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Zillow lost money because they weren't willing to lose money

stevenbuccini.com

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Re: Zillow lost money because they weren't willing to lose money

#31

Post by lotsofpulp »

skohan wrote: post #28

> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…

> why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their datasets.

Why would Zillow have unique insights? With the exception of Texas, I thought real estate sales information is public information in the US.

Re: Zillow lost money because they weren't willing to lose money

#32

Post by johnebgd »

skohan wrote: post #28

> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…

People forget that tech is able to automate workflows. You don’t often yield success when you attempt to automate and invent the workflows in parallel.

Re: Zillow lost money because they weren't willing to lose money

#33

Post by draw_down »

skohan wrote: post #28

> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…

That sounds hard. Why don’t we just rub some machine learning on it?

Re: Zillow lost money because they weren't willing to lose money

#34

Post by perpetualpatzer »

JKCalhoun wrote: post #14
chii wrote: post #11

Earlier quoted context omitted.

flippers make the real estate market more liquid, in the same way high-frequency trading does for stocks. Flippers take the risk of the market falling while they're flipping - that's the price they pay for their profits.

You'll have to educate me then: is more liquid better for the buyers or sellers?

Arguably, it's good for both. Buyers have more quality inventory to choose from and can purchase a home with lower risk of getting trapped in it permanently. Sellers get faster sales with a higher floor on prices.

Re: Zillow lost money because they weren't willing to lose money

#35

Post by NoblePublius »

Buy low, sell high. You need “data science” to do this? $VNQ is up 33% since 2016. Do you realize how dumb and bad you have to be to lose money on real estate in this time? I imagine randomly picking homes off the MLS would have yielded better returns in the last five years than whatever Tableau-powered nonsense the biz ops analysts at Zillow used. The entire iBuying concept is a farce, completely divorced from basic fundamental analysis.

Re: Zillow lost money because they weren't willing to lose money

#36

Post by loeg »

javert wrote: post #18
JKCalhoun wrote: post #9

> At a high level, the story of Zillow Offers is a story of our industry at its best. Not in my book. All I see is the price of real estate being driven up by corporate greed and the individual home-buyer being shut out of the market. Is it wrong of me to hate "flippers" (be they corporate or private)? Pure capitalists will tell me that every property sold went to the highest bidder — in the case of a flipper winning…

Yes, you are wrong to hate flippers. You are wrong to hate anyone who is working hard to make an honest living. Yes, flipping is hard work. All successful work probably displaces someone else in some way. If you're good at your job, you're "denying" that job to someone less skilled. If you work in software, you're automating things that would require more labor if done manually. Fortunately, humans can pivot. Either…

I think there are ways to make money that are socially negative value -- e.g., theft is a pretty obvious one, or bitcoin mining.

House flipping isn't a social negative. They're doing a productive activity and producing value. They aren't long-term speculators removing housing stock from the market. It's essentially home renovation, done by a 3rd party owner.

Re: Zillow lost money because they weren't willing to lose money

#37

Post by ctvo »

lotsofpulp wrote: post #31
skohan wrote: post #28

> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…

> why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their datasets. Why would Zillow have unique insights? With the exception of Texas, I thought real estate sales information is public information in the US.

Can you not imagine how useful it is to know user data e.g. what neighborhoods receive the most clicks, what type of homes generate the most favorites, how long people view one listing vs. another, … that is unrelated to public MLS data?

Re: Zillow lost money because they weren't willing to lose money

#38

Post by iandanforth »

lotsofpulp wrote: post #31
skohan wrote: post #28

> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…

> why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their datasets. Why would Zillow have unique insights? With the exception of Texas, I thought real estate sales information is public information in the US.

One example, User search behavior should contain several leading indicators.

Re: Zillow lost money because they weren't willing to lose money

#39

Post by loeg »

perpetualpatzer wrote: post #34
JKCalhoun wrote: post #14

Earlier quoted context omitted.

You'll have to educate me then: is more liquid better for the buyers or sellers?

Arguably, it's good for both. Buyers have more quality inventory to choose from and can purchase a home with lower risk of getting trapped in it permanently. Sellers get faster sales with a higher floor on prices.

What's even arguable about it? Liquidity is good for market participants, period.

Re: Zillow lost money because they weren't willing to lose money

#40

Post by skohan »

lotsofpulp wrote: post #31
skohan wrote: post #28

> They thought they needed to build a machine learning model when they really needed to build an entirely new organization, one that possessed the technical and cultural mindset necessary to succeed in this space. I totally agree. It's not impossible to imagine their model working: why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their…

> why couldn't you serve as a market-maker for homes at a large scale, especially with the unique insights Zillow could have based on their datasets. Why would Zillow have unique insights? With the exception of Texas, I thought real estate sales information is public information in the US.

My understanding is that they believed they had an advantage in terms of buyer intent information. Everyone can see who buys what, but Zillow has access to more information about how people shop for homes, and the events leading up to the actual sale.
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