ZillowOffers, Zillow Group’s iBuyer buying/selling house flipping aspect of its business is “just the beginning,” according to Zillow’s CEO Richard Barton. “We dream one day of you having an almost trade-in experience with your house,” Barton told CNBC’s The Source.
So how does a house flipping business transform itself into “…a trade-in experience with your house” when its internet, media and technology business remains operationally unprofitable?
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Zillow has been investing in businesses such as mortgage services and escrow and title services (and now testing closing services) as well as its iBuyer business in order to create an integrated home buying digital platform. Such a digital platform with such comprehensive financial information concerning a consumer transforms this digital platform into a most powerful instrument that has the potential to facilitate, compromise and/or predict a consumer’s buying and/or selling actions.
Barton’s words in an interview with CNBC’s The Closing Bell confirm such potential. “We know who you are and where you live. We already have a mortgage ready to go. We have an offer ready for your house when you’re ready to transact and you, with one click, can decide to move.”
With all these “complementary” sectors of its overall business, how is the Zillow Group doing? As a publicly traded company, Zillow’s shares were up approximately +25% year-to-date in Q3 2019. The company posted better-than-expected Q3 revenues, thanks to ZillowOffers. Zillow’s revenues came in at $745.2M, an increase of +117% when compared with Q3 2018.
Zillow Homes generated $384.6M in revenue and a loss of $87M before income taxes. (The company overall posted a net loss of $64.65M in Q3 2019.) The returns on the 1,211 homes sold and 2,291 homes bought after interest expenses came in at ($5,844,000) or ($4,826 per house.) The company’s expectations for Q4 2019 include total revenue of $790M-$825M with $465M-$490M coming from its Homes Segment and a loss of $25M-$43M in Q4.
ZillowOffers currently operates in 21 markets with expansion plans in 2020 for Los Angeles (in Q4 2019), Tucson, Oklahoma City, Cincinnati and Jacksonville.
Barton is nothing if not optimistic. He closed his interview with CNBC’s The Closing Bell by saying, “…there is a technology disruption happening and we’ve got to be the ones to build the bridge across the chasm…our customers are demanding that e-commerce actively come to the real estate market and transform the transaction. Zillow 2.0 is about revolutionizing that transaction.”
Thanks to CNBC’s Kevin Stankiewiez and GeekWire’s Taylor Soper for source data.