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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

#381

Post by speby »

speby wrote: post #380

If 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.

No "machine learning" model can successfully peer into the inside of the home, and in the walls, or in the plumbing, to get an accurate sense of the worth of the home because no machine learning model would have that information. It isn't available until you actually go and look, with real human eyes, into the house.

No pricing model will ever get this right.

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

#382

Post by hhmc »

JumpCrisscross wrote: post #333
hhmc wrote: post #321

Earlier quoted context omitted.

I think you maybe have some misunderstandings around the practicalities limit orders and market microstructure (not withstand some theoretical model of risk free market-making, which has broadly been superseded, if you care about the theory at all).

> you maybe have some misunderstandings around the practicalities limit orders and market microstructure Perhaps. I haven’t been on a market-making desk for close to a decade now. But to correct one misconception in your comment, market makers don’t commonly use limit orders. (You’d submit a quote and try to hit rebates.)

> But to correct one misconception in your comment, market makers don’t commonly use limit orders. (You’d submit a quote and try to hit rebates.)

They do in the asset classes I work with, YMMV

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

#383

Post by emodendroket »

speby wrote: post #379
emodendroket wrote: post #302

Earlier quoted context omitted.

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,…

I disagree for a few reasons:

1. Your numbers are somewhat arbitrarily chosen... a car could easily be worth $40k and in some markets a home could be worth $200k.

2. Precisely because the house is worth so much, most people cannot afford to pay two mortgages, or their mortgage and rent on a similar home, at the same time, so if they must move by a certain date, they're under pressure to sell.

3. If you decide to sell to Opendoor you can pretty sure that the sale is going to go through; no worries about financing, for instance.

4. It's true that the numbers are larger in absolute terms, but people are often not rational in this way. Plenty of sellers leave tens of thousands on the table for somewhat frivolous reasons.

5. There is a lot of fat as far as people skimming off the top of transactions -- brokers, title companies, etc. IBuyers can get much better rates on these services by being bulk buyers, meaning they don't actually have to come that far off of the next-best offer to make a profit.

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

#384

Post by JanisL »

Ekaros wrote: post #264
skinnymuch wrote: post #214

Earlier quoted context omitted.

Would some cryptocurrency stuff count? We have no idea how much a handful of whales control Bitcoin or Eth. The tether thing seems really shaky too with how much they actually have in reserves. Same with a number of exchanges or major market players. Cryptocurrency is also a bit wonky because of always including forever lost access to a solid percentage of the currency. Bitcoin is the most notable.

Bitcoin is best example. Somehow currency we aren't sure how much is reachable anymore should come some sort of gold standard... Like at any moment significant fraction of it could be dumped on market. Probably won't, but it is not entirely certain...

Bitcoin is a lot less liquid than many people think, a lot of wash trading has occurred recently that has obscured this.

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

#385

Post by skinnymuch »

JanisL wrote: post #384
Ekaros wrote: post #264

Earlier quoted context omitted.

Bitcoin is best example. Somehow currency we aren't sure how much is reachable anymore should come some sort of gold standard... Like at any moment significant fraction of it could be dumped on market. Probably won't, but it is not entirely certain...

Bitcoin is a lot less liquid than many people think, a lot of wash trading has occurred recently that has obscured this.

I wish there was better or more reporting and stuff on this. I have assumed this is the case. But :/

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

#386

Post by skinnymuch »

JanisL wrote: post #332
skinnymuch wrote: post #214

Earlier quoted context omitted.

Would some cryptocurrency stuff count? We have no idea how much a handful of whales control Bitcoin or Eth. The tether thing seems really shaky too with how much they actually have in reserves. Same with a number of exchanges or major market players. Cryptocurrency is also a bit wonky because of always including forever lost access to a solid percentage of the currency. Bitcoin is the most notable.

Tether is an enormous fraud and the financial reporting of the reserves has just never been up to generally accepted standards. The thing with crypto is that much like some of these other commodity markets there's less real trading volume than many people think (there's been a lot of wash trading going on: https://cryptobriefing.com/binance-wash-trading-icebergs-tip... ). Where crypto is very different from the futur…

Ah yes this makes sense
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