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> Zillow buying up properties in cash over their own online estimates A discussion around this probably deserves its own entire page, but as I am currently loo

• 6AA4FD 5y ago
  I'm not saying it's fair, but is is probably better financially for current home owners. Sell faster, with fewer/no contingencies and waiting periods, and Zillow may potentially price "hassle" lower— making deferred maintenance less expensive to take care of. Is it better for people who are trying to break into the housing market now? No. Is it better for people who are trying to sell and move out in a low-demand area? Probably not, except it might speed up the process.
  • dawnerd 5y ago
    Okay so in Portland homes sell same weekend they're listed if they're priced right. I know this because My home sold after only a 2 hr open house. It's nuts. Zillow wanted to pay way under their zestimate and I ended up selling for more than asking. The offer I picked ultimately was a real family with a mortgage. The zillow owned homes have been sitting on the market for a while despite being fair prices IMO. I think its turning agents away since zillow really wants the buyers to also use zillow.
    • poulsbohemian 5y ago
      Realtor here, so sure, I'm biased... Zillow is engaged in arbitrage just like anyone else trading assets. It's possible to get a great price and low fees... or it's possible to get taken for a ride. Knowing what I know about real estate - I'd never buy or sell through Zillow or a similar service (Redfin, etc), and I'd never recommend it to a family member or friend. Everybody focuses on commissions, but if you sell your house below what you should have, you are leaving a lot more money on the table than the cost of my commission.
• throwaway5752 5y ago
  I think this has happened coincidentally with a very substantial increases in spikes in markets they targeted, more than increases in the general market. Maybe they are good, maybe they are contributing to it. You identified the mechanism by which they would create a feedback loop.
• sokoloff 5y ago
  To me, a plethora of “Zillow owned homes” in an area is a negative signal for pricing outlook. Zillow is a non-user of these properties and therefore represent future selling pressure in the neighborhood. I think they’re welcome as a market participant and, if they’re particularly good at pricing properties, they might be able to make some money by exploiting inefficiencies in the market. I think it’s far more likely that they’ll be a net donor to most markets from their algorithmic operations (in trading terms, I doubt they’ll exhibit positive alpha from purely algorithmic buying).
• axiolite 5y ago
  Given a bit of time, people will figure out how Zillow's buying spree works, and figure out how to game it to their own advantage. Perhaps put a fresh coat of paint on an old abandoned house that's about to fall down, list it slightly below neighboring houses, and wait for Zillow's stupid computer to buy it?
  • sjg007 5y ago
    Zillow and open door have clauses to basically prevent this.
    • dawnerd 5y ago
      And they still have local agents that meet you.
• int3 5y ago
  > I’ve spent a LOT of time of the past few years trying to get a hold of reliable MLS market data to do my own sort of analysis to try and find affordable enclaves or diamonds in the rough or whatever and that data is damn near impossible to get free access to. So the fact that Zillow has this data and also has unlimited pockets and FTEs who work on this stuff all day…it doesn’t feel right to me. How is this different from hedge funds who do the same thing with equities, and outperform the retail investor as a result? The advice to retail investors is "buy and hold", and I think the same applies here.
  • rodgerd 5y ago
    > How is this different from hedge funds who do the same thing with equities, and outperform the retail investor as a result? Equities are not a necessity of life.
    • cycrutchfield 5y ago
      Owning a home is a necessity of life?
      • deleted 5y ago
        [deleted]
    • int3 5y ago
      There are also plenty of funds trading commodities, and many of those can be framed as "necessities".
• api 5y ago
  None of this shit would be possible if we could build. When supply is restricted the way it is, it makes housing a scarce resource that is vulnerable to market cornering and manipulation.
• jvp 5y ago
  I'm in Colorado and just bought a home over the last month. I went with a service called Accept Inc. You basically go through the underwriting process first, they then buy the home you want in cash (Giving you a cash offer to the seller), then you do a traditional mortgage to buy the house from them. No mark up. Sounds great... but I can tell you that having a cash offer didn't mean anything if you weren't the top offer. I lost out on many homes because I didn't come out on top. Lost against those with conventional loans too. People will wait an extra 2/3 weeks if it means an extra $10K in the home price.
