Zillow Seeks to Sell 7,000 Homes for $2.8 Billion After High-Tech Home-Flipping Business Fails (bloomberg.com) 144
Zillow is looking to sell about 7,000 homes as it seeks to recover from a fumble in its high-tech home-flipping business. Bloomberg reports: The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Zillow will likely sell the properties to a multitude of buyers rather than packaging them in a single transaction, said the people, who asked not to be named because the matter is private. The move to offload homes comes as Zillow seeks to recover from an operational stumble that saw it buy too many houses, with many now being listed for less than it paid. The company typically offers smaller numbers of homes to single-family landlords, but the current sales effort is much larger than normal. If successful, the sale would make a dramatic dent in Zillow's inventory. The company acquired roughly 8,000 homes in the third quarter, according to an estimate by real estate tech strategist Mike DelPrete.
Houses (Score:5, Informative)
Houses should be for living, not for investing.
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He agrees with you. [youtu.be]
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He agrees with you. [youtu.be]
Well he must be really smart then, that's all I can say!
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Houses should be for living, not for investing.
Are you a commie? /s
Seriously though, under capitalism, everything short of your own body (and sometimes even your body) has a price tag on it. Everything that has a price tag and can be traded, is an opportunity for investment.
"Should" have no place in a capitalist & rule of law system, you either call your lawmakers to ban trading houses, or you suck it up.
For example, in many other countries, health care is also not for investing, and they have laws to make it so. Saying something "should" not be d
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Seriously though, under capitalism, everything short of your own body (and sometimes even your body) has a price tag on it. Everything that has a price tag and can be traded, is an opportunity for investment.
Especially your body. That's why you're renting it out to your employer for 8 hours a day.
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Saying something "should" not be done without putting the law in place is just virtue signalling.
Sounds like you think no one except a small handful politicians are allowed opinions.
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Virtue signalling connotes that you're playing to an audience of like-minded people.
Which is precisely what bleating about virtue signalling is. Which is why it's ironic.
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I'm not arrogant enough to think I can pull sound economic policy out of my ass so I wont attempt to describe an implementation that someone will almost immediately find a problem with. Instead I'll just say this, houses shouldn't be the play things of speculators or investment firms. In a perfect world they would be bought and sold purely by private individuals for the purpose of residency. We are already past the ability for most people to be able to afford one out right so we include banks in the process
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A vacancy tax may work for what you want.
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I'm not arrogant enough to think I can pull sound economic policy out of my ass
I see you don't aspire to be a politician or economist.
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Houses should be for living, not for investing.
You know, I HATE the "new homes built" metric. Until this year (from the 2008), a lot of areas still had 'hidden liquidity' where people basically put off plans to move because their homes were cheaper to live in than where they were going to move to. I mean real people. People who didn't do anything crazy but had a good amount of equity in their homes that they lived in for years and then in a matter of a month, they couldn't move after retirement. That was the case in my area.
Everyone has seen the 'bu
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You go ahead and start a house building company on that basis, let me know how that goes.
(shrug)
People with utopian ideals are amusing as long as they understand their comments are pragmatically valueless.
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Well, in the area I live in, the local small-scale housing contractors that build excellent houses would do just fine since they build on-demand and don't hold inventory, and the big corporate housing contractors that build 50 identical crappy homes adjacent to each other that build in the hopes of selling would (eventually) fail. I'm not seeing a problem here.
What I'm really confused by is why this is even a problem in some areas. The state I live in bases property taxes on whether the home is homesteade
Re: Houses (Score:4, Interesting)
I couple years ago I interviewed ~30 different startups, looking for a job. A good number of them had the business plan of buying houses and then monetizing them in some way.
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You mean a REIT?
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I'm don't know the exact legal definition of an REIT, but these were all more creative. For example, Divvy Homes [divvyhomes.com] has some ideas that they will help you "rent to own" a house, which is cool, but an important part of their business model was real estate speculation. There were a few like that, each with a different approach.
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Worth mentioning that SoFi has gotten into real estate too, probably more successfully than Zillow.
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I'm sure your guess, motivated by your feelings about how things "should" be working in a capitalist society, is entirely accurate and not just wishful thinking. Yes, that's sarcasm, for those without a functioning sarcasm detector. So let me guess, in your theory, it's all NIMBYism that's raising home prices and nothing at all to do with investors buying up way too many houses. Because that would make capitalism look like a crap system, wouldn't it?
