Zillow Shuts Down Home Buying Business, to be Investigated for Securities Fraud

Zillow announced it will be closing down Offers, its homebuying unit and reducing its workforce while it is also the subject of securities fraud investigation.

Zillow said it wanted to sell about 7,000 homes worth $2.8 billion after apparently buying too many and blaming labor shortages.

Compared to other home buying platforms, Zillow buys and sells houses with Offers instead of acting as real estate agents to post listings.

Zillow is also planning on reducing its workforce by 25% or around 2000 people in tandem with their downsizing.

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,” said Zillow Group co-founder and CEO Rich Barton.

Zillow added it suspend new offers in its home-flipping operation for the rest of the year but would continue to close on properties that were already under contract.

Kaplan Fox & Kilsheimer LLP is also investigating Zillow on behalf of its investors for possible securities fraud.

As a result of the Offers closure and investigation, Zillow shares dropped as much as 11% to $76.22 in late trading.

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