Zillow’s Zeal to Outbid for Homes Backfires in Flipping Fumble

Faced with the fastest-rising real estate prices in U.S. history, Zillow Group Inc. tweaked the algorithms that power its home-flipping operation to make higher offers.

It ended up with so many winning bids that it had to stop making new offerson properties. Now, after buying more homes in the third quarter than it ever has before, the company is working through a backlog of houses that need to be fixed up and sold while facing an unpleasant reality: Slowing price appreciation means it will sell many homes at a loss.