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Even as it completes divesting itself of Zillow Offers, Zillow Group has found a way back into the iBuying business.
Along with releasing its second-quarter earnings results on Thursday, the Seattle-based online real estate marketplace announced a multiyear partnership with rival Opendoor Technologies Inc. that will allow home sellers on the Zillow platform to request an Opendoor offer to sell their homes. Opendoor, which buys and sells real estate online, makes cash offers for homes.
The announcement took some of the sting out of Zillow Group’s earnings release; the company reported net income of $8 million, or 3 cents per diluted share, in the second quarter, down 50% from $16 million in the first quarter and down 20% from $10 million in the second quarter last year.
Total revenue in the quarter was $1.01 billion, down 76% from $4.26 billion in the first quarter and down 23% from $1.31 billion in the second quarter last year.
Zillow’s earnings are divided into three segments: Homes, Mortgages, and Internet, Media & Technology (IMT). Most of Zillow’s revenue in the quarter was produced by the IMT ($475 million) and Homes ($505 million) segments. The mortgage origination segment saw revenue decline nearly 50%, falling to $29 million from $57 million a year earlier, a result of rising interest rates and shrinking home affordability.
The Homes segment holds the remains of Zillow Offers, the company’s iBuying business that it abruptly shut down last year. Zillow said during an earnings call with analysts on Thursday that it ended June with just 71 homes left in its inventory.
“I’m relieved we are no longer carrying the capital risk of iBuying on our balance sheet,” Zillow Co-Founder and CEO Rich Barton told analysts during a conference call on Thursday.
The partnership with Opendoor, however, allows Zillow a risk-free way to once again offer an iBuying option to its customers. Opendoor, meanwhile, will reap the rewards of Zillow’s popularity and brand recognition.
Zillow said Thursday its mobile apps and websites had 234 million average monthly unique users in the second quarter, up 2% year over year, and that the apps and website had 2.9 billion visits in the quarter, up 5% year over year.
"Zillow is the most visited brand in online real estate,” said Jeremy Wacksman, Zillow’s chief operating officer. “As we bring the housing super app to life, we're empowering our millions of visitors to understand all their options and transact in the way that best meets their housing needs."
He continued, "We know choice is important for customers and they can make the best decision when they see all of their selling options up front — including selling on the open market with a Zillow Premier Agent partner, and getting a cash offer from Opendoor. This exclusive partnership will pair Zillow's audience and brand power with Opendoor's selling solution in one easy place, so customers can evaluate their selling options and easily package it with other Zillow services to buy and finance their next home."
"At Opendoor, we're working to turn what is often viewed as one of life's most stressful moments — the home move — into an e-commerce experience that's simple, certain and fast,” said Opendoor President Andrew Low Ah Kee. “By bringing together Zillow's market-leading audience and Opendoor's e-commerce platform, more consumers will have the option to sell to Opendoor and save themselves the stress and uncertainty of a traditional sale process."
The companies said they are working together to launch the “new product experience” in the coming months.
Zillow did not comment on the recent action by the Federal Trade Commission, which proposed a $62 million fine for Opendoor for misrepresenting its ability to save potential home sellers on how much profit they could realize from using the online home-buying company.