Zillow's missteps have been in financial news sources for
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You should be able to. And you should be able to make a profit when you sell it, particularly if you've improved it. Nevertheless, we shouldn't encourage asset price increases. For instance, we should tax capital gains on the sale of a primary home, just like any other capital gain.
That would definitely have a lot of negative pressure on prices. Suddenly, there would be 20% less cash available when people move-up homes -- but the same number of homes. (Perhaps there might later be some impact on home b
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I think your plan would have a lot of bad side effects. Not only would you be taxing one of the primary means of investing by low income people, you would also be making it much more difficult for people to move in general and driving down the availability of existing homes for sale. People move all the time, such as taking a new job in a new city, and your plan would mean they would take a 20% hit on the "home equity" they had built up in their current home. This would depress mobility of homeowners, an
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It wouldn't be a 20% on the equity, it would be 20% on the delta from what they paid on move in.
However, I agree that capital gains on primary residence is ill-advised as while it isn't 20% of the whole value, it is still a hit because your move-to house probably had the same market increase as your primary residence had so you are screwed by moving.
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You would be taxing inflation. That accounts for most of the increase in home values over time, after accounting for demographic shifts which can sometimes cause prices to be bid up or down with respect to the inflation-adjusted value they would otherwise have.
This is a problem with all "capital gains tax" schemes. They typically not only tax inflation, but, thereby, offer governments even more incentive to produce inflation than they already have.
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Not all capital gains tax is inherently a bad idea (to skip out on it gives the rich an easy way to switch off their 'earned income' and funnel it in a way that manifests as capital gains), but some capital assets admittedly should be left out.
One could imagine that a inflation adjustment to exempt part of capital gains would be a reasonable measure to mitigate broader capital gains wrongness, but given the housing market is special, still makes sense to exempt primary residence since the real estate market
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You would be taxing inflation.
In theory you could adjust by the average level of price increases, or even the level of price increases in housing by region.
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In Japan buildings are depreciating assets. After about 40-50 years they are worthless and get torn down and replaced.
This keeps prices reasonable and doesn't seem to be a big issue for buyers. The mortgage pays off a bit faster than the property depreciates so there is no negative equity, at least after the first few years where depreciation is highest.
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In Japan buildings are depreciating assets. After about 40-50 years they are worthless and get torn down and replaced.
This keeps prices reasonable and doesn't seem to be a big issue for buyers. The mortgage pays off a bit faster than the property depreciates so there is no negative equity, at least after the first few years where depreciation is highest.
How do they deal with historic or iconic structures?
The Japanese system isn't bad, since the US system has a real drawback, as illustrated during the subprime crisis. At one point shortly before that house of cards collapsed, I listened to an NPR interview with a prominent economist who was claiming that the new normal was continual refinancing of your house, because housing value invariably goes up, and look how inexpensive it is to buy your ever appreciating investment.
I think that's called the "To Infi
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Not every building depreciates, if the building has some historic significance it will can retain value. Most buildings don't though.
Having said that, some historic/iconic structures are regularly rebuilt anyway. In the past they were regularly destroyed or made unsafe by earthquakes. For example some temples rebuild every few decades, building a new one right next to the old one and swapping back and forth endlessly.
The buildings are made with steel frames and cladding too, they tend to me much better than
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The temple attended by the Imperial Family does that rebuild every 20 years thing, in part to ensure that younger craftsmen have the opportunity to actually work on the thing before they become the elder craftsmen.
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The buildings are made with steel frames and cladding too, they tend to me much better than brick houses in the UK.
You said they only last 40-50 years, which is much worse in terms of longevity than in the UK. In the UK steel frame buildings are hard to get a mortgage on because historically they have not tended to last well. It doesn't seem like it would be particularly efficient in terms of resources long-term unless they are made with lots of insulation that can then be recycled.
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Bricks are very bad for the environment. The other issue is that we have the oldest housing stock in Europe because it keeps getting badly renovated. Much of it is unsuitable for modern living.
Re: Houses (Score:2)
The problem with taxing capital gains for primary homes is you're either losing lots of money every time you move or you hunker down and refuse to sell when you can't move to a comparable house; which sends the prices even higher.
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So who owns those rental properties? The government?
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This is a terrible idea, because for most owner-occupants housing is a terrible investment compared to equities.
