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How Zillow's homebuying scheme lost $881M

fullstackeconomics.com

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Re: How Zillow's homebuying scheme lost $881M

#131

Post by trixie_ »

devmunchies wrote: post #82

> Zillow’s exit from the market strengthens the position of companies like Opendoor or Offerpad, which do something similar Does Opendoor just have better algorithms/models? What factors allow them to have different outcomes from Zillow?

This is a good question. I am long on some company figuring out how to really streamline the home buying/selling process. Everyone dreads it, nothing worse than trying to buy or sell a home. These companies could be great buffers allowing the quick sale/buying of a home with minimal overhead. There is definitely a market for providing 'peace of mind' and the guarantee of not being screwed which today there is a high probability of from all angles.

Hopefully Opendoor can figure it out. They're probably going to need a lot of cash, homes, and software to really put it together into something that can be automated and scale.

Re: How Zillow's homebuying scheme lost $881M

#132

Post by syspec »

brk wrote: post #4
avgDev wrote: post #3

Earlier quoted context omitted.

Odd. My house is valued at $330k on zillow, would sell for $420K+ in a few days.

Mine is pretty accurate ($2.5M), based on recent sales and a couple of solicitations from realtor friends. FWIW, we have had a high frequency of home sales in the past year, so that might help. I just looked up my previous house (sold 5 years ago), and Zillow is saying $740K, which I am pretty sure is massively overvalued, however the street it is on, and general area, have a fairly low turnover, so less recent data.

Humble brag

Re: How Zillow's homebuying scheme lost $881M

#133

Post by civilized »

buzzdenver wrote: post #10

The author has a valid point in that the information asymmetry will attract sellers whose property is overvalued to sell to Zillow. I suspect though that something different happened in reality. I live in a 70 unit condo building, so there are a lot of very good comparables. Zillow bought one of the units about 10% over market value, which makes me think that they're doing some sort of market manipulation, like charg…

In my experience, Zillow is sometimes conspicuously bad at valuing condos and literally doesn't know their market value, no matter how obvious it may be to you https://news.ycombinator.com/item?id=30724925

Re: How Zillow's homebuying scheme lost $881M

#134

Post by ridgered4 »

prototypeasap wrote: post #78

I recall reading months ago that Zillow made cash offers with inspections waived, in order to expedite the process. I believe they had an algo which would access average repair cost which they would factor in the actual offer. Each house needs to be inspected by multiple experts as there are many toxic properties with huge liabilities.

If I was stuck in a toxic house that I couldn't afford to fix that Zillow no contingency offer would be like a literal dream come true!

Re: How Zillow's homebuying scheme lost $881M

#135

Post by bitlax »

paxys wrote: post #40
thr0wawayf00 wrote: post #9

The scary thing is that it's easy to see how something how like this could drive a market boom and bust cycle. I'm imagining a scenario where two iBuyer companies try to outbid each other algorithmically, driving the prices further and further out of reach of people who are looking for a primary home. Tangentially related, I talked to a friend who works on geospatial data for one of the big vacation rental companies,…

One can blame Airbnb, Zillow or whoever else, but the truth is that speculation in real estate and vacation towns have both been a thing for a very long time. If the population rises and we refuse to build more houses, the existing ones will get more expensive no matter what. The solution is out there in front of us but everyone prefers to dance around it.

Well, there are two solutions.

Re: How Zillow's homebuying scheme lost $881M

#136

Post by MiroF »

gnicholas wrote: post #117
paxys wrote: post #57

Earlier quoted context omitted.

Agreed. Heck I know several people who prefer to keep their condos/houses empty rather than rent them out at market rate because of 100% tenant friendly city and state laws. Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. At that point the city is just incentivizing homeowners to contribute to the housing…

A friend bought a duplex in Berkeley. Due to the tenant-friendly laws there, she will only rent to international university affiliates whose roles/visas will require them to leave after a year or two. Interestingly, she is very YIMBY and liberal, and even has a PhD in urban planning. But no one wants a forever tenant!

You're not a liberal if you're casually violating fair housing law :)

Everyone wants to call themselves a liberal or progressive nowadays, it's bizarre. These things are about actions, not self-assigned labels.

Re: How Zillow's homebuying scheme lost $881M

#137

Post by wwweston »

Teknoman117 wrote: post #71
paxys wrote: post #57

Earlier quoted context omitted.

Agreed. Heck I know several people who prefer to keep their condos/houses empty rather than rent them out at market rate because of 100% tenant friendly city and state laws. Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. At that point the city is just incentivizing homeowners to contribute to the housing…

> Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. This is one of those things that really just confuses me. It's like no one could agree on happy medium between "landlord can eject you whenever they want for whatever reason" and "no one can make you leave, ever, for any reason". And to whoever downvoted yo…

> they can't do much if you stop paying rent.

I'm aware of specific stories where bad-faith tenants have made enforcement difficult, but I'm also aware of enough specific stories from the other side where tenants -- even some who have committed no violations -- have found themselves without housing to know that as a total generalization, these statements are false.

And you don't get to a resident-sourced homelessness crisis if landlords are truly powerless (and sure, coastal homelessness numbers are driven by bus-ticket policies elsewhere, but it's not the whole story).

AFAICT there is in fact a medium between "landlord can eject you whenever they want for whatever reason" and "no one can make you leave, ever, for any reason". Whether or not it's a happy one probably depends more on court outcomes than any apparent shortcomings in statutes, but if anyone has specific complaints about the law, perhaps they should point them out.

Re: How Zillow's homebuying scheme lost $881M

#138

Post by eyjafjallajokul »

syspec wrote: post #132
brk wrote: post #4

Earlier quoted context omitted.

Mine is pretty accurate ($2.5M), based on recent sales and a couple of solicitations from realtor friends. FWIW, we have had a high frequency of home sales in the past year, so that might help. I just looked up my previous house (sold 5 years ago), and Zillow is saying $740K, which I am pretty sure is massively overvalued, however the street it is on, and general area, have a fairly low turnover, so less recent data.

Humble brag

Not if you bought a home a decade or two ago and house prices went up around you with no action of your own.

I drive an old Honda Civic and my neighbors all have Tesla, Porsche, etc.

Re: How Zillow's homebuying scheme lost $881M

#139

Post by titanomachy »

1B05H1N wrote: post #17

How much money did this cost everyone else?

I think that "everyone else" actually made money from this. Zillow overpaid for houses and then was forced to sell them for the actual market value, so this $881M was basically free money given directly to the people Zillow bought from.

Re: How Zillow's homebuying scheme lost $881M

#140

Post by bombcar »

TimPC wrote: post #125
Teknoman117 wrote: post #71

Earlier quoted context omitted.

> Someone can move in and refuse to pay rent, refuse to leave, use your house as a drug den, destroy your property and lots more, and you can do nothing about it. This is one of those things that really just confuses me. It's like no one could agree on happy medium between "landlord can eject you whenever they want for whatever reason" and "no one can make you leave, ever, for any reason". And to whoever downvoted yo…

These laws are hard to get actually correct. The major problem is court delays. There is a very high bar for kicking someone out before they get their day in court about whether it is fair to do so. This seems eminently reasonable but there is also a severe shortage of judicial services that result in court dates over a year out to resolve such issues. In that year of time, it's quite possible for a tenant with maybe…

From what I've heard is a common thing for landlords to do is a "pay to vacate" where they show up at the door with $1k in cash if the tenant will just leave.
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