Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

stevenbuccini.com

Post reply on HN
Print view View original

191–200 of 386 posts

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

#191

Post by kube-system »

SilasX wrote: post #133
SteveGerencser wrote: post #117

Earlier quoted context omitted.

Or a house full of cats. I had a 'cat lady' friend who struggled to sell her home because she had 13 cats. 13 'indoor' cats. Even at a great price the house would not sell. Enter the wonderful folks at Zillow that bought her house based purely on the numbers. Last I heard they still hadn't been able to move that house at any price.

Okay even accepting that Zillow made big unforced errors, that doesn't sound believable. Like, they don't make the offer conditional on someone looking at it in person for red flags?

As I understand, they were buying sight unseen.

This happens in hot real estate markets. If you don’t want to miss out or start a bidding war, you have to be the most frictionless buyer.

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

#192

Post by MisterBastahrd »

SMEs are smarter than developers in their space.

Always has been that way. Always will be that way. AI is great for when you need to tame a firehose and make millisecond decisions. But there's a 90 year old in Omaha who is better than the best AI.

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

#193

Post by MisterBastahrd »

abiro wrote: post #118

I think the title is highly misleading. The main point here is that Zillow simply had no idea what it takes to be a market maker and their pool was picked off by savvy traders. Good tweetstorms with technical explanations on how that happened: https://twitter.com/macrocephalopod/status/14558873523715973... https://twitter.com/0xdoug/status/1456032851477028870?s=21

Zillow offered to buy my home at 30% more than everyone else in the market for cash, without an inspection, and I wasn't even looking to sell it at the time.

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

#194

Post by winternett »

breischl wrote: post #175
winternett wrote: post #156

Earlier quoted context omitted.

It's a pretty interesting discussion as I sold my house just this year, and was frequently watching Zillow trends and information. Originally the estimate on Zillow said my house was 20% over the value I actually sold my house for just last month. I listed with a traditional realtor for a 5% commission, because when I looked up the service and other fees for Zillow sales, I found they included around 20% of cost for…

>as I reduced price on it for it to gain attention, I noticed the zillow estimate also went down to always stay below my listed price. I believe the estimate that both Zillow and Redfin display prominently were purely based on what my list price was changed to last, not on any meaningful algorithm The fact that a house is for sale at a given price, but has not sold after some time, is a strong signal that it's overpr…

When you reduce price on a house listed on Zillow and Redfin right now, it bumps it to the top of taxonomy-based cues on those sites because of the information update, which increases overall recommendations/listing promotion to potential buyers. It's a new step in getting a property sold introduced by technology dynamics. Price reductions in traditional real estate listings worked differently (You were not refreshed on MRIS). with everyone performing price reductions though, that can have mis-leading effect on economic indicators, and it can also create harmful price reduction "panic" in certain markets though, so this is going to be a burgeoning issue moving forward.

I am luckily both a web developer and knowledgeable about real estate, most people don't properly understand the dynamics that are impacted/introduced into the market by technology and algorithms... People assume the traditional real estate market rules are still in play primarily still, but technology has complicated everything... That's also why Zillow overbought homes, because people making critical decisions too often put "traditional pre-tech" real estate market concerns over considering modern impacts of IT to their decisions.

My house sold within 2.5 months overall, it was not on the market for a long time.

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

#195

Post by MisterBastahrd »

andromeda-brain wrote: post #168
wiradikusuma wrote: post #164

Does anyone know where Zillow get its dataset from? I reckon it's essentially sale price? Can a "hobbyist" investor do the same?

There's a lot of information that is only available to MLS members. Zillow used to not have access to this information, but they slowly brokered deals with MLSes around the country to get it. One example: The MLS in Austin, TX recently banned publicly sharing a home's sold price. https://www.zillow.com/austin-tx-78701/sold/

Yeah, each MLS org has its own data set which is a giant pain in the ass for the newspapers who are publishing listings for the MLSes in their areas. I don't know if they ever standardized it, but I know that one of the first tasks I had as a new dev for a newspaper back in the early 00s was to build a tool to take the data and normalize it into a single CSV.

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

#196

Post by faizshah »

JumpCrisscross wrote: post #79
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…

> a market-maker for homes at a large scale…a house-flipping company These are different things. Archetypal market making involves simultaneously buying and selling an asset. Flipping involves buying, improving and later selling. One might be able to deal with the heterogeneity of houses by operating at scale. (Zillow attempted this.) One might also deal with the delay between buying and selling by hedging. (Zillow n…

Theres a good video here from a british hedge fund manager on why zillows real estate market making doesn't make sense: https://youtu.be/eDc4saE5m9k

The main insights are that market makers hold assets for a short period of time making money on the spread between buyers and sellers offers. Zillow had to hold on to houses for a long time and was speculating that the houses would be worth more in the future which is not market making.

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

#198

Post by h2odragon »

toast0 wrote: post #188
h2odragon wrote: post #68

Earlier quoted context omitted.

My wife did some work for the Census last year. Our extremely rural neighborhood has lots of unused housing, some for a decade+. That work got her out to see some of the places not visible from the roads, and increased our awareness of the scale of the problem. At a guess, in our county, 20%+ of the housing is idle, owned by out-of-state companies, some of whom pay property taxes and some dont. The county isn't aucti…

> The county isn't auctioning off because of tax default anymore, no one was buying these places at $100. What's the issue with out of state companies owning rural properties nobody wants? If the market is heating up, maybe it's time to run tax auctions again. In WA state, if there's no bidders, the county retains the land and will auction it again when someone expresses interest (or it some cases, can sell it to a n…

They'll eventually be reclaimed and re-titled one way or another I'm sure. I'm concerned with the larger implications, if my supposition is correct that they are being accounted more valuable than they actually are. These are the leftovers of Countrywide mortgage bonds and such I think.

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

#200

Post by cardosof »

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…

Would investors pour their money if they were more conservative and said something along the lines of "look, this is a very complex subject driven by and for humans, we should hire a bunch of non-technical people with relevant industry experience and try to make some bucks of profit before going full scale engineering and AI"?
Post reply on HN