Hey, listen, I’m sitting there watching the Braves game last night, and all of a sudden my phone starts blowing with all this news coming across the line with Zillow, all this information about Zillow. And I thought it was pretty interesting. I kind of like blew it off ’cause I was really just getting ready for the game and I didn’t really want to get all that distracted with it. So this morning when I got up and I actually started looking at my phone and reading the articles, major news about Zillow that actually hit the line, and it’s important for everybody to understand what’s going on. Those in the real estate industry like myself and the other agents, but the general community. Really, really big news. So what was it? So Zillow is laying off 25% of their workforce. Zillow is writing down half a billion-dollar…
Okay, let me back up just a little bit for the general public, just to let you know. Zillow, historically, has always been a marketing company. It’s a marketing platform, it is not a real estate company. And about a year and a half, two years ago, they decided to go ahead and become a real estate company and try and change their identity and transition from being a marketing company into being a real estate company, basically replacing agents. So what we have all been working for and large real estate companies that have been working for years and building, Zillow decided to go ahead and think that they were going to go ahead and replace us in a very short period of time.
It was a major fail and it all came together yesterday when they came out and basically gave us the news. We heard a little bit of a hint of this earlier this week when they decided they came out with news that said they were going to halt all buying of properties until the end of the year because they couldn’t find resources in order to renovate the properties that they had. A lot of us were very skeptical about that. We didn’t really think that that was accurate, and sure enough, as of yesterday, we’re finding out exactly what’s going on and that is that they are buying properties and they’ve been buying properties for way too much money and now they are underwater with them.
So the result of all of this that is transitioning is that they’re laying off 25% of their workforce, feel awful for those folks, they’re writing down almost half a billion dollars in assets. They’re unloading 7,000 homes in the United States, that’s across the board. 7,000 homes that they are unloading. They are projecting that at least 66% of those homes they bought and are underwater with So what they had been hoping for by using their logarithm, the general public knows it as the Zestimate, which agents and people in the real estate industry have been banging our head against the wall, trying to explain to folks that the Zestimate is not accurate. We’ve been battling that for years. Zillow decided to rely on that Zestimate and actually went out and bought a bunch of homes in the market based on the logarithm that they use for the Zestimate. Well, guess what? The local real estate agents in the area were right, Zillow was wrong. And what the result of that is, is Zillow now has 7,000 homes that they have in their inventory that they paid too much money for and they are underwater. The projection that I read, and I can’t verify this, but they’re saying that the average value they are underwater on is 15% for each of their homes. So that’s pretty dang big. So Zillow is really taking it on the chin. This is really going to hurt their, obviously, their goals of actually replacing the local real estate agents and the real estate companies in your local area. So very, very interesting times.
Okay, let me kind of explain what all this stuff means for the general public, and then I want to talk to my agent friends out there as well. The general public. Let me tell you what this is not, this is not a crash. I’ve seen a couple of little blips that have come up here and there and there said, “Oh, they’re doing this because of the crash,” that is not the case at all. The case is that Zillow has been overpaying for homes for quite some time. Everybody that’s been in the industry has seen it. We’ve all been shaking our heads, trying to figure out what the heck they’re doing. They’re making money on the back end through depreciation channels and all this other good stuff, that may be the case. But the bottom line is, they made a major mistake in miscalculating this market. They made a major mistake in trying to transition from a marketing company to a real estate company and relying on this logarithm, their Zestimate, that they’ve been relying on for years. That’s truly what’s happening. All the other fundamental elements as it relates to real estate are solid, we are good to go. The great news is, we’re going to have 7,000 homes that are going to be dumped on the market for the general public. We’re hoping the general public will be able to actually buy.
Remember, Zillow has been going out there and grabbing a lot of our inventory, which is taking that inventory away from you, the consumer, who’s been trying to buy a house. So that’s going to be gone, we’re not going to have that competition. We’re hoping they do not dump these properties off to large investment companies that are out there. I’ve heard of some rumors out there that that may be what they’re doing, if they do, it may be a fire sale, because these large investment firms are going to buy those up for pennies on the dollar, I can see it already. But eventually, those firms hopefully are going to put those back on the market. So that’s what we’re hoping to do. But what it’s not is a crash, it has nothing to do with a crash. What this is is just a miscalculation on Zillow’s part, big time, by trying to replace the local real estate agent. All right, so that’s what’s going on. I encourage everybody to understand these big companies, they’re not local. Rely on your local agent and your local brokerage to give you the best advice on what’s going on here locally. When you engage us and you hire us locally, the money that we receive from you in commissions stays right here in the community. I can not express that enough. It’s not going off to Seattle or out of state or anywhere else where these big companies are located. It’s staying right here. We invest our dollars right back here in our local community, which we are passionate about. So hire a local agent. They’re going to be your absolute best bet and your absolute best advocate moving forward.
Okay, that’s for the general public. Agent friends, you already know what’s going to happen, right? You know that Zillow is going to come back and crawl back to us and want to start getting in business with us again after they just tried to get rid of us six months ago. Remember, they were selling us our data back for a long time, then they just disregarded us and put that whole program, the premier agent program thing was a disaster and they just threw us off to the wayside and they were going to replace us. Well, you know they’re going to come back and ask us, “Oh, sorry, sorry about that, we really didn’t mean to do that.” So it is up to us, we’ve got a great opportunity to tell these guys, “Absolutely not.” We’re not going to do that, right? Please tell me we’re not going to do that. All right, so I just wanted to make sure that I expressed that to folks. This is a great opportunity for us to take our market share back, to serve our community better than any outside company can do. We are the local experts, let’s be the local experts, it’s our data, it’s our information, this is our market, and our clients. So I am begging you, please don’t crawl back to Zillow and think that they’re going to treat you right the next time around, all right? So sorry about being so passionate about this but this has been something that’s been on my mind for quite some time. So huge news. Make sure you share this everywhere, and hey, go Braves! Proud of you guys and everybody have a great day. Thanks.