Has anyone figured out why Zillow is buying houses

[marybourg]

for more than they’re worth, even on today’s market, and selling them a few weeks later for $20,000 less than they paid? I know of two instances in my neighborhood.

Doesn’t seem like a sustainable business model.

[Hoyt]

1. Assuming true, maybe someone realized, "We've overpaid, better cut our losses."

[PoliticAverse]

2. Zillow net loss per home...

From: https://www.mikedp.com/articles/2021/5/6/what-zillows-results-reveal-about-its-momentum-towards-zillow-20

Zillow's iBuyer business is back to growth mode, purchasing and selling houses at pre-pandemic levels, and still operating at a loss. But the net loss per home has dropped to its lowest level yet, a reflection of improving economics at scale.

Q1 '21: $ 29,517

[marybourg]

3. Amazing. These are the titans of industry?

If they had a local r.e. agent, they’d have known they were overpaying in both instances that I’m aware of. And they didn’t even test the market at re-sale. Just put it on the market two weeks later at exactly $20,000 less than they paid in each instance.

They’re up to something. But I don’t know what.

[PoliticAverse]

4. As the article indicates...

Perhaps most impressively, Zillow just had its third consecutive profitable quarter! For a business that's basically operated at a net loss since inception, this is a noteworthy achievement.

A lot of these start up tech companies have a business model of throwing money at things until they find out what works.

I'm not sure why they'd sell a house at a loss 2 weeks later though. That type of activity suggests they are trying to inflate some number (market share, number of transactions) instead of trying to make a profit immediately.

I'd email they guy who wrote the article I referenced and tell him your story. He'd probably love to get the info and might have some good insight.

[marybourg]

5. Yes. I'm sure you're right.

But they’re not even trying to make a profit. The first house I know of was eminently flippable- no upgrades in 40 years. But they didn’t make an attempt to upgrade it. Just put it back on the market, where it was bought for much less than their asking — by a flipper! The second was in good shape, but ugly. In both cases the sellers were amazed at getting their asking price. As are the neighbors.

[PSPS]

6. A actual real estate broker would lose their license by doing this.

[Alice Kramden]

7. Possibly money laundering?

First thing that sprang into my head

[Scrivener7]

8. Wow. I would never have thought of that, but it totally makes sense.

And there is no other explanation I can think of that does. Especially on that scale.

[Lars39]

9. This might be the answer...

https://www.democraticunderground.com/111691640