HomeZillow responds to viral Tik Tok video alleging housing market manipulation

Zillow responds to viral Tik Tok video alleging housing market manipulation

Popular real estate website Zillow has come under fire on social media after a video went viral on TikTok criticizing the business strategies of an unnamed potentially infamous real estate company.

Las Vegas real estate agent Sean Goutcher (@seangotcher) posted a two-and-a-half-minute video to TikTok earlier this month, describing a scenario in which a so-called iBuyer uses its massive user-created database to map the local housing market. according to Zillow, is “a company that buys homes almost instantly by relying on technology to determine a market-based money supply.”

Let’s say this company bought 30 homes in a two-mile radius, and let’s say the price is $300,000. So, they buy all these homes for $300,000,” Goucher says in the video. “Then in the 31st home, they bought it for $340,000.”

Gotcher suggests in his video that the unnamed company is intentionally increasing home values ​​in order to dramatically increase its profits and thus manipulate the market value.

While Gotcher never mentioned Zillow’s name, social media users have suggested that the company might be his target due to its size, popularity and the fact that the company has created its own real estate program called Zillow Offers that buys and sells single-family homes.

Commentators quickly pointed the finger at Zillow and two other real estate services, Redfin and Opendoor, and the video was soon given a second life on Twitter.

Glenn Kellman, CEO of Redfin, responded to the Twitter thread calling Gotcher’s hypothesis “incorrect”.

There is a conspiracy among iBuyers, but it’s about paying less commission to the brokers that represent the buyers of the homes we sell, by about 60 basis points so far. This may be one of the reasons why some brokers hate iBuyers,” Kellman tweeted on the topic.

In a statement emailed to Yahoo Finance, Zillow said that while the Internet has often been a powerful tool for business and consumers, it is riddled with “misinformation and lies.”

“Zillow’s home buying and selling program, Zillow Deals, enables operators to be able to sell on their schedule, reducing the stress of a traditional home sale. We pay the market value of every home we buy. When we looked at homes that were traditionally sold after If they rejected Zillow’s offer, we knew that on average, homes that were traditionally sold sold 0.9% more than Zillow’s bid.And on every home Zillow buys and sells, we’re transparent: Purchase and resale prices are shown to the public on Zillow’s real estate page .com With Zillow Deals, our goal is to buy at market price, then sell quickly at market price.The business model is designed to generate our profit margins from the convenience fee we charge sellers – usually around 5% today.

“Because our margins are so small, it is critical that we price the home accurately. If we overpay – we will lose money on resale. If we bid too low – homeowners will not use us,” the statement read.

Redfin also shared a statement with Yahoo Finance, arguing that Gotcher’s theory is not plausible because under their iBuyer program RedfinNow, the company sold only 292 homes in the second quarter.

“We have no share in market manipulation and have no desire to,” Redfin said in a statement. “Deliberately overpaying for homes would be a terrible business model. As a brokerage that employs local real estate agents that help consumers buy and sell homes, we offer homeowners a transparent choice: list with one of our agents for a low fee or get a cash offer from RedfinNow. We Being honest with sellers that they are more likely to net more by listing on the market with an agent.Sometimes they prefer to take the comfort and certainty of the cash offer and let’s risk selling it to the final buyer.Of all the homes sold by Redfin in the second quarter, all of the homes sold by Redfin in the second quarter were 99% sold via our listing service and 1% were RedfinNow sales.”

Yahoo Finance also contacted Opendoor for this story, but heard no response prior to publication.

The tweets continued to call out the company and blame it for making the tricky process even more difficult.

“How can I buy a house to live in when I’m competing with a multibillion dollar company doing it for profit?” Twitter @CMCabrera_.

Twitter user MrDys linked to a YouTube video Published this summer by Reventure Consulting with the title “Zillow is manipulating the housing market. They need to stop. ”

Others responded directly to Kelman, essentially doubling down on Goucher’s ideas.

Hastaggiting tweeted: “I would never believe that Redfin as a broker in housing deals is a plus for regular residential buyers.”

In the story of Bloomberg Wealth, reporter Patrick Clark wrote that while Goucher’s idea “may be great,” Zillow probably doesn’t live up to what Goucher believes.

Instead, Clark is pointing his finger at the incredibly active real estate market.

“The most likely explanation is that Zillow sometimes overpaid for homes, because the market was really hot, and sometimes prices in some markets were moving so fast that it’s hard to know the value of the property.”

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