Owning a house is expensive. Even without anything like remodeling, there's a lot of expensive maintenance just to keep the property from decaying. Roofs, windows, exterior paint/siding, systems like HVAC, appliances, landscaping all suck up a ton of money over time.
And some spaces, like bathrooms and kitchens, need remodeling over time. I had 5-10 year old cabinets when I moved in 20 years ago
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Any time someone says the government should stay the fuck out of anything, they are tacitly admitting that they don't know how governments work. And usually admitting they don't know how the thing they are supposed to stay out of works either. Social security is a textbook example. Lots of noise about how the government shouldn't touch it, when it is a government program. The only way for the government to stay out of it is to
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Markets aren't created by governments. Take away the government and markets still exist (see, for instance, American Indians doing long-distance trade long before there was any sort of centralized government.
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Markets aren't created by governments.
Some are, some aren't. The market for selling things to the US Navy is very much one created by a government. Some only exist in any recognisable form because government regulation prevents a monopoly closing the market. Elsewhere, the government might mandate a monopoly, destroying a market.
Winner take all. (Score:5, Insightful)
The move to offload homes comes as Zillow seeks to recover from an operational stumble that saw it buy too many houses, with many now being listed for less than it paid.
And in the process made it harder for others to get an affordable home.
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Funnily in this case they appear to be selling some for a lower price than they paid...people could literally buy back their house for less than they sold it for.
But I agree their business practice in general suck.
Re: Winner take all. (Score:2)
Blackstone scandalously did this in TheNetherlands (Score:3)
Controversial real estate owner Blackstone uses common trick to avoid Dutch taxes: Report [nltimes.nl] American investment house Blackstone, which has built up a Dutch housing portfolio valued at €793m since 2019, pays no tax on its real estate in the Netherlands, the Volkskrant reported.
A related article in Dutch [at5.nl]
The Netherlands is already on of the most densely populated countries in the world and about a month ago, about 15,000 came to Amsterdam to protest the housing shortage in September. [at5.nl]
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they are dumping property on the market right now at a loss, thats libel to lower home prices in the areas they bought into heavily.
Re:Winner take all. (Score:5, Interesting)
Very true. The most common issues across the US are:
1) Refusal to permit multi-family housing. Often they even reject duplexes, as apparently owning your home while renting half of it is not classy.
2) Setting the regulations under the assumption that only a family with 2 kids will ever want to buy a home - so every single lot is sized and permitted for 4 people, never for a single person or even a retired couple. And just FORGET about tiny houses.
3) A general preocupation with making sure that property values rise, rather than making housing affordable.
This also ensures traffic and huge commutes. More roads = more cars spending time on roads. More housing close to employment (via condos, coops, etc.) = less distance to travel = less time on the road = less traffic.
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Very true. The most common issues across the US are:
1) Refusal to permit multi-family housing. Often they even reject duplexes, as apparently owning your home while renting half of it is not classy.
I've never understood this thing with HOA's and letting others dictate what you can do in your home. It seems at odds with the "dont tread on me" attitude that Americans often display.
A persons home is their castle, you don't let Lord Karen from down the road dictate how you run your castle. Sure here in the UK it can go the other way with hoarders filling up their yards with garbage, but they are few and far between as most people take care of their homes (out of pride, but also because it's the most ex
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It has nothing to do with HOAs, although most HOAs enforce that. Zoning is at the city level, and I can tell you that duplexes tend to really drag an area down in every way. That's why so many people are against them.
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I've never understood this thing with HOA's and letting others dictate what you can do in your home. It seems at odds with the "dont tread on me" attitude that Americans often display.
It is because most HOAs tend to be DNC leaning areas, while RNC leaning people tend to be the Don't tread on my types.
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LOL no. At least in my experience, the more ridiculous the HOA requirements, the more conservative the area. These things are literally set up to keep out poor/young people (who tend to be less white and more Democratic). Neighborhoods with a minimum size of a house's footprint are the most obvious way to make sure it's only affordable for the wealthy. Less obviously, having architectural and landscaping elements enforced by a committee of existing owners is a great way to just flat-out exclude people who t
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It is because most HOAs tend to be DNC leaning areas
My goodness, what total nonsense.
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4) the insistence that everyone must want the American Dream*
Note: From what I've gathered the American Dream is to live as far away from your work as you can, in a massively oversized and inefficient living space, while spending as much of your life as possible sitting in a car stuck in traffic just to do the most basic tasks imaginable, such as getting food for dinner.
