Zillow is reportedly looking to sell 7,000 homes as its homebuying unit hits turbulence

• Zillow paused buying homes for the rest of 2021, leading to questions about its flipping business.
• Insider found most homes Zillow is selling in its five biggest markets are priced below what it paid.
• Now Bloomberg is reporting that Zillow is looking to sell 7,000 homes for around $2.8 billion.

Zillow's homebuying unit is having a rough couple of weeks.

The $25 billion property giant spent the past couple of years buying up thousands of homes through Zillow Offers, its instant buyer, or iBuyer, arm.

The bad news started rolling in October 17, when it announced that it would stop buying homes for the remainder of 2021. Jeremy Wacksman, its chief operating officer, said it was because of "an operational backlog for renovations and closings" that he blamed on "a labor- and supply-constrained economy inside a competitive real estate market."

That move sent the stock plummeting, as investors had bet on Zillow Offers as a big driver of company revenue.

Insider then reported October 28 that the majority of its homes in its five biggest markets, in places like Atlanta, Phoenix, and Houston, were listed for less than what Zillow paid to purchase the homes. The numbers were particularly striking in Phoenix, where it's listing more than 90% of the properties for less than it paid.

Wall Street responded, with analysts conducting their own analysis to get similar findings, and some predicting a chunky write-down in Zillow's November 2 earnings statement.

Brad Erickson, an equity analyst with RBC Capital Markets who covers Zillow, estimated that the company would acknowledge between $20 million and $30 million in lost value on the thousands of homes it owns.

"They're clearly losing money on homes, and the margins will be worse this quarter," Erickson told Insider's Daniel Geiger. "They'll have to write down some of their inventory."

Zillow's stock took another hit on November 1, finishing the day down almost 9%.

Now Patrick Clark, Sridhar Natarajan, and Heather Clark at Bloomberg are reporting that Zillow is looking to sell around 7,000 homes it holds for about $2.8 billion. The sale would be to a multitude of buyers in the booming single-family rental space, according to Bloomberg, rather than a single entity.

We'll be watching for Zillow's earnings statement to shed more light on what's going on.