  • sjg007 5y ago
    It sounds weird because the house has to appraise at the correct value to get a mortgage. Otherwise you have to make up the difference in cash..
    • toomuchtodo 5y ago
      Unless your offer is wildly above comparables, it’ll appraise at or above your offer price, assuming an arms length transaction. Cash offers distort the market because they drag up prices beyond what income driven mortgage offers would.
      • KirillPanov 5y ago
        This assumes that it's better for bankers to decide how customers spend their income than for the customers to decide that. Also, "income driven mortgage" is really "salary from large employer driven mortgage". For everybody else it either underestimates, breaks down badly, or both. Especially business owners. "I sign my own payroll check" is not what a banker wants to hear.
        • deleted 5y ago
          [deleted]
    • sokoloff 5y ago
      Appraisals are somewhat grimy IMO. When our house was being appraised, the appraiser asked for the P&S price as part of his research. To no one’s shock, the appraisal came in just over the P&S price. (To some extent, I get it. I’m an arms-length buyer. I’m willing to pay $X. That’s strong evidence that that’s the arms-length market price.)
• ineedasername 5y ago
  that data is damn near impossible to get free access to How much does access cost? You're making a massive purchase. If that data is going to help you save a substantial amount by finding a diamond (or even some lesser precious gem) in the rough, it seems like it would be worth a few $hundred to save much more than that.
  • iknowSFR 5y ago
    HouseCanary is a leading data feed and is $150k/year. MLS offers a limited feed for around $1,500/month. You can scrape Zillow and use a captcha handler tool for $30/month. There are distinct differences in these approaches. Zillow’s data lags 3-4 weeks while HouseCanary’s is about as real time as you can get. MLS can be weird and is typically market-specific. With all of that said, you can’t just login to a website and have this available. There is legwork required.
    • ineedasername 5y ago
      Wow that's expensive. I wonder if HouseCanary offers data limited to specific zip codes for less. It seems like that would be a logical product for small realtor business, but that might not be HouseCanary's target customer. It looks like Zillow offers an API [0] though I'm not sure of the extent of its capabilities. Could be you don't need to go the scrape/captcha route though? [0] https://www.zillow.com/howto/api/APIOverview.htm https://www.zillow.com/howto/api/APIOverview.htm
• thedrbrian 5y ago
  Are you not enjoying the disruption? /s
• georgeplusplus 5y ago
  >>>> First, they use scale and data science to find what they consider under-priced homes and buy them for cash. If I happen to find the same home for sale at the same time, what seller is going to go with a traditional loan over a full cash offer who could easily offer more if needed? I can’t compete with that. Loan offerings compete with all cash offering by offering more than what the cash offer is offering. The idea that you bid over asking and the cash offer will find out what you bid and meet your offer in cash is just not true. It’s not like an auction house where you each bid until one of each persons max has been reached. Seller agents just opt for the max for each offer from the start. >>>> Secondly, they don’t do anything to the house (aside from clean it up and taking nice pictures—no value added) and then resell it for multiple tens of thousands more than what they just paid. If this house was originally at the high end of my budget, bought by Zillow, then re-listed for more, I can no longer afford it. It costs tens of thousands in fees and cost to transfer ownership. I have a hard time believing they buy a home, clean and take pictures, then relist. Houses that are relisted in less than a year raise serious eyebrows in the industry as well. As to your third point. The homes are worth only what a buyer is willing to pay. Period. All too often I’ve seen homes sell for less against a similar home right next door sell for less from the exact same builder with same features and sq footage within weeks. This post is mostly for others looking to buy because you have in my professional opinion, unrealistic expectations and understandings of how the housing market works .
• poulsbohemian 5y ago
  As a former software developer turned Realtor, I concur with your findings... FWIW: even as an agent, trying to get MLS data into formats that are easy to dig into for interesting patterns is not easy. You might have better luck talking to your local title company or seeing if you can scrape data off your county tax assessor site. In my market, I can absolutely tell you where those diamonds are, because I'm in the market daily. That might not be the answer you want, but finding a skilled Realtor you like / trust who can get you into opportunities is the fastest path.