The Struggle Is Real for Zillow

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If you feel like you can’t land one of the few homes on the market to save your life right now, try competing with a record number of real-estate agents to sell one. In many ways, Zillow’s near-term fate hinges upon that struggle.

The combination of low inventory and high demand for homes has made Zillow surfing a full-time job for those intent upon moving and has only heightened agents’ hustle. That doesn’t make growth a given though.

With Zillow sunsetting automated home flipping, or iBuying, its legacy agent ads business has become even more important. Dubbed “Premier Agent,” it is a small business by comparison—generating about 30% of the revenue iBuying did for Zillow in the third quarter. Lately, though, it has been a more profitable one: Zillow is forecasting its Internet, Media and Technology segment, the majority of which is composed of agent ads, will generate around $200 million in adjusted earnings before interest, taxes, depreciation and amortization for the fourth quarter, versus up to $365 million in adjusted Ebitda losses for its Homes segment, which houses iBuying.

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