4 ms·

Improving liquidity in the market, aka being a market maker, can provide an interesting advantage.

ethbro 9y ago
Agreed. The surprisingly bespoke nature of home translations definitely provides an opportunity for this to be a win/win. Zillow wins by buying an asset it has more information on the true market value of, then providing an easier, economies of scale on the associated services (inspection, legal, repair, etc), then being able to offer a standardized product to home buyers. Buyers win from taking a lot of the uncertainty out of a transaction. And from possibly lower fees if Zillow decides to rebate a portion. Let's not forget there's a standard 6% commission in US real estate transactions... most retail would kill to start with a 3% margin. If Zillow has high confidence a home is underpriced, it makes sense to time arb that into profit when it can match with a buyer.
- tonyedgecombe 9y ago
  Let's not forget there's a standard 6% commission in US real estate transactions I never really understood this, the last time I sold a house in the UK the fee was 1.5% and only on my side, the buyer pays nothing.
  - aidaman 9y ago
    Welcome to the US.
  - oh_sigh 9y ago
    You don't need to pay it, but people feel that it is worth it/ You can definitely get a broker who works by the hour for you.
    - zirpderp 9y ago
      or flat fee - which will crush every realtor going fwd.
  - gm-conspiracy 9y ago
    Did you know that "realtor" is a registered trademark?
    - Declanomous 9y ago
      What is the generic mark? Real estate agent?
  - mbesto 9y ago
    1) The 6% commission is negotiable. 2) In the UK, the buyer pays stamp duty (tax) on the purchase.[0] 3) You can put a bid on a property in the UK and it's non-binding (until exchange)[1] In other words - very different markets with very different dynamics. [0] - I forget the percent, but it's material. This effectively disincentives people from buying, making the market less liquid. [1] - This is frankly ridiculous. (I've bought and sold in both US&UK markets)

Agreed. The surprisingly bespoke nature of home translations definitely provides an opportunity for this to be a win/win. Zillow wins by buying an asset it has more information on the true market value of, then providing an easier, economies of scale on the associated services (inspection, legal, repair, etc), then being able to offer a standardized product to home buyers. Buyers win from taking a lot of the uncertainty out of a transaction. And from possibly lower fees if Zillow decides to rebate a portion. Let's not forget there's a standard 6% commission in US real estate transactions... most retail would kill to start with a 3% margin. If Zillow has high confidence a home is underpriced, it makes sense to time arb that into profit when it can match with a buyer.

tonyedgecombe 9y ago
Let's not forget there's a standard 6% commission in US real estate transactions I never really understood this, the last time I sold a house in the UK the fee was 1.5% and only on my side, the buyer pays nothing.
- aidaman 9y ago
  Welcome to the US.
- oh_sigh 9y ago
  You don't need to pay it, but people feel that it is worth it/ You can definitely get a broker who works by the hour for you.
  - zirpderp 9y ago
    or flat fee - which will crush every realtor going fwd.
- gm-conspiracy 9y ago
  Did you know that "realtor" is a registered trademark?
  - Declanomous 9y ago
    What is the generic mark? Real estate agent?
- mbesto 9y ago
  1) The 6% commission is negotiable. 2) In the UK, the buyer pays stamp duty (tax) on the purchase.[0] 3) You can put a bid on a property in the UK and it's non-binding (until exchange)[1] In other words - very different markets with very different dynamics. [0] - I forget the percent, but it's material. This effectively disincentives people from buying, making the market less liquid. [1] - This is frankly ridiculous. (I've bought and sold in both US&UK markets)