Zillow Group is expanding beyond its online real estate listings, announcing on Friday that it’s entering the house-flipping business.
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The company said it will buy existing homes in the Las Vegas and Phoenix markets to renovate and later sell them. Zillow told The Wall Street Journal that it aims to flip homes within 90 days, and it plans to have 300 to 1,000 homes by the end of 2018. That would require Zillow to invest about $75 million to $250 million.
“This is expected to be a vibrant line of business for us and for our partners in the real estate industry, while providing homeowners with more choices and information,” Zillow Chief Marketing Officer Jeremy Wacksman said in a statement, adding that consumers are looking for more choices despite a strong real estate market.
Home prices have surged to record highs in almost two-thirds of U.S. cities, according to the National Association of Realtors. The S&P/Case-Shiller national index climbed by a seasonally adjusted 0.5% in the three-month period ending in January. Prices are up 6.2% from a year earlier.
But investors appear uncertain about Zillow’s house-flipping aspirations. Shares of the company fell as much as 10% on Friday, and the stock was down 6.3% in recent trading.
Zillow, known for its namesake website as well as other brands such as Trulia and RealEstate.com, will purchase homes using its Instant Offers program, which presents sellers with a bid from the company. The West USA, Berkshire Hathaway HomeServices and Coldwell Banker real-estate agencies will represent Zillow in the purchase and sale of each home.
After completing a sale, Zillow will make necessary repairs and updates and list the home as quickly as possible, the company said.
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Seattle-based Zillow first tested Instant Offers in May 2017 in Phoenix and Orlando.
Other digitally focused companies such as Redfin have also jumped into the real estate market. Redfin started a pilot program last year. Another firm, Opendoor, said it bought $1 billion worth of real estate in 2017, the Journal reported. Opendoor plans to buy another $3 billion to $4 billion this year.