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Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

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421–430 of 476 posts

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#421
post #415

Earlier quoted context omitted.

There are several TV shows that show house flippers. You think that's immoral? For each property, they engage in two transactions for which all parties involved are willing participants. How is that immoral?

Willingness is not necessarily, informed consent, and even that might be due to exogenous probabilistic predetermination. So if we go by Rawlsian concepts: if it's not fair, it's immoral. If the market maker makes too much, then it's economic rent (due to rent-seeking behavior), which a lot of people consider immoral.

I don’t understand how it is rent seeking. They are actually improving the supply of housing by fixing them up.

How is it possible for the market-maker to make “too much” in a free competitive market? They don’t have any special capability that the average home buyer doesn’t have.

I really don’t understand the angle. Capitalism is all about selling 5 cent pencils for 10 cents.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#422

Earlier quoted context omitted.

Yeah, throw your model at: "contractors took six months longer than expected to finish the kitchen" Extrapolate that out a hundred thousand times and you get a sense of what they were trying to manage. How did they predict remodel costs? Pre-pandemic material costs and back-of-the-napkin labor estimates?

LOL. It’s kinda like estimating software!

It's worse. These people are relying on unskilled labor hired by contractors to fulfill requirements they dreamed up in a game of telephone.

Mobilizing professional contractors is very difficult unless you are the highest bidder. And even then, shit happens...a lot.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#423

Earlier quoted context omitted.

> If they outbid everyone who actually wanted to live there, who were they planning to sell to? :P I mean, exactly - they lost $550 million. Didn't stop them from burning massive capital reserves to outbid tons of people and fuck up the market a bit for them on a bad bet.

So they basically gave $550 million to UMC homeowners by overpaying for houses, while making it slightly harder for other UMC wanna-be homeowners to buy homes for a couple months. Not the worst outcome I can imagine

Is the threshold for being "UMC" owning a home now? Most of these homes were not uber pricey.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#424
post #332
post #324

Earlier quoted context omitted.

There was a Kaggle Competition in case you missed it. At least here you can see what kind of features they are using and what models people employed. See https://www.kaggle.com/c/zillow-prize-1

Zillow Offers team was isolated from the Zestimate team. They didn't share algorithms.

AFAIK this is false; Offers began transacting at the Zestimate price in several markets earlier this year

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#425
post #101

We recently went through buying a Zillow owned house in Phoenix AZ and response and attitude from the selling agent and zillow was pathetic. They took 3 full days to send the signed contract after they told us we our offer was accepted. Couldn't get the inspection done within first 9 days(inspection contingency is 10 days) of signing the contract and only got a response when we said we were going to cancel escrow. Go…

Was the agent a Zillow employee?

The seller agent was a Zillow employee since the home is owned by Zillow. My agent was not a Zillow employee.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#426
post #101

We recently went through buying a Zillow owned house in Phoenix AZ and response and attitude from the selling agent and zillow was pathetic. They took 3 full days to send the signed contract after they told us we our offer was accepted. Couldn't get the inspection done within first 9 days(inspection contingency is 10 days) of signing the contract and only got a response when we said we were going to cancel escrow. Go…

You get what you pay for. I tried using a discount broker back in the day, my experience was similar to yours.

My agent was traditional and would get a standard 2.5% commission if I went through with the purchase.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#427
post #92

Earlier quoted context omitted.

> house prices have a fundamental ceiling, and it is determined by the size of the monthly payment that banks will allow the typical homebuyer to assume when approving a loan. In the more irrationally-hot markets, why assume that housing is even being purchased on a mortgage by your average home-buyer, rather than being purchased cash-in-hand by a private or corporate investor looking to park wealth they've already g…

If the current value of something is over a "fundamental ceiling" it means that it's already inflated. Why would an investor park their wealth in such an asset?

A large part of the "foreign ownership" plaguing west-coast cities like Vancouver and Seattle is capital flight from China. In this case, real estate has the valuable property of being harder for a foreign government (who happens to be the government to which the homeowner is subject) to confiscate+liquidate than other assets, so said government will prioritize softer targets. Real estate as an investment class here is acting like a club on a car steering wheel—de-prioritizing theft, rather than inhibiting it.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#428
post #377
post #337

Earlier quoted context omitted.

Which may not be a good alternative.

Well, you can also put your money into short-selling strategies, if you think stuff is overvalued. (Of course, taxes and regulations complicated this discussion.)

Of course, taxes and regulations complicated this discussion.

It doesn't complicate the discussion, it is the discussion. Basically the only reason foreign investors are buying real estate in North America is because of issues directly related to regulations and taxes.

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#429

Earlier quoted context omitted.

Actually, this is a problem that is already solved by smart motorways in the UK (Europe too maybe?). They have a variable speed limit that dynamically changes according to traffic that stop brake waves happening. Do you not have them in the US?

Not only do we not have them, but I don't think I've ever read a freeway speed limit sign at all.

> I don't think I've ever read a freeway speed limit sign at all

Lol, why adopt the UK's variable speed limit when we have already de-facto reinvented the Autobahn....

Re: Zillow to stop flipping homes, loses more than $550M, lays off 25% of staff

#430

Earlier quoted context omitted.

I think you're confusing the common meaning of rent for "rent seeking"[1] which, in economics, means specifically getting more resources in return for nothing. It's a pejorative definition. Getting paid for a service is not rent seeking in the way people are using it here. [1] https://www.investopedia.com/terms/r/rentseeking.asp

I actually didn't know about the pejorative nature of 'rent seeking', so genuine thanks for the link! IMO I didn't need to either, knowing the commonalty doesn't change the intent I was going for. Even if you're seeking rent above the break even point. I'd still say that's amoral at it it's worse ethically speaking. I mean to expose the hyperbole of the assertion that wanting to wake profit in of itself doesn't make…

Again, I think you're mistaking what people are saying.

> Pretending that, just owning property and having them gall to dare to not rent it at or below cost is what's immoral or unethical is harmful to persuading anyone currently undecided[...]

This is not what people are critiquing. No one else is talking about the thing you are. They are expressing their own moral judgements about a certain category of economic activity. That's why I linked you to a definition of "rent seeking." Economics does not make a moral judgement about rent seeking - it just says systems of exchange are more efficient w/o it.

Not everyone agrees on where to draw the line between productive business and rent seeking - but when someone speaks about businesses or owners "seeking rents" they are specifically talking about a proportion of their business that is past the point of making things worthwhile for them and into the range of excess. The definition of a "rent" in this context is that the business owner would make a reasonable profit without it. If they need to charge as much as they do to break even, it is not a rent (with some exceptions[1]).

There is another conversation all together that happens outside economics about how we should organize our society. The 'left' side of that conversation often includes the ideas that all landlords are bad or that profiting from property you own w/o labor is bad. Those are all ideas we could also talk about but they are orthogonal to the economic discussion. Economics cannot tell you what system of ownership is moral and morality cannot tell you what economic systems are stable.

[1] If an owner makes a bad investment and, say, buys a building at the peak of valuation, and then tries to pass on their bad investment to their tenants an an unethical way, that could be considered a "rent" in the economic sense as they are tying to get income on an unfair value of the building.

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