Zillow has been working to sell thousands of homes as it exits the house-flipping business, it and just made a big bulk deal to jump-start the process.
The Seattle-based listing giant struck an agreement to sell 2,000 of the homes from its failed iBuyer business to New York City investment firm Pretium Partners, according to a report Wednesday in The Wall Street Journal.
Pretium Partners intends to rent these homes out as part of its portfolio of 70,000 single-family properties, the newspaper reports, citing “people familiar with the matter.”
The Wall Street Journal reports that other large rental-home investors have expressed interest in Zillow’s inventory. At the end of September, the company had 9,790 homes in its inventory. It was also under contract to buy another 8,172 homes, bringing the total number it needed to sell to roughly 18,000.
The properties span 20 home markets throughout the U.S. Pretium’s business model focuses on renting out homes to families in cities with hot housing markets, where homeownership has grown just out of reach for many potential buyers.
“We continue to invest in communities and improve access to housing throughout the U.S.,” a Pretium spokesperson told the Journal.
The listing portal’s home-flipping business, Zillow Offers, was shuttered last week after the company made more purchases than intended and at high market prices. Homes were sitting on the market for longer and starting to sell for a loss more often.
The intent was to gain market share over the company’s iBuyer rivals, such as Opendoor, Offerpad and RedfinNow. But Zillow suffered heavy financial losses in the process, including $422 million between July and September from its Homes division alone.
The company expects further losses totaling roughly $250 million in the fourth quarter of the year, due to its commitment to purchase the remaining homes it has under contract.
As part of the wind-down, Zillow also announced plans last week to lay off 25 percent of its staff. A spokesperson for Zillow did not immediately reply to a request for comment from Inman.