Property listing websites have long been hot property themselves as getting people to browse pictures of homes they can, or (even better) can't afford, has turned out to be a hugely lucrative venture.
The business model for property sites is usually pretty straightforward, with some combination of advertising, marketing and commission fees keeping the website lights on. For years, those kinds of services turned Zillow into a billion dollar business, and the largest property site in the US. Then, a few years ago, Zillow decided it wanted to get into a new line of business — house flipping.
Huge scale house flipping
Armed with more data than probably any other institution has ever had on homes in the US, Zillow began buying homes in 2018, hoping to make modest renovations and sell the houses on later for a higher price — a classic house flipping technique more common with individuals who have watched too many home renovating TV shows.
Last week Zillow gave an update on its home flipping side hustle, revealing that they had bought more than 3,800 homes in the last 3 months, as well as detailing what they spent, and made, on a typical transaction. According to Zillow the company spent an average of $322k on each home, spent $10k renovating it, $16k on selling, marketing and holding costs and sold each home for $370k — profiting just over $20k per home.
So if Zillow wants to buy your house, ask for a bit more.
