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Comment by ddoolin | Hacker News Reader

The problem here is that they were buying the homes at prices above what they would actually sell for to real buyers and Zillow ended up racking up losses in that way. In your scenario in which two iBuyers outbid each other -- fine, but wouldn't the same situation as Zillow's happen? They'd just end up with overpaid inventory.

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Whether or not the market works itself out later, it puts everything into a weird state while the bidding war is going on. If iBuyer1 and iBuyer2 together buy up the inventory of a zip code for 120% of asking, then what are people who are willing to go to 105% to do? Maybe it just resets the market to whatever the drunken algorithm decided it to be.

Buy in one of the surrounding zip codes? Wait out the idiots?

In a housing bubble, hopping a zip code over isn't always possible.

One can always wait out the market. You could tell me to simply wait for the next housing crash to buy up property, but until that happens, it's not an option.

The whole observation the other person made

> automation creating adverse market incentives for smaller market participants

matters not just in the long-term state but while the adverse conditions exist.

> who are willing to go to 105% to do?

i too, want to only pay less money than the highest bidder for the mona lisa.

There's no such thing as 105%. By definition, iBuyer paying "120%" is the true 100%. If they overpay, they lose when there's no buyer after them to sell to, and their debt will not be serviceable. At that time, the "105%" buyer could buy at a lower price.

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