It’s like Movie Pass for houses.
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As a professional DS/ML guy, the Zillow story is just incredible
You hate to see it.
This is paywalled. Did they lose money? Or just invest in a bunch of real estate?
built some bot to flip real estate and boy did they fuck that up, ended up making offers way higher than they were worth and zillow got owned for it
And so all the losses are that? Or does it include some capex stuff. Where they’ve spent money but now own houses.
Losing money when the housing market is at ATHs is some true wizard shit.
Like watching someone that has seen way too many YouTubes try and 5 bet bluff a fish in a Texas poker game.
Does anybody who works in finance have a reliable calendar that shows all Fed Governor interviews and appearances?
Been looking around but I can’t find anything that has them all listed.
It really was, we keep our eye on Zillow and 80% of the “Houses being sold by Zillow” were being sold at a loss from their purchase price
Feels like they could have rolled this out in a much more limited way before losing almost a billion dollars.
But that wouldn’t be disruptive. Fail fast!
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This Zillow thing is quite depressing to me as it likely means that my house is not worth the ridiculous amount Zillow claims it to be.
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It’s pretty amazing that they had like all the data you could ever want about houses, and still managed to lose money. Like they knew which neighborhoods/zip codes were getting the most searches, had possible info about the users’ finances who were looking at those, all the comps, and they still managed to fuck up.
Maybe they modeled for continuing price appreciation without accounting for the fact that the average home price versus median income was already pretty much stretched as much as possible?
It is incomprehensible how badly they fucked it up - losing that much money during the biggest housing price increases ever should be impossible!
They probably tested the system during the big melt-up, then expanded it and went all-in near the peak. Plus if I recall correctly, they mostly/entirely bought in cash? Which exposed them to maximum downside risk with no leverage toward the upside.
There was some talk about private equity buying up tons of houses, I bet they levered the fuck out of it at low enough rates that they’re perfectly happy renting stuff out, covering the payments, racking up equity, and having optionality for decades… Which would explain why Zillow is fucked and they aren’t.
Yeah, meanwhile those same assholes were telling everyone how it was so smart to buy a house during the peak and to outcompete the institutional investors by waiving inspections and contingencies.
Realtor tiktok/IG makes me want to find a realtor and strangle them. It’s all them being condescending about how important they are and how stupid the average client is, and how much value they add… Which is 95% bullshit. Nothing triggers me more than people being arrogantly and blatantly wrong, and the cherry on top is doing it to get money out of people.
Everyone could see Zillow’s prices were too high compared to the other services and to reality. I just assumed that was just some game to try to get more customers or something. Did they screw themselves somehow with that?
So how hard is it to get a realtor license (or whatever credential is required) and just DIY. I guess even that probably isn’t necessary as I understand there are ways to get listed on MLS without a commission based realtor.
If I was retired, I’d absolutely do it for 3% of my home value.
that’s the thing. they have a database of properties with a few thousand data features for every row. so even a much too simple linear regression model could identify underperforming properties, but it could also easily lack the necessary variables to tell why those listings are underperforming. a similar thing can easily happen to a fancier model you trained. it might under the hood be very similar to a linear regression. 800m sounds they could lose it on less than 1000 houses/transactions. gambling leaks add up pretty quickly.
It would be hilarious if they only bought “underperforming” listings, paid cash, waived inspection (playing the numbers game that across tens of thousands of purchases, the number of issues would fall into a narrow range they could tolerate and would be more cost-efficient than inspections… only to essentially buy up everything that couldn’t pass an inspection, which they had selected for by buying underperforming homes.
The simple answer is that even if their pricing was better than everyone else’s (like suppose there was an unobservable “true” value, and zillow estimated that value with 5% variance, while homeowners and realtors estimated that value with 10% variance), there’s a simple problem of adverse selection - when Zillow makes an unsolicited offer, homeowners are not obligated to accept.
So basically what happens is that, despite Zillow’s information advantage (if it exists), the only people who sell are the ones who are like, “Holy shit, this bid is impossibly high for our house, even if our personal estimate is too low.”
A good thread that I posted last year:
https://twitter.com/macrocephalopod/status/1455887356611940355
https://twitter.com/macrocephalopod/status/1455887361045372932
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