The key is that market makers are doing large volumes at very small margins. The market maker just needs to guess the market movement direction for the next int

The key is that market makers are doing large volumes at very small margins. The market maker just needs to guess the market movement direction for the next interval of time (stocks would be sub second timescale, homes could be daily/weekly, etc.) then they can adjust what they buy and sell very slightly to profit from this spread. If the spread is a large percentage of the assets value then it doesn't work as well and public perception is more negative. The housing market is much more difficult to properly become a market maker in because the transaction costs are high. The seller's realtor is going to want their >=3% commission. There's other costs like title transfer fee/cost, inspections, etc. Also scalping is typically more of product's that are impossible to otherwise obtain and are sold at a huge premium. I think Zillow frequently tried to make the seller cover these costs (whether directly or via a lower offer amount) but it seems they didn't do this successfully. It's also possible that the seller's who accepted Zillow's offer tended to have some X factor that would make their house more difficult to sell but properly handling every possible X factor is very difficult.