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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

#161

Post by awb »

bastawhiz wrote: post #6

I recently bought a home. We toured a Zillow home, and I can understand what they were going for and where they failed. We were able to pull up to the driveway, book a tour for that minute, and walk in the front door. It was almost a magical experience compared to the process of finding and going to showings. The listings were clear and thorough. The experience was extremely compelling. The downside: the homes were a…

> the homes were absurdly overpriced

That’s saying a lot for a red hot real estate market.

I still get updates from Zillow every month saying my home increased 5% in value in the last 30 days and up 30% over the last 12 months. Something is wildly off with their algorithm.

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

#162

Post by Finnucane »

dopamean wrote: post #89
Finnucane wrote: post #75

"In the real estate industry, this service is called iBuying, " Also, 'flipping.'

I dont really think anyone would call the business models of Opendoor, Offerpad, and formerly Zillow "flipping." Yes, they did buy a house with the intent to sell it but imo the term flipping refers to a much, much smaller scale business that also includes fixing up the property in some way. That is not what iBuyers do.

Buying a house to make a short-term profit on the resale is flipping. You can cover it up with some marketing tech-biz baloney, but it is still flipping flipping.

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

#163

Post by Cederfjard »

MiroF wrote: post #136
gnicholas wrote: post #117

Earlier quoted context omitted.

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.

Just curious as an outsider, what laws are she breaking by doing that?

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

#164

Post by devoutsalsa »

jliptzin wrote: post #51
paxys wrote: post #40

Earlier quoted context omitted.

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.

There's even lower hanging fruit than that. I have a 6 bedroom house, but local regulations state that I am not allowed to live with more than 2 people unrelated to me. Plenty of parking, tons of people looking for housing, but legally I am forced to keep 3 bedrooms empty.

House Hacking, Extreme Edition: legally adopting your roommates.

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

#165

Post by sib »

vincentmarle wrote: post #122
cellis wrote: post #97

Earlier quoted context omitted.

As a potential landlord who is doing this very thing right now, it isn't really "throwing money away", because of asset appreciation. If you get stuck with a bad tenant it's way more hassle than if you had just let it sit and AirBnB'd it every once in a while. Especially for properties where the rent is less than the appreciation per month.

You are neglecting opportunity costs: if you could earn double (appreciation + rent) instead of just appreciation, you're leaving money on the table.

But also avoiding a very real possibility of significant costs (property destruction, litigation to remove bad tenants, etc.)

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

#166

Post by registeredcorn »

MiroF wrote: post #149
registeredcorn wrote: post #144

Earlier quoted context omitted.

>landlord can eject you whenever they want for whatever reason I don't understand. Why aren't landlords able to do this? Isn't it seen as immoral to steal property from an owner?

> Why aren't landlords able to do this? Isn't it seen as immoral to steal property from an owner? Well, for one, the government should enforce contract neutrally - so if you sign a contract leasing your property, you can't unilaterally break this without cause. Second, we as a society have an interest in giving people time to move their stuff out and find a new place to live.

Thanks for the response! Honestly, I was going to delete my comment, I felt like I was asking in bad faith, but can't since it had a reply.

I guess I see your point. I tend to side a bit harder with the landlords, but I don't want people tossed out on the streets without any sort of warning either.

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

#167

Post by 999900000999 »

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,…

Honest to God, the founders of Airbnb should have been sent to prison.

That would have fixed much of this, it's point blank illegal to run a bed and breakfast out of your home. Now if you're my buddy, and you want to slide me $200 to crash at my house for a week that's fine, but if you add technology to it, it ends up destroying entire neighborhoods.

Ride-sharing is a bit different, since I'd argue the reduction in drunk driving deaths more than outweigh any negative side effects. It's amazingly easy to just call an Uber when you've had one too many. Countless lives have been saved already.

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

#168

Post by moffkalast »

bitlax wrote: post #135
paxys wrote: post #40

Earlier quoted context omitted.

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.

True, we could lower the population back down by exiling real estate agents.

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

#170

Post by sib »

lubesGordi wrote: post #157
ryandrake wrote: post #123

Earlier quoted context omitted.

> > It's honestly quite scary how I'm in the top 2% of income earners in my generation and yet I could barely afford to buy a small place > I live in Los Angeles, where a "small place in semi-desirable area" gets listed for 1.5M and goes for nearly 2M. I'm somewhere in the top 5% of earners in California, but that $2M 1950s tract housing would be >50% of my post-tax income. I think the obvious answer here is that peo…

I'm under the impression that 'cash offer' just means that whoever is buying has already secured their financing. That means there's almost no risk of the deal falling through and the sale can go from contingent to pending immediately. This is better for the buyer because they sell faster. Senior software eng at microsoft can pull this off no problem (no one is buying a house with cash in their bank, not even rich pe…

No, there's still a distinction. Secured financing can still fall through.
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