In the last few years, Zillow has reshaped its entire business, moving from a real estate listings website to a company that supports the entire homebuying and selling experience.
And while the company is seeing positive results in terms of growth and revenue generation, Zillow is also experiencing some serious financial growing pains as it expands.
According to the company’s third quarter results, Zillow’s consolidated quarterly revenue more than doubled year over year, growing 117% year over year to $745.2 million.
The company stated that growth was driven by expansion in its Homes segment (which includes the company’s iBuying business, Zillow Offers) and solid performance in the Premier Agent business.
“Our third quarter results were strong, demonstrating that Zillow Group’s business model expansion to mechanize real estate transactions is gaining traction as consumer demand reveals people want a better, simpler way to buy, sell, rent and finance homes,” said Zillow co-founder and CEO Rich Barton.
But, while things may be looking up for Zillow Offers, the program’s costs are exceeding the money coming in, leaving the company operating at a big loss.
In the third quarter, Zillow posted a net loss of $64.6 million, an increase of more than 13,000% from the same time period last year, when the company lost only $492,000.
For the year, Zillow has now lost more than $204 million, compared to a loss of just over $22 million in the first nine months of 2018.
And basically all of that loss is coming from the company’s homebuying expansion.
According to Zillow, its Homes segment has lost approximately $204.2 million, slightly more than the company’s overall loss of $204.15 million.
As Zillow is finding so far, buying, refurbishing and selling houses is a sometimes expensive proposition.
In fact, according to Zillow, the company is losing money every time it buys and sells a house.
According to a letter to shareholders, Zillow’s average cost per house in the third quarter was $317,723. Its average sales price was $113 less, $317,610.
Put simply, Zillow is losing $113 every time it buys and sells a house.
Courtesy HousingWire newsletter
