honouring several contracts that it entered into not only leaves many home movers in a difficult situation but also places the company in an awkward position in terms of PR. In November a Zillow spokesperson told, Inman.com that the company would honour its purchase contracts. Several investor lawsuits have already been filed against Zillow and the company may well also have to deal with lawsuits from disgruntled home movers on top of these.
With around 18,000 homes still on the balance sheet, and negative publicity being generated around the possibility of selling homes off in bulk to shady institutional investors, the move by Zillow to cancel those contracts that it still can might well be the most pragmatic decision from a business perspective. The company's share price has tumbled from $203 in February to around $52 as investors bail out of a company whose moonshot appears to have failed.