Zillow lost money because they weren't willing to lose money • Hacker News Board

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

#241

Post by NortySpock » Sat, Nov 27, 2021, 8:05 PM UTC

JoeyBananas wrote: post #159

it_does_follow wrote: post #148

Earlier quoted context omitted.

> a machine learning model Not to mention that generally ML models are not useful for assessing risk . ML nearly always focuses almost exclusively on some point estimate rather than a distribution of what you believe about a value. The former case is all about expectation and the latter about variance . Correctly modeling variance is far more essential to risk modeling than expectation alone. I recall talking to a st…

> Not to mention that generally ML models are not useful for assessing risk. ML nearly always focuses almost exclusively on some point estimate rather than a distribution of what you believe about a value. It is actually quite a common practice to design neural networks that output probability distributions.

I was going to say, that seems like an "easy" second step once you get your ML to output hard numbers -- tack on ranges and confidence intervals.

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

#242

Post by mistrial9 » Sat, Nov 27, 2021, 8:08 PM UTC

bee_rider wrote: post #235

perl4ever wrote: post #223

Earlier quoted context omitted.

>adverse selection According to Matt Levine's recent column, while you might think that, it wasn't what sunk them in practice. Bidding low in fact worked; it just was inherently limited in scale, which is why they switched to bidding higher. Unfortunately, being wrong in the other direction is very bad. "I know, I know, the traders are saying: “No, this is stupid, your algorithms will not be 100% precise, some of you…

I wonder -- does it really matter if the previous homeowner is more informed than Zillow? For things like "annoying neighbor" or other hard to quantify/quickly detect annoyances, the buyer doesn't know about those things either, so I guess the information asymmetry is almost 100% in Zillow's favor, right?

no - because machine data of the deal is not complete, therefore cannot be represented in the models. As any computer-vision researcher knows, the code sometimes does not see what is "obvious" to almost any person.

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

#243

Post by notahacker » Sat, Nov 27, 2021, 8:12 PM UTC

bee_rider wrote: post #235

perl4ever wrote: post #223

Earlier quoted context omitted.

>adverse selection According to Matt Levine's recent column, while you might think that, it wasn't what sunk them in practice. Bidding low in fact worked; it just was inherently limited in scale, which is why they switched to bidding higher. Unfortunately, being wrong in the other direction is very bad. "I know, I know, the traders are saying: “No, this is stupid, your algorithms will not be 100% precise, some of you…

I wonder -- does it really matter if the previous homeowner is more informed than Zillow? For things like "annoying neighbor" or other hard to quantify/quickly detect annoyances, the buyer doesn't know about those things either, so I guess the information asymmetry is almost 100% in Zillow's favor, right?

The buyer might not realise about the annoying neighbour (unless the most annoying thing about the neighbour is the mess they leave everywhere) but will definitely pick up on things that Zillow's algorithm doesn't.

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

#244

Post by nitrogen » Sat, Nov 27, 2021, 8:13 PM UTC

lisper wrote: post #229

ricardobayes wrote: post #225

Earlier quoted context omitted.

Yes, and even if something is super annoying, it might be legal. For example they listened to music until 2-3 in the morning a lot of cases. Thumping reggaeton. And while it for sure wasn't over legal limit by decibel, the bass made my bed shake.

It all depends. But in general you have a common law right to peaceful enjoyment of your property. http://bryancrews.com/private-nuisance-right-peace-quiet/

The one noise ordinance I've read in full also said that, even if the decibel limit is not exceeded, an audible beat or bass can also be cited.

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

#245

Post by cwilkes » Sat, Nov 27, 2021, 8:18 PM UTC

libertine wrote: post #144

_xnmw wrote: post #54

Good riddance. If large-scale house flipping took off, we might actually end up in a scenario where housing was treated as a speculative asset, with empty houses getting flipped between investors looking to make a quick buck, further lowering the supply of actual places to live (because housing units remain empty while being flipped), driving up the cost for families who just want a place to live. Oh wait...

Half way through I was already clicking "Reply" thinking "...is this guy for real?!", only to see the "Oh wait..." The amount of social media content revolving around "how I became a milionaire/how I reached my first million" and the common factor is "I bought a house in 201*", then I'd say something is a bit off... Either there's massive speculation, or 1 million isn't what it used to be, or worst: both.

The problem with those scenarios is that for every one that made a killing in real estate there’s plenty that barely broke even. The winners think they have some special sauce … maybe rhey did, maybe theg didn’t.

The problem is that their blogging about it attracts the people that want to get rich quick and they are the ones likely to lose their shirts.

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

#246

Post by jollybean » Sat, Nov 27, 2021, 8:23 PM UTC

All of this reads like a Dickensian nightmare, where corporations have bought up all the water and air.

