Zillow Group Inc. (NASDAQ: Z) has agreed to about 2,000 homes from its unsuccessful iBuying program Zillow Offers to Pretium Partners, a New York City-based investment firm.
What Happened: According to a Wall Street Journal report sourced from unnamed “people familiar with the matter,” the transaction involves Zillow homes in 20 markets, which Pretium Partners intends to turn into rentals.
Zillow is seeking to approximately 9,800 homes that it currently owns and another 8,200 it’s in the process of buying. The unnamed sources claim Zillow is receiving market price for the properties, resulting in losses between 5% and 7% on these sales.
See Also: Why Zillow Homebuying Halt ‘Might Be Beneficial’ In The Near-Term
Why It Happened: Zillow announced last week it was ending the Zillow Offers program, which purchased residential properties with the goal of flipping them for a higher price, stating that it has become too difficult to predict future home values. The company expects to absorb more than $500 million in losses from the program and plans to play off one-quarter of its workforce.
Pretium, which owns around 70,000 single-family homes, is taking advantage of the increased demand for rental housing with its acquisition. A spokesperson for the company told the Journal, “We continue to invest in communities and improve access to housing throughout the U.S.”
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