We all know Redfin and Zillow as two online home-buying giants. Last year, Zillow closed its home-flipping venture after it completely failed on a massive scale. It looks like Redfin is right behind them.
iBuying, or the practice of online companies buying homes and flipping them for a profit, seemed like a good deal. How many of us on a daily basis drive down the street and see signs that say they will buy your ramshackle home for big money? Those people will just fix it up and sell it for more. So why wouldn’t online home-buying companies want to do the same?
Well, they tried and ultimately failed. In Redfin’s case, it’s no longer worth the “money and risk”. Vice even reported that the company expects to lose 22 million this year from the project alone.
That’s not the only financial red flag the company is dealing with. During the last year, Redfin stock has also dropped 92% and almost a third within the last few weeks. The company is practically hemorrhaging money at this point.
After seeing the timely demise of Zillows’ home flipping project, it was pretty predictable for Redfin to follow suit. Home flipping simply can’t be done on such a large scale and the company would not have survived trying to keep it open. It’s better they have shut RedfinNow (the project in question) down sooner rather than later…when it could have officially sunk the company.
Between the RedfinNow failure and the economic downturn of the housing market, the company has had to let go of 13% of its employees. They don’t currently see another way out of the financial sticky situation.
Over the last few years, public opinion of the two companies has seen its highs and lows. That’s all irrelevant though when a company’s failure causes people to lose their jobs. Just a week of not working can put some folks into financial debt.
I wonder, with all both Redfin and Zillow have lost, if they will be able to finically recover and make it through the inevitable recession headed our way. We will have to wait and see.