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

stevenbuccini.com

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

#301

Post by cowpig »

sam0x17 wrote: post #297

Let's not forget there was also a huge public outcry on HN and in other places when it came out that they were buying and selling real estate. So if it was socially detrimental to the company's image, and they didn't have the corporate will to collect enough data for it to become profitable, it's a no-brainer that they would get rid of it. I see this as a victory for us calling out companies for immoral behavior.

Yeah, reading this article I couldn't help but notice that there would be a massive conflict of interest in Zillow entering the real estate market, and would probably create externalities. Seems like a win and strange that the author is so derisive of the company for doing what is probably in all of our best interests.

It's telling that the article opens with a clip of Alec Baldwin talking about needing "brass balls" from Glengarry Glen Ross, seemingly oblivious to the fact that it's a dark comedy mocking cutthroat sales culture.

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

#302

Post by emodendroket »

perl4ever wrote: post #223
opportune wrote: post #158

Earlier quoted context omitted.

I don’t think it’s just that they had a poor model, but the combination of that and adverse selection. If you pledge to purchase at the Zestimate then people who reasonably think they can get more than the Zestimate on the open market don’t have an incentive to sell their house to Zillow (besides convenience). But people who think the Zestimate is an over estimate will of course sell to Zillow. So instead of a normal…

>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 think a useful analogy here is trade-ins. Everybody knows that a private sale gets you a better price for a car than selling to a dealer. But a lot of people don't want the headaches that come with one. Why wouldn't it be the same for housing, especially when people may have life circumstances that mean they need to sell ASAP?

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

#303

Post by Reuzel »

Zillow lost money, because they were hit really hard during pandemic.

This article does not mention that. Instead, the rest of the article deals with Linkedin-wisdom and hard platitudes, such that it is not possible to build a good model on someone else's data (as if Zillow even was).

Data scientists remarking on the Zillow fold, are like psychiatrists or engineers remarking on non-clients and bridges build by others. They know nothing about the business, about the constraints, about how the estimates are consumed. They end up silly, but without good information coming from Zillow, we assign value to their analysis, purely on Twitter-soundbite-ability and internet-authority.

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

#304

Post by nebula8804 »

reaperducer wrote: post #280
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…

in our county, 20%+ of the housing is idle, owned by out-of-state companies, some of whom pay property taxes and some dont. I've seen this personally, too. A house I rented until a couple of years ago was owned by a Chinese company, which also owned half of the other houses on the block. We all paid rent to the same LLC that forwarded the cash overseas, and did almost zero maintenance. I think the housing market is s…

I don't understand why the US does not push back on Chinese ownership of property. From what I understand, there are so many restrictions of owning land in China as a foreigner:

1. The property must be residential 2. If the property is commercial, a foreigner must incorporate in China 3. You may own only one property 4. You must possess a long-term visa 5. You cannot be a landlord, as a foreigner 6. You must pay a 1% deposit and an initial 30% of the purchase price to the seller in RMB, if you are obtaining a mortgage

I think there needs to be a campaign to educate the US population on how lopsided the system is. Only then will politicians start to get massive heat to enact at least equivalent restrictions. Right now its all the rich and foreigners picking away at the carcass that is America.

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

#306

Post by [deleted] »

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…

[deleted]

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

#307

Post by scheme271 »

nebula8804 wrote: post #299
seanmcdirmid wrote: post #233

Earlier quoted context omitted.

> Cactuses are protected from destruction by law, and must be transplanted when doing clearing for construction. You may find the idea of being able to own a firearm without a license to be unpalatable but the state largely remains very safe crime-wise (perhaps due to that?) My mom lived in Tucson and decided on a visit that I might want to go shooting with her and her boyfriend at the time. Suffice it to say, it did…

>When I was a kid, I took a greyhound bus from Vicksburg MS to Seattle WA via the southwest approach (I later did the northwest route, which wasn't as interesting). People would get on the bus from various prisons in Texas (the bus stopped a lot at prisons), New Mexico and Arizona...and were all going to LA. Why bother being homeless in Phoenix (when summers can kill) if LA isn't that far away? Heck, that applies to…

There's a point-in-time count of homeless that happens annually nationwide. I believe they capture this information (well, it's more along the lines of how long did they live in the area before becoming homeless).

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

#308

Post by ipaddr »

SteveGerencser wrote: post #190
h2odragon wrote: post #134

Earlier quoted context omitted.

West TN; we've got that happening too. The neighbor's $750k McMansion has ludicrous "market value" implications for the hunting camp trailers beside it and the doublewide up the road. and (ahem) East TN is more "western Arlington VA" IMO. I said rural . I'd have to walk a half mile to get a decent rifle shot at a neighbor. It's getting too crowded here.

You just described my road here in Henderson County,TN. We bought 100 acres and built a dream home. In the last years (ish) 4 new single wides went in and a couple of new smaller homes. We were told during the entire build that we will never get out of it what we are putting into it and we don't care. We aren't building for resale, selling it is our kid's problem. But there are so many abandoned places out here. Peop…

Could you use it for hiking, hunting or woods?

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

#309

Post by civilized »

perl4ever wrote: post #223
opportune wrote: post #158

Earlier quoted context omitted.

I don’t think it’s just that they had a poor model, but the combination of that and adverse selection. If you pledge to purchase at the Zestimate then people who reasonably think they can get more than the Zestimate on the open market don’t have an incentive to sell their house to Zillow (besides convenience). But people who think the Zestimate is an over estimate will of course sell to Zillow. So instead of a normal…

>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 don't think Levine successfully disputes the importance of adverse selection here. Sure, if you make a million low-ball offers, a handful will be accepted for God knows what reason. That doesn't mean that adverse selection isn't a serious danger when you attempt to scale up, as Zillow did.

I mean, why did Zillow go straight from making profitable purchases of few houses to losing money on tons? If there's some sweet spot in the middle that would have allowed them to scale up profitably, would it really be that hard to land on that spot?

I think it's obvious that homeowners know much more about the houses and neighborhoods they live in than Zillow, and this creates a big risk for Zillow.

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

#310

Post by ipaddr »

nebula8804 wrote: post #298
goldenkey wrote: post #185

Earlier quoted context omitted.

You'd be surprised at how progressive southern states are. The Texas state motto is literally "Friendship." Now, I don't know much about Texas but I did live in Arizona for a few years. It surprised me more than a bit, as someone who grew up in New York. Arizona legalized medical marijuana quite early, followed by recreational marijuana. Their medicaid program AHCCCS [1] is extremely comprehensive and even pays for U…

How is the diversity? Is there integration or do different ethnic groups just keep to themselves. Is there upward mobility for some groups but not others? What about issues like Joe Arpaio and his policies affecting the community. I can't speak for your experience but I wonder are you really seeing the whole picture? How do you feel Arizona will cope with the coming climate change? At the rate its going Arizona may b…

I remember hearing that 15 years ago. I remember hearing about how we are due for an earthquake that will break California into two. That was in the 80/90s. We had great fears of a new ice age in 60/70s.

I don't know what the future holds but thinking Arizona will become unsafe in 10-15 due to climate change is a little foolish.

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