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Why is Zillow buying houses? A video on TikTok received millions of views talking about Zillow allegedly manipulating the real estate market. (https://www.tiktok.com/@seangotcher). Let’s figure out if this is the case.
WHAT IS ZILLOW?
Zillow is an online broker that millions of people use to look at homes across the country.
WHAT IS THE ALLEGATION AGAINST ZILLOW?
The theory is that Zillow will buy up homes in a concentrated area (example: 30 homes at $300k a piece within a few miles of each other), and the 31st home they buy they pay a premium ($340k). Since they have all the data, and access to cash, they don’t need to run comps (or comparables). This alleges that since they overpaid for the 31st home, it increases the value of the other 30 holdings they previously purchased. This makes housing more unaffordable for the average person.
HOW DOES ZILLOW ACTUALLY MAKE MONEY?
They make money in 3 main ways: IMT, Mortgages, and Homes.
1. Internet, Media and Technology (IMT). It makes money by charging property management companies to list their homes on Zillow. They made about 1.45 billion dollars from IMT in 2020.
2. Mortgages. They bought a company called Mortgage Lenders of America and they became a fully licensed lender. Through Zillow, you can get a loan on a house or refinance your current mortgage. They made $174 million dollars in 2020 through this segment.
3. Homes. In 2018 they launched a service called Zillow Offers where sellers could sell their homes almost instantly. The way it works is Zillow will use its massive data and everything it knows about the real estate market in an area to make an accurate estimation on your home (Zestimate) and based on that it will give sellers a cash offer – almost instantly. They made roughly 1.7 billion dollars in 2020 from the Homes segment.
ARE THEY ACTUALLY OVER PAYING?
Yes. In some cases they are but it’s not for the reasons laid out in the original TikTok video. Instead, Zillow will use its algorithm to make a guess on the value of a home and buy it. Sometimes the algorithm overestimates how much a home is worth and makes an offer above asking. This is because Zillow expects to sell the house for a profit but in the case of the Las Vegas real estate market (as shown in the video), sometimes they have to resell for less than their original purchase price which means they are losing money.
IS ZILLOW ACTUALLY MANIPULATING THE PRICE THEN?
One comp doesn’t reset the other 30, that’s not how it works. Home values aren’t based off of the last sale price. Instead it’s compared using an average in the area over a long period of time. Also, iBrokers like Zillow represent only a small % of the real estate market (less than 1%) they would need exponentially more billions of dollars to make a dent on the market on a national level.
Furthermore, Zillow would have to buy up dozens and dozens of homes within a few mile radius which is clearly not the case (as shown in the video).
WHAT IS ZILLOW DOING?
They’re trying to do to real estate what Amazon did to retail. It’s all about volume and Zillow is subsidizing that growth (sometimes at a loss) by offering sellers more money.
WHY IS REAL ESTATE BECOMING SO EXPENSIVE THEN?
In January 2015, the average hourly rate was about $25. That same year the average home in the US cost 191k. Fast forward to this year and the average hourly rate has grown to $31; meanwhile, the average home has grown to $307,000.
Real estate has grown 60%, and wages have grown 24%. Real estate is outpacing our annual wage growth and supply is not keeping up with demand.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
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Yeah Supply so low because Millennials delivered so many baby's in last 5-10 years 🤣🤣🤣it's all scam , sellers ( boomers ) just removed all homes for sale and waiting for bigger price , stop taking 30 years mortgage and you will see 60% discount overnight
I was paying leads with Zillow Premium and they sent me fake buyers none of them showed me proof of funds showed a house to one of them and he forced to enter a house without my permission
This video is sponsored by ZILLOW 😑
Oooh nice Korean shirt
I get what you are saying but, what we recently saw in Orlando Florida is an indicator. Also, Zillow doesn't list the total properties that they own on their website. Only those that sold or are selling. After what we all saw and when through in 2008, I don't trust these people. I'm not saying this is true, but there is a possibility that they are holding onto properties to reduce the active inventory of homes on the market. This would result in shortages in homes available and driving up prices. Either way, for Zillow participate in the market at this level is conflict of interest and should be investigated. We don't know the whole story and it is in the public interest to the understand what the situation is.