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Bovernment zoning is caused by people living in the area (mostly NOT property owners) howling how development will "change forever the nature of the neighbor hood!"
The rejections TEND not be due to planning commissions, but community objections to the development.
Oakland had one delayed for five years because of housing extortion... er, advocates.
At one point, the objection wasn't that there wasn't affordable housing, but that there were not enough premium units set aside as affordable units. 320 units not
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It is caused by government zoning and permitting processes that restrict the construction of housing.
Because who doesn't want to live in a concrete and macadm jungle devoid of any greenery? Where temperatures in the summer will be at least 10 degrees warmer because there's no shade. Where everyone is packed nose to gill, side by side with little to no privacy.
Re: Winner take all. (Score:2)
No shade in the city? Have you ever been to the city? Have you ever noticed how buildings cast shadows?
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A lot of cities are built outside the tropics, you know.
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No shade in the city?
Yes, doesn't seem to be a shadow in the city. All around, people looking half dead, walking on the sidewalk, hotter than a match head. But at night it's a different world.
Just another step... (Score:5, Insightful)
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'Family'? Aren't we all going to live alone?
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VR is your friend.
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Wait until they cut your weekly proti-cake ration by 12% and the cost to rent your e-pod apartment goes from $35,000 per week to $40,000. At least you'll have your e-girlfriend pillow to come home to!
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Have you tried being born earlier? Also, don't be poor. Can't be a problem with capitalism, it's flawless, just flawless I tell ya!
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I'd say capitalism did its job here. Zillow got greedy, they thought they could dominate the house-flipping market, they got burned. That's what capitalism does--it has a way of correcting excessive behavior.
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Except when it comes to Goldman Sachs, J.P. Morgan, Wells Fargo, et al, and then capitalism is an evil word and must be replaced with socialist policies to protect the capitalists.
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I recognize all those names, but what specifically are they doing that is "evil"?
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getting bailed out instead of burned, presumably
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I see! Well, the TARP program has made a $15.3 billion profit from the banks they "bailed out." I'd say the government did OK on that one, and the banks paid back more than what they got!
https://en.wikipedia.org/wiki/... [wikipedia.org].
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Zillow had no plans to rent that stuff out... Too much trouble to manage.
They're into finance (shuffling paper), not actually DOING anything.
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I don't follow your logic. Zillow was buying houses, fixing them up, and selling them to families or anyone who wanted them. How is that a step towards no one owning a home?
Re:Just another step... (Score:4, Insightful)
By charging more than the average family can pay. Why do you think they can't sell those homes?
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How is that Zillow's fault? They can't charge more than what people can pay. Home price is a function of supply and demand. If demand is low, even Zillow can't charge more than the market will bear. If supply is high, regular people also can and do charge more, not just Zillow.
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Well, apparently they can charge more than what people can pay.
The problem is, when nobody can pay, what happens is exactly what we see now.
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Yes, I know, I'm in the mortgage business. What we see now is RECORD home sales--double the volume of 2019--and my company doesn't sell to businesses, only to individuals. Apparently people CAN afford to own homes.
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Well, they can finance them. Whether they can afford them is a different matter.
Here you go! (Score:5, Funny)
My Visa is 4681 9037 8801 5327
Exp 07/22
Code is 982
Wait, can I split between two? Just had a couple Patreon's hit.
I guess the thing to do (Score:2)
is bid a couple hundred bucks on these properties, and drop out at about 100k.
They bought a house right out from under me (Score:3)
so... can they please just relist it for the fucking original price? I still want it, and I don't care who I buy it from.
Re:They bought a house right out from under me (Score:4, Informative)
Standby you may get it for less than original price. If they are dumping houses in a particular area the price will most likely go down.
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Man, getting into any kind of bidding war on a property they intended to flip is just unbelievably stupid. Margins can be tight as it is and even a slight market turn can make a huge impact (as it did here).
Maybe try picking up that house from them now, you might find you will get it for less than you originally bid
Serves them right (Score:5, Insightful)
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What they did was load up on inventory.
They need to shed that now... Too much "not liquid" assets and they're now afraid the market will tank and leave them holding it.
But, they're unlikely to lose money... Just won't be able to "mint it".
Flipping is (Score:3)
Buying a distressed property... Foreclosure, tax sale etc.
What Zillow was doing was buying perfectly feasible properties to facilitate people who could buy something else to do so quickly... It's a BIG deal to be able to simply buy something new to you without the hassle of assuring you've sold what you already have.
