Zillow Group Inc. is looking to sell about 7,000 homes as it seeks to recover from a fumble in its high-tech home-flipping business.

       The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter.

       Zillow is likely to sell the houses to a multitude of buyers rather than packaging them in a single transaction, said the people, who asked not to be named because the matter is private.

       The move to offload a block of homes comes as Zillow seeks to recover from an operational stumble that saw it buy too many houses, with many now being listed for less than it paid. The company typically offers smaller numbers of homes to single-family landlords, but the current sales effort is much larger than normal.

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       A representative for Zillow didn’t immediately comment.

       Zillow shares dropped $6.48, or 6.3%, to $97.15 on Monday. The stock had slipped 22% this year through Friday after nearly tripling in 2020.

       The company recently said it would stop making new offers in its home-flipping operation for the remainder of the year. The decision came after the company tweaked the algorithms that power the business to make higher offers, leaving it with a bevy of winning bids just as home-price appreciation cooled off a bit.

       Business

       Zillow takes a break from flipping houses

       Zillow Group Inc. is taking a break from buying U.S. homes after the online real estate giant’s pivot into tech-powered house flipping hit a snag.

       An analysis of 650 homes owned by Zillow showed that two-thirds were priced for less than the company bought them for, according to a note Sunday from KeyBanc Capital Markets.

       “Zillow may have leaned into home acquisition at the wrong time, and we believe earnings may be at risk,” the analysts wrote.

       Zillow put a record number of homes on the market in September, listing properties at the lowest markups since November 2018, according to research from YipitData. It also cut prices on nearly half of its U.S. listings in the third quarter, according to Yipit, signaling that its inventory was commanding prices lower than it expected.

       Zillow, led by Chief Executive Rich Barton, is best known for operating an online listing service. In 2018, it started practicing a new spin on home-flipping called iBuying that seeks to offer a simplified way to sell a home.

       The company bought more than 3,800 houses in the second quarter, making progress toward its stated goal of acquiring 5,000 homes a month by 2024. The increase in purchases left the company struggling to find workers to renovate the properties.

       Zillow and its chief competitors, Opendoor Technologies Inc. and Offerpad Solutions Inc., often sell homes to single-family landlords in the normal course of business. Investors bought roughly 9% of all homes Zillow sold in the first quarter of 2021, Bloomberg previously reported.

       Bloomberg writer Gillian Tan contributed to this report.