The Biggest Reason Zillow Went Sideways in the iBuying Business

The iBuying business is a challenging one, if it's ever going to work at all. Home values aren't uniform on a given block, much less across the country, and it's going to be difficult for any company to build the algorithm and attract the capital to make the business profitable. But Zillow (NASDAQ: Z) (NASDAQ: ZG) had the customer base, the capital, and its Zestimate price model in place, which theoretically gave it a lead in the iBuying market.

That clearly didn't work out well for Zillow or investors after the company abandoned that business last week. Where did Zillow go wrong? There are a lot of answers to that question, but one sticks out to me -- and it's that Zillow never focused on profits for its iBuying business in the first place. And given the risk involved in real estate investing in general, that could have been its fatal problem.

Image source: Getty Images.

Source Fool.com