That said, The folks I worked with were all really great people. There's just a lot of interesting history. Fun fact, DriveTime used to be Ugly Duckling Car Sales.
https://www.reviewjournal.com/local/local-las-vegas/ugly-duc...
A discussion around this probably deserves its own entire page, but as I am currently looking for a home as a first-time buyer, seeing “Zillow owned home” labels all over the area in which I’m looking (as if it’s some sort of positive thing) has been infuriating. All they do is use their scale and data science to push me out of the market several times over!
I present no evidence, to prove this, but from what I can tell, this is what they seem to do:
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.
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.
Third, if that house DOES sell for more to someone else, it just drives up the rest of the prices in the neighborhood. A lose-lose all around for me and my family. I don’t see how Zillow being able to flip houses is good for anyone. And by flip, I don’t mean fix up—-I have yet to find a Zillow-owned home that has anything of substantial value added to it—-and saving 1% of closing costs or whatever their incentive is by owning a Zillow house is not enough value add.
FWIW, 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.
And it’s not like they’re driving up prices of arbitrary goods or services—these are single family homes (in probably the most popular price range) they’re inflating when we’re already in the middle of a national housing crisis!
/rant
Edit: spelling/clarification
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).
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.
Regarding the comments on appraisals below... so I work across a state line. In one market, the majority of appraisals don't have a problem unless the accepted price is really something ridiculous (and I'd argue the listing agent should have done a better job coaching their sellers to avoid that situation). In the other state though, we have a serious problem with appraisals. There aren't enough appraisers in the area, so they are coming from 2+ hours away and really don't know our market. This is compounded by many of them not being able to pull comparables from just across the state line. It's seriously messing with our market, for both buyers and sellers. Looking for a career post-technology? Become an appraiser or an inspector, we don't have enough of either.
(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.)
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As for the Zillow topic:
Zillow is fantastic for sellers. I was offered well above market for my house, paid at least 5% less in fees, I could do everything remotely, and I could close in 14 days.
Fuck traditional realtors. Our buying experience sucked. Zillow made selling a breeze and I would recommend it to anyone looking to sell right now.
Cash offers distort the market because they drag up prices beyond what income driven mortgage offers would.
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.
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.
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.
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 .
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.
Equities are not a necessity of life.
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.
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.
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.
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?
The housing market in the US though is on a different level. $8-9 trillion, so I don't think any one player is going to even make the smallest of differences unless they are focusing in specific markets and maybe manipulating just that area.
But that’s not the inventory that is being traded at any point of time.
The vast majority of housing in the US sits in a single family without switching hands for probably decades. So the actual market is probably 20-30 times smaller, and so a single major player is far more capable of having an influence on pricing.
Besides, housing is not a national market. A buyer does not usually decide that they want to own a house and then scour the entire country to find houses they could live in.
They usually decide a place they want to live in, and then look at a much smaller market within that area. So even if a single entity cannot impact the national market, they could definitely impact local markets.
It’s not guaranteed that these companies will start intentionally misinforming people for profit, but that’s very much the risk.
Although the sleazier part might be people shopping homes on Zillow, which can then promote its own listings above those not owner by Zillow.
If people are actually taking those loans, there seems to be a decent amount of excess risk at play. I'm assuming Carvana eventually does pull your credit but I doubt they're lowering rates after doing so.