That later part often sinks the buy of the new property... Which is why Zillow got into it.
It stopped the sales from blocking the buys people wanted to do, that Zillow, as real estate agent, would get paid for.
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Distressed properties would make this scheme riskier because they're more likely to have deferred maintenance. More likely they just aimed to underpay a bit. So the seller is paying a "convenience fee" to make the deal faster/easier, and the company makes a profit as long as their lowball estimate isn't catastrophically wrong. With thousands of properties, any overestimated prices should be balanced out by underestimated ones and the company makes a profit on average. This is the theory anyway, but it doesn
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Zillow wasn't in the business of just "buying stuff on the market".
Most people who own a house and want to buy something different have to not just sell the house they're in, it have to be coordinated like a ballet... Miss a step, and everybody falls. They were buying properties from people who needed to sell to make their next buy go through... Generally, buyers who were using Zillow as a buyers agent. If the buyer couldn't sell the house they were in Zillow would lose the commission for the purchase wer
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I think what they were actually doing is buy 9 houses in a neighborhood for market price, then buy 1 for an inflated price. People see the inflated house, they think the neighborhood has become more expensive, now Zillow can sell the 9 houses for a higher price. The idea is that the profits from the 9 houses outweigh the losses from the 1 house. In short, speculation and market manipulation.
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OK... citation pretty please, with sugar on top?
What is known, is what I cited.
What you put out is RAW waste... Take it to the water treatment plant.
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Here's the claim. [yahoo.com] I don't know for a fact that it's correct, but it does explain their otherwise strange behavior. Zillow denies it, but of course they would deny even if they did it.
Scalping (Score:2)
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I thought the Zillow business model was to purchase a property in need of lets say "upgrading", do the "upgrading" and then sell on for a profit. That is Zillow actually do actual real work which distinguishes them from a ticket scalper or PS5 sellers on eBay. To my mind at least that is a perfectly legitimate business model. At lot of people are willing to pay someone else to do all that work so they can walk into a property that requires minimal to no work done on it. That is Zillow are attempting to add
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The upgrade schtick was a bit of a misdirect for marketing purposes. Sure, they'd do some basic repairs or slap on a coat of paint, but they were hardly 'flipping' in the traditional sense. This is more like ticket reseller market that joins people who want to sell tickets they procured
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They probably projected that the labor shortage and supply chain gridlock crisis would be over by now. Or at least would be showing tangible signs of progress toward being resolved eventually.
So in a way, this is a bad omen. How many other potentially useful projects are being abandoned these days, as people who usually get things done just give up on trying to get things done?
Get rich quick schemes are getting grander. (Score:2)
The practice will continue (Score:2)
Until it is illegal, or more just as ideally, dangerous. How come we never hear about CEOs or Bankers washing ashore sans heads, mysteriously disappearing, or being brutally murdered in front of their families? Some of these characters MUST have pissed off the wrong guy at one point...
Houses shouldn't be an investment (Score:4, Insightful)
Instead we have a majority who will do anything to not only maintain the value of their homes but to insure prices continue to go up. The next generation will be able to buy a house, just the fraction of their income going to mortgage payments will go up and the length of those mortgages will get longer.
Zillow isn't the problem. They make their money by adding liquidity and transparency to the market. Real-estate agents are leaches, charging 5% of the value of the house. But the real problem with house prices is your neighbour who will always vote to keep houses scarce, to prevent new houses or increasing the number of people who can live in a given house and to keep his investment increasing in value.
Failed in every way (Score:3, Insightful)
People don't understand zillow I see (Score:2)
One thing that Zillow is fixing is the real-estate realtor monopoly that causes most people to lose 6% on every real-estate transaction, often for no good reason. My house is now worth around $1,000,000 due to the crazy market around here doubling the price. That's $60,000 to the real estate agents if I decide to sell the house. That's a shit load of money. I mean, sell six houses each year and you're in the top 10% of income earners. And, no, it doesn't take a bunch of money to "market" my house. Put
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Depends on the realtor I suppose. When we hired one she helped us get our house sold very quickly, had an offer that worked out within 12 hours. She brought a lot of experience and knowledge regarding what buyers in the proper price range would be looking for. Specifically what things would a buyer expect to be in great working order and what would be acceptable to leave for them to fix up on their own. There was a lot of stuff like that where her expertise saved us a lot of money and time. Before we talked