Analyst: Zillow is exiting iBuying – here are five key takeaways

Analyst: Zillow is exiting iBuying – here are five key takeaways

Zillow as a Power Buyer — either through organic development, partnership, or acquisition — is a natural extension to its existing business of helping home buyers. The world of real estate has evolved significantly since 2018, and Zillow needs to stay relevant to those evolving consumer needs.

Opendoor’s Pyrrhic Victory?

With Zillow’s exit, Opendoor is left as the undisputed iBuying champion. But is it a battle worth winning? Zillow’s exit is a mixed blessing for Opendoor, and puts the spotlight on Opendoor’s path to profitability.

On the one hand, Zillow’s absence from the market will relieve some competitive tension, allowing Opendoor to make slightly lower offers and charge slightly higher fees. There should be a small, positive effect on margins (which Opendoor needs more than ever).

But on the other hand, Opendoor is now going it alone, no longer able to piggyback off Zillow’s consumer education efforts (advertising) in new and existing markets.

Opendoor has thrived in a high home price appreciation (HPA) market, driving gross margins to record highs. But with HPA dropping, what will happen to Opendoor’s gross margins? Will it “make it up in volume,” or will losses compound as it scales?

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About the Author

Kassie Hoffman
Kassie pens down all the news from the world of politics on ANH.