Sorry for the possibly dumb question, but doesn’t this just describe buying things in any financial market? Your offer will only be accepted in cases where nobody else is willing to pay more.
Maybe Zillow went wrong because they deployed too much capital too quickly. With the opportunity to be selective, they could have found homes with 'good bones' that were under-priced. But if the executives mandated X billions of purchases in Y months, you move downstream to progressively less good deals, due to your own insatiable demand, when housing stock is already extremely low. That's not the AI/ML team's fault. That's you simply taking what you can get.
Zillow is an example just bad bidding (due to bad valuation model)
This isn't a financial (securities and derivatives) market, nor is that behavior specific to financial markets. OTOH, in financial markets, you are dealing with masses of interchangeable items (e.g., every share of IBM is the same); whereas with real estate every individual item is different. In financial markets, you typically have (some) other participants order data for the same asset as a pricing signal.
It's a lot easier, when you are willing to give an offer on any item in the market, to be way off in real estate than financial markets without knowing it till you try to flip the assset.