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Earlier quoted context omitted.
You can sign up to Zillow via Facebook, where they get permission to pull the most relevant data points. They can then make additional inferences based on that.
Facebook offers targeting. They don't sell "data points".
Zillow has such reach that they can low-ball every offer so that 99% of people won't take it - but as long as 1% of people do, and Zillow can avoid terrible houses, then Zillow will be buying properties at a huge discount from the market, plus collecting a substantial fee. Thus, they can sell at market rates and make a big profit per house. The key advantage here is that they can make these low offers to a much bigge…
Maybe that's not a big part of the cost?
Earlier quoted context omitted.
You can sign up to Zillow via Facebook, where they get permission to pull the most relevant data points. They can then make additional inferences based on that.
What do you think are the most relevant data points that you believe can be pulled from that API?
I have been studying this part of the business quite a lot lately. A few considerations:
1) It seems to me that Opendoor, Unison, etc, and now Zillow, are trying to capture "pre-foreclosure" opportunities before they hit the market. Think about this: why would you want to sell your house quickly, and leaving money on the table, if not because you're short on cash and you know you will soon lose your house?
2) Secondarily, especially in the case of Opendoor, some homeowners might want to simply avoid the complex and time-consuming task of "changing homes" (fixing small details, picking the agent and listing it, staging it, handling the delicate balance between selling the current one and securing the next one, etc). Opendoor promises to vastly simplify this part, which I think is good.
3) I believe that some of these assumptions are specific of the current market situation, where in most "hot" real estate areas (SF, LA, Seattle, NY, Honolulu) prices are wild, the appetite for real estate has never been stronger, and at the same time there's still many opportunities to make a quick buck by flipping, accessing certain information earlier, etc.
I am not completely sure what will happen when/if the market corrects (might also depend on the size of the correction).
4) In the US the whole process of buying homes, financing them, and potentially use LLCs/Trusts/etc to handle various real estate properties as investment is still very fragmented, and still very dependent on which State you live in and in which State the property resides. There are essentially thousands of different combinations and configurations, and the optimal answer to each can also vary over the years, following updates to the legal code or to tax rules.
All in all, I think that Zillow is trying to carve out another piece of the market, and not necessarily because their current market is showing signs of slowing down (even if that has discussed just recently [0]). Heck, it might even be that Opendoor's outstanding fundraising results might have triggered the decision to go against them.
5) Long term, I think most real estate assets will become fully digital, and handled exactly like a small piece of software - that is, for everything that pertains property and ownership, taxation, transactions, etc. Of course, fixing a leaking pipe will still require a physical intervention :)
For background: I'm co-founder/CEO of a startup which will provide a software platform to digitize real estate assets, and legally transact on properties using APIs. We leverage the Ethereum Blockchain as a global land registry where these transactions are recorded. (I don't intend to use this comment to publicize it, hence no link).
Zillow has such reach that they can low-ball every offer so that 99% of people won't take it - but as long as 1% of people do, and Zillow can avoid terrible houses, then Zillow will be buying properties at a huge discount from the market, plus collecting a substantial fee. Thus, they can sell at market rates and make a big profit per house. The key advantage here is that they can make these low offers to a much bigge…
It'd be pretty inconsistent to put in a lowball offer when your company publishes an estimated value for every home in the market.
Earlier quoted context omitted.
I mentioned this elsewhere, but 'closing certainty' is a real concern in the real estate market, to the point where many sellers will take a lower offer price in favor of a cash buyer.
I never understood why though, in the worst case doesn’t their house just take a bit longer to sell if a deal falls through? Aren’t there backup offers in play? Is taking a lower offer really better than just waiting a bit more for the higher offer?
There is value in certainty.
It’s why a $100 now is worth more than a pronise to pay in the future
Earlier quoted context omitted.
I mentioned this elsewhere, but 'closing certainty' is a real concern in the real estate market, to the point where many sellers will take a lower offer price in favor of a cash buyer.
I never understood why though, in the worst case doesn’t their house just take a bit longer to sell if a deal falls through? Aren’t there backup offers in play? Is taking a lower offer really better than just waiting a bit more for the higher offer?
Earlier quoted context omitted.
I never understood why though, in the worst case doesn’t their house just take a bit longer to sell if a deal falls through? Aren’t there backup offers in play? Is taking a lower offer really better than just waiting a bit more for the higher offer?
Here’s an example reason why someone might take an earlier offer: A new job starts July Nth. It’s now mid-April. The family needs to be moved before July. They don’t have a lot of months left to close a deal.
Could Zillow use some combination of data from data brokers to find out how motivated a seller really is and then take them for as low as they can go?
For instance you’re selling a home and I see your job has changed on LinkedIn and your home hasn’t sold yet.
Zillow has such reach that they can low-ball every offer so that 99% of people won't take it - but as long as 1% of people do, and Zillow can avoid terrible houses, then Zillow will be buying properties at a huge discount from the market, plus collecting a substantial fee. Thus, they can sell at market rates and make a big profit per house. The key advantage here is that they can make these low offers to a much bigge…
> Zillow has such reach that they can low-ball every offer so that 99% of people won't take it - but as long as 1% of people do It'd be pretty inconsistent to put in a lowball offer when your company publishes an estimated value for every home in the market.
Sometimes people just want sell now.