Realtor and Mortgage Lending industry is very slow in tech adoption and adaptation of digital strategy. Unless there is a lift across the industry on the buy-sell-marketplace together, such mishaps will occur. This industry will fail if injected with viral nature of social media algorithms.
Zillow lost money because they weren't willing to lose money
371–380 of 386 posts
Re: Zillow lost money because they weren't willing to lose money
#372Earlier quoted context omitted.
Maybe that's been your experience. Mine has been that they're eager to cover up issues and explain away those they can't. I mean no hate, that's their job.
It has been my experience. My agent took a particular likening to me for whatever reason, probably because I'm a very low drama client, and took me around on the open houses that are mostly intended for agents to connect. In my town these happen on Wednesday morning. Selling agent usually has some basic amenities out like a coffee station, pastries, occasionally pizza. A large number of agents just cruise through con…
My observation where I live is that there are somewhat exclusive networks and not everybody is in the same one -- they might be clustered around catering to a clientele speaking a particular foreign language, for instance, and be somewhat apart from more "mainstream" agents. Anyway, I personally watched the selling agent try and convince me and my agent that the water damage in a property I was looking at was hardly damage at all and anyway, it doesn't rain in California, so don't worry about it. Sure, that's just an anecdote. So is your story, though.
I don't doubt that two agents who had frequently worked with each other amicably might be more frank, but I do doubt that agents all, or even mostly, presumptively do this with every counterparty they meet.
Re: Zillow lost money because they weren't willing to lose money
#373Earlier quoted context omitted.
> 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. I really question the idea that most people have any idea what their home is worth without relying on... Services like Zillow. Especially if they've lived there a while.
Most people don't know what their home is worth, and if you get two appraisers or realtors to give you an estimate they'll likely be quite different. Similarly, if you think a house is worth $500k but you list it for $600k, you don't know if someone will decide they love that house and they're willing to pay that amount or not. That's one reason Opendoor tends to list houses at a fair premium to what they paid, as so…
Yeah, and by the same token, you don't know if the buyer offering the top amount is really going to pull through, giving an offer from OpenDoor a certain appeal.
Re: Zillow lost money because they weren't willing to lose money
#374Earlier quoted context omitted.
Sure, these houses exist everywhere, but most people avoid buying houses next to them. If Zillow bought such a house they’d take a loss to unload it unless they baked it into their model.
I think I’m just used to a housing market (seattle) where that is such a tiny blip it couldn’t possibly affect the price. Maybe untrue elsewhere. Edit: it also seems like a small thing to worry about at a point in time since neighbors change. Annoying neighbors move away, or a new annoying neighbor can buy the house next door at any time. I’m not paying extra for something that is completely out of my control and cou…
I can't speak for everyone. But I definitely think that a lot of people are put off by buying a house next to a Beware of Dog guy even though they know that one could move in tomorrow. Also, in California, a lot of people are in neighborhoods who could never afford to move in but own the home and don't have to worry about increasing taxes.
Re: Zillow lost money because they weren't willing to lose money
#375Earlier quoted context omitted.
Zillow just has Zillow. The homeowner has Zillow, local realtors, inspections, personal experience of the house...
The local Realtors are ultimately just going off sales data, and inspections rarely happen before an agreement is made in principle to buy.
> inspections rarely happen before an agreement is made in principle to buy
That depends on the market.
Re: Zillow lost money because they weren't willing to lose money
#376Earlier quoted context omitted.
Last time I looked at a map it was next to Mexico which is as far south as one can travel before leaving the United States. Where do you consider it to be?
I believe he means it isn't in the South, but in the Southwest. The South in the US is actually southeast. Note the capitalization.
I see, that is odd to me but I learned something new. Thank you for clarifying.
Re: Zillow lost money because they weren't willing to lose money
#377Earlier quoted context omitted.
The local Realtors are ultimately just going off sales data, and inspections rarely happen before an agreement is made in principle to buy.
> inspections rarely happen before an agreement is made in principle to buy That depends on the market.
Where is that done? I've bought in two states and sold in one and typically the way it's done is you have a contingency in the home sale that lets you walk if you don't like what your inspector finds. A seller could theoretically do their own but there's little upside, since this just creates a record of any issue that turns up that you now can't claim ignorance of.
Re: Zillow lost money because they weren't willing to lose money
#378Earlier quoted context omitted.
> inspections rarely happen before an agreement is made in principle to buy That depends on the market.
Where is that done? I've bought in two states and sold in one and typically the way it's done is you have a contingency in the home sale that lets you walk if you don't like what your inspector finds. A seller could theoretically do their own but there's little upside, since this just creates a record of any issue that turns up that you now can't claim ignorance of.
In Oakland at the moment the sellers typically get the inspection done, provide the report in the disclosure packet, and then expect an offer with inspection contingency waived.
On the downside, there are the obvious risks in the structure of the incentives - in principle these may be sufficiently mitigated by the need to maintain a good reputation among buyers' agents; in practice they may not be.
On the upside, having had the opportunity (and motivation) to read many tens of such reports meant that I was (I believe) much better at reading them - and had a sense of what was typical amongst the homes I was looking at - by the time I read through the report for the house I wound up buying, and there haven't been any surprises so far...
Re: Zillow lost money because they weren't willing to lose money
#379Earlier 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 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?
Because of shear dollar amount. Let's say on trade, you can sell your car to a dealership for $8000. Privately, maybe you can get $10000 or 10,500. Now, of course, $2,500 is not nothing but for some people, that is a trade they're willing to make to simply get the car off of their hands rather than go thru with a full-scale private sale process.
On the other hand, for a house that you could sell "instantly" for, say, $450,000, but that you could potentially get by selling privately for $480,000 or $500,000, that is now leaving 10 times more dollars on the table. Proportionally, the difference between the car and the house might be similar but in absolute dollars, it's a huge difference.
Re: Zillow lost money because they weren't willing to lose money
#380If Zillow had "figured it all out" on solving the magic pricing problem, they could have put the entire appraisal industry out of business. Well, guess what, they didn't and they didn't even come close.