Zillow REAL ESTATE

Oct 7

Written By

2018-2021

Zillow is a large real estate marketplace in the USA. With their iBuying program the goal was to become the "Amazon of homes" by using AI to buy and resell properties quickly. The service relied on Zillow's famous Zestimate algorithm to predict home values and make cash offers. The business model relied on the company's ability to buy homes quickly, make minor renovations, and then sell them for a profit

The AI was trained on a relatively stable market, but it couldn't keep up with the chaotic real estate boom of the pandemic. While the market was cooling down, Zillow’s algorithm was still aggressively overvaluing properties.

This resulted in Zillow overpaying for thousands of homes as the market cooled down.

The flawed algorithm and operational issues led to Zillow shutting down the program Zillow Offers on November 2021. The company laid off 25% of its workforce and reported a staggering loss of over $500 million.