https://www.bizjournals.com/atlanta/news/2022/02/09/zillow-layoffs-atlanta-offers.html
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Zillow is cutting dozens of Atlanta jobs as the company shutters its Zillow Offers "iBuyer" business.
Seattle-based Zillow Group Inc. (Nasdaq: ZG) will eliminate 46 Atlanta-based jobs, according to a Worker Adjustment, Retraining and Notification (WARN) Act notice submitted to the Georgia Department of Labor. A Zillow spokesperson said that the company submitted additional WARN notices to the labor department, adding two jobs to that tally.
The layoffs began on Jan. 3 and will "wind down over the course of 2022," Zillow Manager of People Operations Emily Merritt said in a Jan. 27 letter addressed to DOL Rapid Response Supervisor Crystal Davis, Dunwoody Mayor Lynn Deutsch and DeKalb County CEO Michael Thurmond.
It is unclear what percentage of Zillow's Atlanta workforce the layoffs represent. Laid off employees will receive severance packages, according to the spokesperson.
"We intend to make the transition as smooth as possible for everyone affected," Zillow said in a statement provided to the Atlanta Business Chronicle. "Employees are receiving a severance package that includes at least 10 weeks of pay, six months of benefit costs covered, the value of their next stock vesting paid directly to them, and outplacement services."
Companies that use the iBuyer model deploy an in-house algorithm to determine the values of homes. They then submit cash offers and renovate homes they purchase before listing them for sale again. In essence, iBuyers are algorithmic home flippers.
Zillow revealed in November that it would exit the iBuyer market and lay off 25% of its employees. The company decided to close down Zillow Offers because of "our comfort level stomaching those swings" in the volatile housing market that emerged amid the coronavirus pandemic, Senior Manager of Data Public Relations Matt Kreamer told Atlanta Business Chronicle at the time.
Early in 2021, Zillow Offers underpaid for the homes it planned to flip. But as the year continued, it overpaid more and more. As a result, Zillow Offers lost $245 million in the third quarter of 2021. That was an average of $80,000 per home it flipped.
Zillow's Atlanta office is at Three Ravinia Drive, the city of Dunwoody's largest office tower. The tower is near the State Farm office complex and Perimeter Mall.
Zillow announced plans for a major expansion in metro Atlanta in August 2020 and said the local office would become its Southeastern hub. It announced 200 new jobs as part of the expansion.
The majority of the jobs announced were intended to support Zillow Offers, Zillow said at the time.
Though Zillow's iBuying business proved to be a failure, its competitors remain bullish on the industry.
Atlanta was the largest market for iBuying across the United States in the first half of last year, according to research published by Zillow in September. Zillow Offers and its three largest competitors sold nearly 3,000 homes through iBuying locally during that time, at a median price of $275,000.
Because of their relatively newer and, therefore, more consistent housing stock, SunBelt markets tend to be better suited for iBuying. The typical renovation in these markets is less expensive compared to Northern and Midwestern locales with older housing stock.
Zillow competitors Offerpad LLC and Opendoor Technologies Inc. (Nasdaq: OPEN) launched in Atlanta in 2017. Redfin Corp. (Nasdaq: RDFN) joined the local market with its RedfinNow iBuyer service last September.
After Zillow announced the closure of Zillow Offers, an Opendoor spokesperson told Atlanta Business Chronicle that the company uses a "unique" algorithm that allows it to "proactively adjust our pricing, renovating, and selling process through changing market conditions."
"We believe iBuying will continue to grow and shape the future of real estate," the spokesperson said.