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Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

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Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#131

Post by iab »

ChuckMcM wrote: post #102
muttantt wrote: post #11

Crazy. I recently sold a condo to Opendoor for significantly more than I would have even thought to list it for. When I negotiated with Opendoor after their initial offer, I pointed out a recently sold condo (days before, in similar condition, layout and finishes) in the same complex that sold for much higher than Opendoor offered. Within hours Opendoor came back matching that same selling price. The kicker? It was a…

Very much like the $5000 books on Amazon where the algorithms are anticipating flipping an existing listing. Congrats on winning this round! The next step might be interesting which would be to go back and re-purchase the Condo once the price corrects to the 'real' price and bank the difference. I have read this article and the one before it and it sounds very much like some folks who fell in love with their own idea…

Traffic fascinated me - please post a link to that paper

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#132

Post by gitfan86 »

_fat_santa wrote: post #80
pezzana wrote: post #34

> ‘We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility,’ CEO tells investors. That's quite a statement. The head of a company with a privileged view of the US residential real estate sector says that the market is "unpredictable." Not the good kind of unpredictable where yo…

Other commenters on this and the previous thread pointed out, sometimes with first-hand experience, that Zillow would vastly overpay them for their home. I think this is less to do with the housing market in general and more to do with their tech. Zillow's iBuyer program hit the scene like a bull in a china shop. The real story is that they rushed into this space, had underdeveloped algorithms, overpaid for homes, an…

The housing market may or may not take a turn. But this Zillow story is about incompetency. It smells of some non tech person pitching an AI solution. No need to inspect these homes and neighborhoods, the AI will figure it out.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#133

Post by emodendroket »

enlyth wrote: post #113

Good riddance, I hope this company burns to the ground The software developers working for this company knowingly tried to make algorithms to flip and profit off of something that should be a human right Replacing carpets and painting walls, trying to flip for a 20% profit, the people running Z must be geniuses As a millennial looking at 2 bedroom flats selling for £575k (780k usd, not far from a million dollars) in…

Well I sold my house in Massachusetts, moved to California, and bought a new one this year and I definitely think the extreme liquidity of housing made it much easier, plus without the equity I doubt I would have been able to afford it. But yes obviously it’s not favorable for anyone who doesn’t already own.

I do think there is a place for a service like this even in a less frothy market. Like a trade in for a car, there’s definitely some percentage of people willing to accept a deal that is not the top one if it means they can cash out faster and with less hassle.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#134

Post by iab »

tomcam wrote: post #103
rflrob wrote: post #100

Earlier quoted context omitted.

My favorite story of algorithmic pricing gone mad was discovered by a postdoc in my grad school lab, leading to an out of print book being listed on Amazon for over $23 million: https://www.michaeleisen.org/blog/?p=358

I feel pretty smart because I immediately found that same book on eBay for only $8 million

Textbook arbitrage - congrats on the fortune

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#135

Post by maxerickson »

emodendroket wrote: post #128
maxerickson wrote: post #106

Earlier quoted context omitted.

If you're buying a home right now, make sure you're moving somewhere you're willing to live for a while and that you're not going to be in financial duress if your home loses 20% of its value. That's an odd way to say "I think you should probably consider renting right now" (which is absolutely what you should do if you think housing is likely to drop 20%).

That’s OK, if you’re trying to time the market, let alone based on forum comments, you’re already making bad decisions, so why not compound them

To the moon!

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#136

Post by AussieWog93 »

enlyth wrote: post #113

Good riddance, I hope this company burns to the ground The software developers working for this company knowingly tried to make algorithms to flip and profit off of something that should be a human right Replacing carpets and painting walls, trying to flip for a 20% profit, the people running Z must be geniuses As a millennial looking at 2 bedroom flats selling for £575k (780k usd, not far from a million dollars) in…

In defense of Zillow, they weren't looking to buy a "portfolio" of houses - they bought as many as they sold, and didn't have any net negative effect on housing supply.

Yes, they're profiting off of a bad situation, but they're not the cause of it. Bev from the local council's planning department, as well as Michael Caton's horrific propaganda piece, has done more damage than every flipper combined.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#137

Post by sytelus »

TLDR; According to CEO they tried to estimate current price vs price 6 months down after a flip and their estimates had been way off. When house doesn't sell at higher price, it creates inventory, monthly loss on rent value and volatility in balance sheet which is not good for a public company. So basically their algorithms had a lot of noise and scale wasn't still large enough to smooth it out for balance sheet.

This is however surprising to me. During COVID, house prices have gone amok. A lot of buyers are now buying 10-20% over asking and waiving everything. Prices are going up 10% every 6 month in my area. If in this market if you can't make money buy flipping, I don't know how you can make money ever.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#138

Post by AussieWog93 »

gravypod wrote: post #47
tppiotrowski wrote: post #14

"The surprising exit, announced with pedestrian quarterly profits, thrashed shares in another rough trading session Tuesday, a day after an analyst said two-thirds of the homes it bought are underwater." https://fred.stlouisfed.org/series/MSPUS The fed chart shows almost hockey stick growth in housing prices this year. How can the Zillow properties be underwater, did they just massively overpay up-front?

I am not an analyst but this is my armchair understanding of the market: 1. The construction of new homes was limited in late 2019 early 2020. This was due to covid and labor shortages and supply lines being blocked. 2. Demand for homes rose to an all time high. The people in big cities said: "Why quarantine with nothing to do in my Manhattan apartment when I can buy a house and sell it when the pandemic is over. Hou…

>I've been seeing homes steadily creep back to what inflation would account for in price delta.

Do you have any data or more info about this? I think many of us young 'uns would just like some hope right about now.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#140

Post by lindseymysse »

muttantt wrote: post #11

Crazy. I recently sold a condo to Opendoor for significantly more than I would have even thought to list it for. When I negotiated with Opendoor after their initial offer, I pointed out a recently sold condo (days before, in similar condition, layout and finishes) in the same complex that sold for much higher than Opendoor offered. Within hours Opendoor came back matching that same selling price. The kicker? It was a…

I wonder how much of our economy, that alternately humming along and collapsing around us, is simply algorithms talking to eachother? How much economic movement is being generated by arbitrage ( https://www.ecomcrew.com/amazon-arbitrage/ ) ? How much online traffic is generated by advertising bots interacting with each-other? How much are housing prices being juiced by algorithms?

I think the environmental crisis is already effecting the supply chain, I don't think we humans can see it yet. Are we Soviet Russia circa 1931, pretending like everything is going swimmingly while an enormous amount of us are about to starve?

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