Here’s why Zillow stock plunged 80% from its peak value
Boston Condos for Sale and Apartments for Rent
Here’s why Zillow stock plunged 80% from its peak value
Shares of Zillow (Z) sank as much as 15% Friday alongside other real estate names after the National Association of Realtors reached a legal settlement that paves the way for homebuyers and sellers to pay lower commissions.
The NAR reached a nationwide settlement of claims that the industry conspired to boost agents’ commissions, the organization said on Friday. If approved by a federal court, the settlement will likely usher changes to the way consumers buy and sell homes. The NAR said it will pay $418 million over the next four years to end litigation.
Real estate names slid on the heels of the NAR’s groundbreaking settlement, with investors expecting these rules to impact spending and competition for lead generation. Alongside Zillow’s decline, shares of Anywhere Real Estate (HOUS), Compass (COMP), and Redfin (RDFN) fell as much as 15%, 11%, and 5%, respectively.
In its 10-K filed last month, Zillow noted, “If agent commissions are meaningfully impacted, it could reduce the marketing budgets of real estate partners or reduce the number of real estate partners participating in the industry, which could adversely affect our financial condition and results of operations.”
If you’ve ever wondered what you could get for your Boston condo, you probably pulled up the real estate listing site Zillow to check its Zestimate.
The algorithm-fueled pricing tool estimates values for millions of homes across the country and is a popular resource for homebuyers and sellers alike.
However, determining a home’s value is a delicate process — not something easily accomplished at the push of a button.
Problems with the company’s estimates forced it to shut down its home-buying business and lay off a quarter of its staff. And that is why Zillow stock plunged 80% from its peak value.
