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Homes in McDonough, Georgia. Much of the town sits in one of the ZIP codes where iBuyers are most active nationally, selling more than 100 homes last year. About 70% of those houses went to investors, many without ever being listed.

Homes in McDonough, Georgia. Much of the town sits in one of the ZIP codes where iBuyers are most active nationally, selling more than 100 homes last year. About 70% of those houses went to investors, many without ever being listed.

Photographer: Elijah Nouvelage/Bloomberg
Business
+ Equality

Wall Street Is Using Tech Firms Like Zillow to Eat Up Starter Homes

A business that’s touted as a convenience for home sellers has created a secret pipeline for big investors to buy properties, often in communities of color.

Zillow Group Inc. spent last year aggressively expanding a home-flipping operation designed to make the $2 trillion U.S. real estate market better for consumers, until a bad bet on home prices pushed the company to pull the plug.

As it shuts down the operation, Zillow’s efforts to sell off its inventory of thousands of homes has highlighted a little-noticed truth about the business, called iBuying. The tech industry’s attempts to simplify the process of selling a house depend on flipping properties to some of the biggest names in global finance.