71–80 of 93 posts
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Social networks don't sell data like that
You can sign up to Zillow via Facebook, where they get permission to pull the most relevant data points. They can then make additional inferences based on that.
Earlier quoted context omitted.
Social networks don't sell data like that
You can sign up to Zillow via Facebook, where they get permission to pull the most relevant data points. They can then make additional inferences based on that.
Buying homes for subsequent resale is a capital-intensive, old-economy, bricks-and-mortar business. Zillow will borrow money to buy the homes, which means that (a) the clock will start ticking the instant each new home is purchased, and (b) this endeavor can be profitable only if proceeds from resales/rentals are sufficiently high to cover cumulative debt service costs -- in addition to all property taxes and ongoing…
Or Zillow has access or insight to data that general property investors do not, thus driving abnormal returns.
Definitely not another housing bubble. No way.
Buying homes for subsequent resale is a capital-intensive, old-economy, bricks-and-mortar business. Zillow will borrow money to buy the homes, which means that (a) the clock will start ticking the instant each new home is purchased, and (b) this endeavor can be profitable only if proceeds from resales/rentals are sufficiently high to cover cumulative debt service costs -- in addition to all property taxes and ongoing…
Earlier quoted context omitted.
That's my guess also. If they have details on the specific aspects in the specific markets that drives prices, being able to "jump on a deal" could work out well. The question becomes if there are enough opportunities like that to move the needle for them. If I had to guess, I would have guessed moving into Lending Tree's matchmaking area would be easier and have a better ROI.
What specific details would they have that other's don't. I don't know how prevalent FSBO is on Zillow in some markets, but in mine it's extremely limited. I'd be shocked if it made up 5% of the residential market, probably closer to 1%. The rest of the listings are from MLS systems and they pull housing data from county systems. For that, I'd assume there is a data broker and Zillow isn't integrating with thousands…
That's not the case, MLS is a giant mess and the reason why Zillow was/is amazing is that it aggregated and normalized lots of different unconnected systems. They still have gaps and it's common for an individual MLS to play hard ball and not give out their data, but it's still a large competitive advantage.
The key advantage here is that they can make these low offers to a much bigger audience than anyone else can do. This should allow them to be either be more profitable per house than anyone else, do more volume than anyone else, or hit any mix of these two better than anyone else.
Of course, they can shoot themselves in the foot pretty well if they:
- Try to go for volume over profitability, and then catch a downturn. - Do a bad job of running repairs. - Don't do a good job of catching houses that are much worse than they appear.
However, there's no physical reason this can't be extremely profitable. They have the data to see their current home investors making money. If they feel they can identify the most profitable attributes of these flips, then they can route all the extra profitable ones to themselves. The only losers here are the existing people in Zillows home flipping program. They are almost guaranteed to now be getting the second best homes, once Zillow has skimmed off the profitable ones.
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The problem seems to be that any homeowner getting an offer from Zillow would immediately know they had mispriced their listing and not accept. Unless Zillow has some new efficiency that no one else has (super contractors that can fix up cheaper than other investors, low cost capital) I don’t know how they will be able to outbid the market consistently as there aren’t enough dumb sellers with dumb agents out there. B…
I mentioned this elsewhere, but 'closing certainty' is a real concern in the real estate market, to the point where many sellers will take a lower offer price in favor of a cash buyer.
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It's already pretty inaccurate today (overestimates by about 10%[0]), so there's not much change there. ;-) [0]: Very rough estimate, may be market-specific.
Really it's only inaccurate because the price of housing isn't static and certainly isn't objective. Zillow works based on how similar houses near yours have sold, which could be low because the seller wasn't driving a hard price and the buyer was a good negotiator. It could be higher because the seller was firm on the price and the buyer didn't know any better. Not to mention, Zillow doesn't know if you recently ren…
If it was static, an estimation tool wouldn't be useful.
And it's not just "the price of housing isn't static and certainly isn't objective." After all, Redfin faces exactly the same difficulties. Somehow Redfin uses more or less the same data and comes up with estimates that are much closer to the prices houses actually sell for (in this area).
The median house sold in my area cost ~$660k last year (zip code 98117). 10% overestimation is a (much) larger absolute error than $15-30k.
And there is plenty of sale volume in this area of similar houses -- the average/median of which are far below Zillow's estimates.
I wouldn't say appraised value is what matters. What matters at the end of the day is what buyers are willing and able to pay. Appraised value is both a factor in that as well as a result of that.