That's what eventually led the company to shut down its instant-buying business for good. Given surging prices and high real estate volatility in the last 18 months, it was a tricky undertaking in the first place.Īs homes appreciated at a rapid pace during the COVID-19 pandemic, Zillow's iBuying algorithms consistently and significantly underestimated market changes. Zillow attributed the mishap to its technology, blaming its iBuying algorithms - called "Zestimates" - for inaccurately predicting the values of homes. The company ended up making thousands of above-market offers to homeowners. Sound too good to be true? For Zillow, it was. What went wrong at Zillow?Īs an iBuyer, Zillow relied on these computer calculations to buy houses in decent condition on the cheap, spend minimal capital fixing them up and quickly resell them for a profit.
You'll get an immediate all-cash offer based simply on the algorithm's assessment of your home's data, though the tradeoff is a smaller profit margin. For one, the process is streamlined over the traditional method: You don't have the stress of dealing with a real estate agent, showings or the uncertainty of the market. If you're a homeowner, there may be a benefit to using an iBuyer to sell your home.