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Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

bloomberg.com

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Re: Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

#11

Post by tristanj »

It's not fully clear what Zillow is offering here, but my reading is that Zillow is buying homes, quickly fixing them up, and selling them. If this is what they are doing, I can see a lot of value in these "Zillow Approved" flipped houses.

I've read a lot of online horror stories where people buy flipped homes only to realize they bought a lemon. Houses with shoddy construction work, code violations, and the new owners are stuck with tens of thousands of $ in repairs.

Home inspections help, but they don't catch everything. Anything inside the walls, such as poor plumbing/electric work, are unlikely to be flagged.

I'd be happy to pay a 0.5% to 1% premium on the sales price to be assured the people who renovated this house followed local housing code, used proper construction procedures, and used decent materials.

Re: Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

#13

Post by tehlike »

tristanj wrote: post #11

It's not fully clear what Zillow is offering here, but my reading is that Zillow is buying homes, quickly fixing them up, and selling them. If this is what they are doing, I can see a lot of value in these "Zillow Approved" flipped houses. I've read a lot of online horror stories where people buy flipped homes only to realize they bought a lemon. Houses with shoddy construction work, code violations, and the new owne…

This seems to be in a similar business/model with opendoor.

Re: Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

#14

Post by tehlike »

pfarnsworth wrote: post #6

Generally, things like this mark a top in the market. Zillow will get caught with a ton of inventory that they can't sell, and then take a huge loss trying to unload them for cash. It probably won't happen right away, but I can totally see it happening in the next year or so.

They are market makers, they will profit off of this.

Re: Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

#15

Post by kosei »

Doesn't this create a big conflict of interest in their Zestimate algorithm that's core to their business?

If they provide lowball Zestimates, that allows them to buy homes for cheap. Or if they own the home, they can increase the value prior to sale.

Hard to trust when they could easily use this estimation system to their other business model's advantage.

Re: Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

#17

Post by jjeaff »

kosei wrote: post #15

Doesn't this create a big conflict of interest in their Zestimate algorithm that's core to their business? If they provide lowball Zestimates, that allows them to buy homes for cheap. Or if they own the home, they can increase the value prior to sale. Hard to trust when they could easily use this estimation system to their other business model's advantage.

I doubt zestimates are really a core of their business.

Try to use a zestimate to negotiate the price on your next home. Watch how quick the experts laugh you out if the room.

The zestimate is just a nice quick way to get a ballpark value of a home. But I don't think they are playing any significant role in affecting market prices.

Re: Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

#18

Post by toasterlovin »

tehlike wrote: post #14
pfarnsworth wrote: post #6

Generally, things like this mark a top in the market. Zillow will get caught with a ton of inventory that they can't sell, and then take a huge loss trying to unload them for cash. It probably won't happen right away, but I can totally see it happening in the next year or so.

They are market makers, they will profit off of this.

If you’re selling, you need buyers. If there is an economic downturn, there won’t be buyers. There is no way around this.

Re: Zillow Launches Home-Flipping Program in Phoenix and Las Vegas

#19

Post by burlesona »

pfarnsworth wrote: post #6

Generally, things like this mark a top in the market. Zillow will get caught with a ton of inventory that they can't sell, and then take a huge loss trying to unload them for cash. It probably won't happen right away, but I can totally see it happening in the next year or so.

Sure seems like it to me. When everyone knows you better get in now because the market is only going up....
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