Zillow’s Renovated Homes Could Be Hiding Construction Defects

Zillow’s Renovated Homes Could Be Hiding Construction Defects

When corners are cut, whether it’s in workmanship or materials, construction defects will more than likely pop up. Poor construction for quick profits can end up costing the new homeowners.
A current example of this in the news is Zillow, who over the past few years bought thousands of homes to flip and sell for profit. However, even with Zillow’s technology and outreach, they have had difficulty selling their home flips. In fact, their home-buying division has lost $300 million in the last few months. This division is now being shut down and laying off 2,000 employees. Zillow now needs to sell 7,000 homes at priced less than what they originally paid.

Zillow’s plan and pace set them up for failure. Zillow depended on their tech and algorithms to build a program called “Zillow Instant Offer”. Home sellers could request a quick cash offer from Zillow to sell their home. Zillow would then attempt to rehab the home. One Zillow purchased the home, Zillow would make repairs and flip the property, placing it right back on the market. A major mistake was they did not have proper oversight in local markets and over their construction teams. Their pricing and quality of workmanship was so poor, Zillow started selling homes at a loss.

Eventually the losses continued to pile up until Zillow finally decided to shut the program down and sell off all their properties.

“We’re operating within a labor- and supply-constrained economy inside a competitive real estate market, especially in the construction, renovation and closing spaces,” said Jeremy Wacksman, Zillow’s chief operating officer.

“We have not been exempt from these market and capacity issues and we now have an operational backlog for renovations and closings,” he added.

Between the COVID-19 pandemic, supply chain issues and labor shortages, there is likely no way Zillow was producing flipped homes that were renovated properly, especially at the speed they were going.

Always be weary of mass-produced, quickly flipped, or renovated homes.

If you suspect you may have encountered a construction defect, do not wait to contact our firm. You may be able to pursue and claim damages. To learn more about this topic, click our construction defect litigation page.

The Naumann Law Firm represents homeowner associations, high/mid-rise condominium and condominium conversion associations, single and multifamily residential property owners, luxury/custom property owners, owner/builders and commercial property owners in construction defect litigation. The Naumann Law Firm has over 40 years of experience handling significant construction cases with complex issues.

If you need more information on construction defects, visit our construction defect litigation page. To contact us, call 844-492-7474 or visit our San Diego construction defect contact page.

We also practice Los Angeles construction defect litigation, Orange County construction defect litigation, Riverside construction defect litigation, and San Bernardino construction defect litigation.