Zillow has reportedly taken the first steps in unloading its unprofitable backlog of i-Bought homes. According to the Wall Street Journal, the real estate giant agreed to sell 2,000 homes to rental investment firm Pretium Partners.
After announcing an end to its iBuying business last week ahead of a Q3 earnings call, the company said it would be selling a backlog of 18,000 homes either purchased or under contract, at a likely loss of around $550 million, or 5% to 7% below purchase price per home.
Exactly where and when those homes would go was not clear, though it appears the company will seek to find big institutional buyers for these homes as the Journal reported that Zillow is already in touch with other rental-home investors.
Zillow stock has fallen precipitously over the last week or so as reports simmered that the company’s iBuying arm was in trouble. After reaching a high of $105.72 on Oct. 29, Zillow was trading at around $65 midday Wed., Nov. 10.
Pretium, which holds $30 billion assets focused on real estate, mortgage finance and corporate debt, according to its website, appears to be maneuvering for a larger stake in the home-flipping business. Earlier this month it acquired Anchor Loans, a specialized lender for flippers.
The firm is also under scrutiny for allegedly violating federal eviction protections during the pandemic, failing to cooperate with rental assistance programs and targeting Black renters more often with evictions. Pretium, whose founder and CEO is former Goldman Sachs executive Don Mullen, has denied these allegations.
Other investors considering bids on Zillow-owned homes include Invitation Homes Inc. and American Homes 4 Rent, according to the Journal.