Zillow bought a house in a neighborhood where I’m active

[Escoguy]

If Zillow could conceivably have enough inventory for both sides of the transaction, that would be a real win/win. I.e. not just buy but also have an upgrade/downgrade new investment property.

Me thinks they would need thousands of properties to make that happen but they could go through a prearrangement process. i.e. if we find something, then you could sell and buy.

In Russia, years ago property transactions could take months, as the buyer would usually need to find a buyer for his place etc, I heard of buyer chains of upwards of 5-7 transactions involved.

[svelte]

[quote=Escoguy]
In Russia, years ago property transactions could take months, as the buyer would usually need to find a buyer for his place etc, I heard of buyer chains of upwards of 5-7 transactions involved.[/quote]

Isn’t that just a contingency as is also common in the US? I’ve heard of those getting stacked up pretty deep also.

[Escoguy]

[quote=sdrealtor]Zillow just bought this one in MM for $787,500. That is full retail on it. It may even be a touch high for this one in that condition. They put it back on at a price that is no better than breakeven if they get that price.

https://www.zillow.com/homes/10842-Whitehall-Rd-San-Diego,-CA-92126_rb/16788569_zpid/%5B/quote%5D

So looks like flipping in a hot market isn’t so easy if one isn’t nimble:

https://www.bloomberg.com/news/articles/2021-10-26/zillow-s-zeal-to-outbid-for-homes-backfires-in-flipping-fumble?sref=AtMgUiWa

Part of me wants them to succeed but not sure this is the model.
In fact, I’m fairly certain Zillow flipping is not the way to go.

[carlsbadworker]

Shares of Zillow Group Inc. took a dive Monday, after KeyBanc analyst Edward Yruma highlighted how most of the homes the real estate services company purchased, with an aim to flip them, were now worth less than what they paid for them.

The stock Z, -5.26% shed 5.8% in midday trading. Although the stock was still up 13.6% since closing at a 13-month low of $86.00 on Oct. 18, which was the day Zillow said it would stop buying U.S. homes after building a big backlog, the stock was still down 51.1% since closing at a record $199.90 on Feb. 16.

“Zillow may have leaned into home acquisition at the wrong time, and we believe earnings may be at risk due to its current home inventory ($1.17 billion at 2Q21),” Yruma wrote in a note to clients.

Yruma said it completed an analysis of 650 homes in Zillow’s inventory, or about one-fifth of the homes owned, and found that 66% are currently listed below the purchase price at an average discount of 4.5%.

Of the 650 homes Yruma analyzed, the cities in which the company had the highest percentage of homes that were listed below the purchase price were San Diego at 94.3%, Phoenix at 93.4% and Mesa, Ariz. at 92.6%.

The city with the most homes listed below the purchase price was Phoenix with 71. Charlotte, N.C. had 70 and Las Vegas had 52.

“While we do think that [Zillow’s] issues are likely transitory in nature, we do think it highlights the importance of strong property level and market data,” Yruma wrote. “From a [long-term] perspective, we maintain that [Zillow’s] changing customer focus (the agent is the customer in the IMT business vs. the consumer in homes) may for unanticipated (and likely negative) compromises.”

Yruma reiterated the neutral rating he’s had on the stock since February 2020.

The stock has tumbled 24.8% year to date, while Zillow’s Class A shares ZG, -7.11%, which were shedding 7.6% on Monday, have sunk 28.2% this year. In comparison, the iShares U.S. Home Construction exchange-traded fund ITB, 1.00% has run up 30.3% and the S&P 500 index SPX, -0.09% has gained 22.8%.

[sdrealtor]

[quote=sdrealtor]Zillow just bought this one in MM for $787,500. That is full retail on it. It may even be a touch high for this one in that condition. They put it back on at a price that is no better than breakeven if they get that price.

https://www.zillow.com/homes/10842-Whitehall-Rd-San-Diego,-CA-92126_rb/16788569_zpid/%5B/quote%5D

Funny I noticed this about a month before this post in early August. Ten days later they paused. Now two months later what I wrote about is out in public. The prices they were paying here just didn’t make sense back then

[sdrealtor]

Was gonna post this morning that the layoffs would come soon but they came much harder and faster than I would’ve thought. Really surprised they are cutting that deep. 25% on the way out the door

[carlsbadworker]

[quote=sdrealtor]Was gonna post this morning that the layoffs would come soon but they came much harder and faster than I would’ve thought. Really surprised they are cutting that deep. 25% on the way out the door[/quote]

Bloomberg reported Monday that Zillow is looking to sell about 7,000 homes, and is seeking roughly $2.8 billion for the houses. Will we see any of those in the market?

[carlsbadworker]

[quote=sdrealtor] The prices they were paying here just didn’t make sense back then[/quote]

Sean Gotcher, a Las Vegas real estate agent, offered a conspiracy theory that iBuyer companies are manipulating the market by intentionally overpaying for some homes in order to sell others that they’ve already bought in nearby areas for a higher price.

