BIG Lesson from Zillow Offers Failure

What can you learn from the epic iBuying failure by Zillow? Zillow Offers has ended with massive losses. How did they lose so much money in the incredibly profitable business of flipping houses? Find out in this video.


How Could Zillow Fail?


Flipping houses is arguably the most profitable business in American history and Zillow has found a way to lose possibly up to a billion dollars. How do you lose a billion dollars in a business that's this good? What can we learn from Zillow’s epic failure? Is it something as obvious as buy low and sell high? Because Zillow Offers was certainly buying high and selling low. But the lesson of buy low and sell high seems self-evident. That’s basic economics. So, if that isn’t the lesson, then what is it? Well, it’s much more important and something that impacts you.

Now, I understand you're not an iBuyer with a platform that reaches millions of homeowners, with thousands of seller leads every day. But you can still learn from this lesson because it's important, and for many of you, it's been holding you back. It’s a lesson that I've been trying to teach for almost two decades, but often, beginners don't believe me.


The big lesson from Zillow Offers' epic failure is this: Your problem is not money. It's good deals.


When people apply for our apprentice program, one questions we ask is, “What’s holding you back? Why haven't you reached your goals in real estate investing?”. So often they say they are unable to do deals because they don't have money. When we hear that we know that they're a complete novice and they, of all people, need a mentor because they don't understand the fundamentals of real estate.


Money is Not the Problem


Zillow illustrates this fundamental of real estate investing perfectly. They had unlimited funds to buy houses and they bought a lot of houses, but they lost a billion dollars. The problem was not money. In fact, what's happening with other iBuyers is very similar. They’ve raised a lot of money and now they need to put that money to work. They focus on the money as the solution thinking if they buy high volume, they can beat out everybody else and make a killing. What they don't realize is, it's not about money. It's about good deals.


Structuring Good Deals


Now, let's be clear, this is not just about finding good deals. Zillow has a platform that reaches millions of homeowners every day. If anyone can generate seller leads, it's Zillow. They have a huge advantage not only with available cash but also in finding deals. How did they fail? Because they didn't structure good deals. Structuring good deals is a specialized skill. I have over a decade of videos on YouTube and they barely scratch the surface compared to the teaching and training in my mentorship program. This is a huge body of knowledge. But once you know it and you know what to do, it's incredibly profitable because you know how to structure good deals.

So, as Zillow learned, even if you get to that seller, you still need to know exactly how to structure that deal for that property, in that marketplace, at that exact moment in time so that you don't fail. Zillow didn't know what they were doing. Instead, they hired people in traditional real estate who don't know what they're doing either and together they failed miserably.


What's Holding You Back?


So, if you think that what's holding you back is that you don't have the money, you're wrong. That's not what's holding you back. What's holding you back are good deals. Even if you don’t have money, there are strategies you can use. If you find a good deal you can put it under contract and sell it immediately. Build up a little bit of a war chest, an extra 10 to 30 thousand dollars. Then then can give a homeowner, let's say $5,000 to move out. You can get a line of credit to help a seller move through a transition so you can get the deal done.

Another option is the thousands of hard money lenders available. In fact, I have a database, a hard money locator tool, that links you to thousands of different hard money lenders across America. There's a lot of different lenders looking to put money on the street right now, but they too want to fund good deals. Now, if you have the good deals and you do have money, that certainly doesn't hurt, but you need to start with good deals and then the money flows.




  1. Isaac Palacios says

    I have always enjoy your videos and your information for all types of investors. Keep it going Young Man!!!

  2. Was Zillow also artificially inflating the prices of homes along the way by removing homes from the marketplace?

    • Phil Pustejovsky says

      They were buying a fraction of the number of houses as OpenDoor. So I don’t see how they could pull that off being as they were a much smaller player in the iBuying space.

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