AgentReal Estate

Zillow earns profit, no thanks to iBuying

The company's venerable agent advertising program is keeping Zillow in the black, despite iBuying losses

Rich Barton - HW+
Zillow CEO Rich Barton

New quarter, same story. Zillow makes money through agents advertising on its website. It loses money via buying homes for cash and then reselling them.

Add it up and the Seattle listings-and-iBuying giant on Wednesday reported $9.6 million in net income for the second quarter of 2021, and $1.3 billion in revenue.

The figures compare favorably to the second quarter 2020 – Zillow posted an $84 million net loss and $768 million in revenue back then – but April through June of 2020 marked the housing market’s COVID-induced nadir.

By contrast, Zillow posted $52 million in net income for the first quarter, and $1.2 billion in revenue in the first quarter of 2021. Zillow sold 2,086 homes through Zillow Offers in the second quarter. The instant homebuying program netted 1,975 sales in the first quarter.

Zillow’s steady, if unspectacular bottom-line contrasts with the company’s enviable popularity and stated ambitions. Zillow’s filing with the Securities and Exchange Commission reported 228 million unique monthly visitors to its U.S. home listings site. The company also reported having 6,420 full-time employees as of June 30, which is a 14% surge in employee headcount within the last six months.

During Wednesday’s earnings call, Zillow CEO Rich Barton made mention of the company’s investment in “research and development” and said that employees are drawn to Zillow’s new “cloud-based” headquarters.

Barton said it was nothing less than a historic time for the housing market. There is a “great reshuffling” with many people’s homes no longer being tethered to their company office, millennials keep entering the homebuying market, and there’s persistently low mortgage interest rates.

The CEO was optimistic about the housing market not cooling off anytime soon. The migration of people away from their work, and generational changes in who is buying homes are long-term trends, he said.

Zillow has tried to capitalize on this seller’s market, and its own popularity, by diving head-first into iBuying. Of the company’s $1.3 billion quarterly profits, $772 million – or 60% – were from its Zillow Offers program.

Zillow Offers has consistently increased revenue since Barton launched the segment in 2019. But it has also lost money each quarter, as the margin earned from reselling a purchased home is more than offset by operating costs. The iBuying segment posted a $59 million loss before taxes, depreciation, and amortization.

Despite repeated losses, Barton said that he has been pleased with the progress of Zillow Offers, which has been his signature change to the Seattle-based company. He noted that the company has been able to both ramp up capital to purchase homes, and the employees to do the deals. The next step, the CEO said, was greater consumer awareness. Barton has repeatedly said that once more consumers know about iBuying they will choose it over the traditional home sale process.

Zillow’s second quarter report shows where the company gets money to buy homes. Zillow has $824 million in total home segments debt: $421 million is owed to Credit Suisse AG Cayman Islands, $220 million to Citibank, and $183 million to Goldman Sachs. Each bank has a credit facility funneling capital to Zillow Offers.

Meanwhile, Premier Agent – where agents, agent teams, and brokerages pay monthly fees to advertise on Zilllow’s website as potential homebuyer’s agents – netted $348 million in revenue. Zillow’s overall internet, marketing, and tech segment posted $134 million before taxes, depreciation, and amortization.

Under Barton – who co-founded the company in 2005 and then returned as CEO in 2019 – the company expanded in other areas including originating mortgages, where Zillow generated $56 million in second-quarter revenue but $17 million in losses.

Two areas, though, are not quite ready for liftoff. One is the company’s $500 million acquisition of home-showing platform ShowingTime. That purchase was announced in February, but Barton acknowledged on the earnings call that it was yet to be finalized.

Another is Zillow’s hiring of in-house real estate agents. Zillow is now a brokerage, but company Chief Financial Officer Allen Parker repeatedly said it was “very early” in that process for Zillow to hire many of its own agents.


  1. Good morning.
    So basically, we (agents who are paying Zillow for working to skewer our industry) are doing this to ourselves…..

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