Absolutely not true. Contractors manipulate the price. Zillow were thinking they can do the same. They found out the hard way the true cost of flipping houses and how much hassle it is on a large scale. Meanwhile, first home buyers left with nothing or unaffordable price.
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Successful trader's don't become wealthy over night(name above). It takes consistency and some good trading experience for that, thanks once more for your recovery services today!
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Successful trader's don't become wealthy over night(name above). It takes consistency and some good trading experience for that, thanks once more for your recovery services today!
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Thank you so much for your act of kindness, words alone cannot describe how happy I am towards the great job and service you did to me (name above)!
This didn't age well
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Just saw on the news with Zillow owner saying that they will no longer be buying homes. Not sure how credible it was but thought I’d update.
Korean hoody! Newly subbed!!
Hive mind: Came for the content, stayed for the Shirt.. Anyone else notice the Korean text on Andrei's shirt?
It's driving me a little mad that I can't find where he got it from. 진리 실험
(I found someone who wore it in 2019 on a photo blog but that's about it, who knows more?)
You and the millionaire money gang are so freaking suspicious- don’t you realize that talking about coins like Bitcoin cash and shiba inu like they’re the same as Bitcoin and other great L1s is spreading misinformation. Also, I’m not going to forget your Vid about million token, just because you didn’t endorse didn’t mean the huge exposure for the coin to the public was okay. Please educate yourself and watch people like cryptosrus and invest answers rather than these dudes, you’ll thank me later
how will you pay for the property taxes man for that give away lol geez
Raise your hand if you're like me and couldn't afford the property taxes on a "free" house worth that much.
Dude…..I think this just happened in my neighborhood. Zillow bought a house for $588K, about 50K more than comps in the area??🤔🤔
Zillow is committing fraud and behaving like a criminal enterprise. The FBI must investigate them ASAP!
Successful people don't become that way overnight. What most people see at a glance wealth, a great career, purpose is the result of hard work and hustle over time. I pray that anyone who reads this will be successful in life.
But you only showed int eh areas for sale.. what about off market owned by Zillow? Still sus
finally somebody address this thing…my mind is boggling why Zillow is buying the homes paying so high prices and then putting back in the market within couple of days way below the price they bought initially, and in some scenarios big price cut. Cant understand the real big game behind it …
Still shorting Zillow
I would take the cash for the house and buy 800k worth of BTC and buy a 1M house.
진리실험 😂 Korean
Andrei. I understand that blackrock is doing the same thing. this WILL price people out of their homes via TAXES. I am Middle lower class and thankfully own my home. However, most of my peeps have mortgages. When you combine that with taxes that are based on the homes value. guess what.. you get taxed right to the streets…
Not trying to spam your comment section🥺 I am just really eager to know this information.
Hi new to investing here ☺️, but I have been watching your videos for a few months now. Can you pleaseeeee explain why/ how Robin Hood is “ripping off/ taking advantage” of new users using transaction fees/ stock prices? Does this mean when we sell our stocks we are not getting the actual stock price? Like if we buy 100 shares of a stock for $5 and it increases to $7. If we decide to sell are we getting the $7 a share? Or is it work more on other stock portfolios. Confused 🆘🆘🆘
It's not much, but I donated 25$! Wish me luck haha
How do we know if Zillow has not paid off this YouTuber and comments on this channel are not independent but fake
Take the $2.6M dollar home. Sell it to Zillow for $3M.
When I applied for zillow on 2018, I got interviewed for this project at Los Angeles. The interviewer said that they are planning to make a engine which provide demand forecasting for house price and like uber (on-demand house).
진리실험? ㅋㅋ
Andrei, what mic are you using? sounds is great, perfect balance!
Hi thank you so much for all a good information ,I been followed and watching your vdo
I used to love your channel and watch all videos religiously! But sadly now it has become one click-bait after another. Im glad it got you more subscribers but loyal fans like me find it annoying.
This is horrible for the average person. Get ready for houses to cost millions on average in a few decades
Andrei, I'm sorry man. It's not pronounced Z-estimate. That would be way too cool, like a saiyan gauging your power level. It's literally " zestimate ".
Stay tuned. Slowly but surely.
Now talk about BlvckRock
Noooooo, Andrei is a sell out now!!!!!