This is ridiculous, we need much better regulation on this stuff.

I wonder if higher property taxes would help a bit? If you own a 'home' then you're going to be paying for the water, school, electricity infrastructure whether you use electricity, water, or not.

Of course, that would be gamed hard and would have to be strongly regulated as well.

But that, and vacant property taxes, limits on some other things, and some other adjustments might help.

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

#247

Post by bee_rider » Sat, Nov 27, 2021, 8:25 PM UTC

JumpCrisscross wrote: post #98

wpietri wrote: post #94

Earlier quoted context omitted.

> Archetypal market making involves simultaneously buying and selling an asset Does it? I worked for a few years for a market maker, and that's not what we did. Simultaneous buying and selling is what the arb guys did. We'd buy and sell with generally short hold times. Which makes sense to me given that the exchange has market makers to provide liquidity. If something can be simultaneously bought and sold, then the m…

> that's not what we did Archetypal, not predominant. > Simultaneous buying and selling is what the arb guys did. We'd buy and sell with generally short hold times The ideal market maker is arbitraging (and eliminating the arbitrage-able inefficiency). That’s why humans were replaced by faster-trading machines everywhere they could be. In most cases, the arbitrage is synthetic or approximate, e.g. hedging an options…

If we look at archetypal on Wikipedia, we get:

> 1) a statement, pattern of behavior, prototype, "first" form, or a main model that other statements, patterns of behavior, and objects copy, emulate, or "merge" into. Informal synonyms frequently used for this definition include "standard example," "basic example," and the longer-form "archetypal example;" mathematical archetypes often appear as "canonical examples."

> 2) the Platonic concept of pure form, believed to embody the fundamental characteristics of a thing.

The confusion between you two seems (to me at least) to fit almost entirely within the difference between those two definition. If you are describing the ideal market maker as essentially performing arbitrage, that seems to fit the second definition pretty well, right?

Meanwhile if wpietri says that most of the work at his believed-to-be-typical example of a market maker was doing non-arbitrage stuff, that'd make sense, right? I guess in most places the main work would be managing the divergence from idealness.

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

#248

Post by cwilkes » Sat, Nov 27, 2021, 8:28 PM UTC

sokoloff wrote: post #67

rpvnwnkl wrote: post #58

Earlier quoted context omitted.

They are out 200k. They bought for 100 too much and will have to sell for a 100 less than planned.

No, they bought for $1000K and sold for $900K. You can’t count the spread twice.

The spread kind of can be counted twice: if you tell management “we’re going to make $100k (10% return) in profit this year” and you end up paying $1000k and selling for $900k instead of $1100k like you planned … management is going to be less than pleased.

They fronted you $1M with the expectation they would make $100k. Now they are losing $100k. So their own projections are screwed by $200k.

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

#249

Post by megablast » Sat, Nov 27, 2021, 8:34 PM UTC

tartoran wrote: post #211

mint2 wrote: post #154

Earlier quoted context omitted.

Cat pee permanently stains flooring and is also extremely hard to get the smell out. 2k will not be nearly enough if there’s extensive cat damage. Wood floors turn black with it and must be replaced.

Yes, even after extensive renovations cat pee smell can persist and some people are bothered by that smell. Im one of those people but I do like cats and wouldn’t mind having cats if they wondered around the neighborhood rather than be inside only.

Killing small animals and birds.

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

#250

Post by wpietri » Sat, Nov 27, 2021, 8:36 PM UTC

bee_rider wrote: post #247

JumpCrisscross wrote: post #98

Earlier quoted context omitted.

> that's not what we did Archetypal, not predominant. > Simultaneous buying and selling is what the arb guys did. We'd buy and sell with generally short hold times The ideal market maker is arbitraging (and eliminating the arbitrage-able inefficiency). That’s why humans were replaced by faster-trading machines everywhere they could be. In most cases, the arbitrage is synthetic or approximate, e.g. hedging an options…

If we look at archetypal on Wikipedia, we get: > 1) a statement, pattern of behavior, prototype, "first" form, or a main model that other statements, patterns of behavior, and objects copy, emulate, or "merge" into. Informal synonyms frequently used for this definition include "standard example," "basic example," and the longer-form "archetypal example;" mathematical archetypes often appear as "canonical examples." >…

That could be it. Except that if market-makers were ideal in that sense, they wouldn't need to exist. If a buyer and a seller simultaneously exist at a given price, they can just trade with one another. Market-makers are valuable to markets only when they provide liquidity through non-simultaneous buy/sell pairs.

I think it also leaves out that not every market maker wants to be flat instantly. The one I worked for, and at least some of our peers were sometimes happy to hold inventory for a bit when they thought the market would even out.