The Tech Stops Here

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Proptech innovations may have started in basements but today, they sure are up to the penthouses of the real estate sector. Despite the leap, there are some things only a human can be trusted with - home valuations. 

Context, Please

Real estate giant Zillow recently announced that it would stop flipping houses for the remainder of 2021. 

FYI, flipping, akin to turning over an omelette on the pan, refers to buying a house for X, doing some repairs or changes if needed and on a better day, selling it at a higher price, say 1.25X, turning a quick profit. 

For the past 3 years, Zillow has been flipping houses using an automated process known as iBuying. 

In iBuying, you can enter all the needed information about your property online, then a proprietary algorithm chews through the property data and makes a financial offer to you in as less as 24 hours.

Can't See The Problem

Actually, there is one. iBuying, with all the tech and big data powering it, is still not a fully automated process, and that’s where Zillow is in a soup. 

The firms that do the iBuying engage a representative to physically inspect the property and do a gut check on the offer. But Zillow says it doesn’t have enough manpower and thus can’t add any new houses on top of its current backlog. 

For perspective, Zillow’s house-flipping unit accounted for more than half of it’s revenue last year and it bought 3,805 homes in Q2, 2021, the highest till date. 

That's A Big Loss

Not for the competition though. Opendoor, another such company is grinning like a race car driver whose opponent's engine failed on the start line. 

Now under which tag should we file this blurb? Proptech? 😶