[XBoxBoy]

[quote=carlsbadworker]Sean Gotcher, a Las Vegas real estate agent, offered a conspiracy theory that iBuyer companies are manipulating the market by intentionally overpaying for some homes in order to sell others that they’ve already bought in nearby areas for a higher price.[/quote]

As always, I would stay away from conspiracy theories. Zillow is losing money on the houses they’ve bought and are now trying to sell. Simple foolishness on the part of a large company is all there is to see here.

Here’s an example of their efforts, bought for 790k, now listed for sale at 741k
https://www.zillow.com/homedetails/1538-Missouri-St-APT-C-San-Diego-CA-92109/70597152_zpid/

Personally, I’m glad to see them exit the market and I hope other big companies learn from their mistakes. Buying and selling homes at a profit isn’t as easy as it sounds on those reality shows.

[sdrealtor]

[quote=carlsbadworker][quote=sdrealtor]Was gonna post this morning that the layoffs would come soon but they came much harder and faster than I would’ve thought. Really surprised they are cutting that deep. 25% on the way out the door[/quote]

Bloomberg reported Monday that Zillow is looking to sell about 7,000 homes, and is seeking roughly $2.8 billion for the houses. Will we see any of those in the market?[/quote]

Many of them already are and others will be. The own a couple hundred here. It wont have any impact on the market. They will sell at market value. Zillow paid too much and will lose money.

I noticed this a few months ago whn I saw experienced realtors selling their homes to Zillow. Those realotrs can sell their homes themselves and at most pay a buyers agent commission. They know what their homes are worth. Zillow was charging 5 to 7% fees in the prices prices paid. That means they were paying well over what the agents could themselves on the open market by around 5%. Zillow was also buying homes as-is and paying fixed up retail prices. It made no sense to me but I didnt know enough about it to really call them out here until I knew more. In early August it was getting obvious they were paying too much and thats when I first posted something.

Its not that I have a crystal ball, its just that I know agents wouldnt sell them to zillow unless they were making out better than selling themselves on open market even after paying zillow hefty fees

[sdrealtor]

[quote=XBoxBoy][quote=carlsbadworker]Sean Gotcher, a Las Vegas real estate agent, offered a conspiracy theory that iBuyer companies are manipulating the market by intentionally overpaying for some homes in order to sell others that they’ve already bought in nearby areas for a higher price.[/quote]

As always, I would stay away from conspiracy theories. Zillow is losing money on the houses they’ve bought and are now trying to sell. Simple foolishness on the part of a large company is all there is to see here.

Here’s an example of their efforts, bought for 790k, now listed for sale at 741k
https://www.zillow.com/homedetails/1538-Missouri-St-APT-C-San-Diego-CA-92109/70597152_zpid/

Personally, I’m glad to see them exit the market and I hope other big companies learn from their mistakes. Buying and selling homes at a profit isn’t as easy as it sounds on those reality shows.[/quote]

I agree and dont see a conspiracy. I think they figured the market would go up a little, they had free wall street money and they wanted to see if they could play this game and win. I think they were hoping to breakeven and figure out a new business model but got burned because the local real estate markets are much more efficient than anyone gives them credit for

[gzz]

Zillow was overpaying for homes, but also charging the seller a 7% “fee” that it kept itself?

The seller in such circumstance would demand an extra 4.5% as the difference between Zillow’s fee and the normal buyer agent fee.

This inflates what Zillow actually paid and makes its losses also look larger.

We shouldn’t be too shocked Z is losing a lot of money. That’s the Silicon Valley DISRUPTION! that investors are lining up to subsidize.

Lyft just reported Q3 2021 results, and revenue is still well below Q3 2019. They also have diluted shareholders by 10% by issuing more shares, have dissipated another 1.5 billion from their balance sheet, and lost “only” $60 million because they booked a 1-time $125 million gain on selling their self driving assets to Toyota.

Despite another quarter of massive losses, they are up 12% afterhours and higher than 2019 when the company had more revenue and more customers.

[sdrealtor]

Zillow charges 5-7%. Sellers typically pay 5% and have other fees like pre sale fixes, staging, termite and repairs they don’t with Zillow. So call the prices Z pays basically the same net if price is the same. But Z was paying 3-5% above. Seller was getting above market net with no work or uncertainty. It was a gift to sellers while it lasted. That’s why agents were selling they’re homes to Z

Stocks are valued on future expectations not past performance. C’mon man! You know that

Zillow ibuying has no future expectations anymore. Done

[sdrealtor]

This is getting funnier by the day. Done in by their own zestimates. Stock is off 20% today

https://on.mktw.net/3GLihuw

[scaredyclassic]

If they’d tried this 5 years ago, they’d be geniuses. Just bad timing…

[Author]

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