Zillow Selling Off more Houses to Controversial Institutional Investor, Reports

According to Bloomberg News, Zillow has sold off more of the housing stock that it was left with after exiting iBuying late last year.

Citing sources familiar with the matter, Bloomberg reported on Friday that Wall St investor Pretium Partners recently bought some 800 properties from Zillow for around $300 million and has agreed to purchase 400 more for roughly $150 million.

In a letter to shareholders accompanying Zillow's Q4 earnings report last week, CEO Rich Barton said that the company's efforts to sell off the residual housing stock on Zillow's books was progressing "faster than we anticipated at better unit economics than we projected".

Although selling off houses that the company bought or agreed to buy when it was still trying to scale its iBuying division to institutional investors such as Pretium might be beneficial for Zillow on a business level, there are negative PR consequences.

As the likes of iBuying expert Mike DelPrete and others have pointed out, many of the institutional investors looking to buy houses at scale from iBuyers such as Zillow and Opendoor are doing so with the intention of using them as rental cash-cows. Such a practice is not only viewed in a negative light because of the affordability crisis and lack of housing inventory on the US market currently but also because of some of the accusations levelled at Pretium.

Zillow has long cultivated an image of a fair housing champion, regularly publishing research on housing inequality and sponsoring programming events for Historically Black Colleges and Universities among other efforts. Pretium Partners has been accused by Non-Profit Organizations of disproportionately evicting tenants in majority-black areas and as such the association might be uncomfortable for the Seattle based portal company.

Both Zillow and Pretium declined requests to comment from Reuters and Bloomberg.