Zillow said labor and supply issues in the market have created an “operational backlog for renovations and closings.” The pause will enable the company to catch up on its existing contracts.
The company acquired more than 3,800 homes during the second quarter, following an expansion of the Zillow Offers program in 2018, but today, can’t work quickly enough to satisfy an insatiable demand from consumers.
The pause will last at least through the end of 2021 while Zillow works through its backlog of properties that already have contracts signed and require any renovations. During this time period, Zillow will keep marketing and selling homes through Zillow Offers.
“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” Zillow Chief Operating Officer Jeremy Wacksman said in a statement. “We have not been exempt from these market and capacity issues and we now have an operational backlog for renovations and closings. Pausing new contracts will enable us to focus on sellers already under contract with us and our current home inventory.”
Prospective sellers who might have worked with Zillow Offers will instead be connected with a local Zillow Premier Agent partner.
Following the news, Zillow shares were down more than 6 percent in premarket trading on Monday. As of last Friday’s close, stock had declined 31 percent in the year to date.
Given the company’s market power and huge amounts of data at hand, it has the ability to essentially plan out its inventory and acquisitions in advance, and speed up or slow down business as needed, Inman Contributor Mike DelPrete told the Wall Street Journal. Therefore, the announcement, which covers all Zillow markets, is a bit surprising.
No other major iBuyers have made any similar announcement to halt purchasing homes this year so far. In fact, iBuyer Opendoor reached out to Inman directly to confirm they are still continuing to acquire homes.
“We know how important certainty and convenience are to homeowners seeking to move and we’ve worked hard over the past seven years to ensure we can continue to deliver our experience at scale,” a spokesperson for Opendoor said in a statement emailed to Inman. “Opendoor is open for business and continues to scale and grow.”
Update: This story was updated after publication with a statement from Opendoor.