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My response to Sean Gotcher's conspiratorial TikTok video on Zillow.
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My response to Sean Gotcher's conspiratorial TikTok video on Zillow.
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Hey everyone me kevin here. You may have seen this viral a tick tock where essentially, this particular individual who says he's a real estate agent claims that it would be possible for zillow to just buy up 30 homes in a particular neighborhood for 300 000. Each then write a cash offer on the 31st home for three hundred forty thousand dollars, because, after all, zillow has all of our data. They know what we're looking for and ties together.
All these conspiratorial arguments and then suggests that essentially zillow be able to price fix. The market by that last sale selling for 340 000 pulling up the value of all of the other homes that zillow bought, therefore, making people now interested in paying 340 000 for homes so that when zillow goes to sell them, zillow makes a whole lot of money. This conspiracy, for some reason, is very popular right now. It's probably very popular out of frustration over the fact that home prices are ridiculously high and unaffordable.
Don't get me wrong, i completely agree. We got to build more homes, we have a housing shortage. We don't have enough workers and the housing crisis is so bad that you have morons in states like california, that don't actually help us build more homes. But let's address in this video, not politics, but instead this nonsense.
Conspiracy. I want to start by saying this. I am a real estate broker sean you can look this up over. The last 11 years has had 51 sales.
However, in the eight years that i was actively selling real estate, i sold almost five times this 240 homes in eight years in an area that's three times as expensive as this particular area, and i don't say that to brag, i say that to tell you: i've Worked on a lot of deals, an order of magnitude, more deals, and i understand data. So let's use some facts, some simple facts to break down whether or not what the individual claims could potentially be true. First, let's go where, in my opinion, the real truth of everything is and that's in earnings reports. I'm going to spare you looking at the boring black and white pieces of paper, but you can fact check this by just googling zillow investor relations and pulling up their annual or quarterly reports for the first six months of 2021, zillow took in 1.473 billion dollars in Home sales revenue, that means they sold homes worth 1.473 billion dollars.
This is not like advertising from agents or other services that they charge money for is just for home sales, however, those home, flips or sales cost them 1.481 billion dollars. That means they lost 8 million dollars on their home flipping business if they were really scamming. People right now in terms of fixing prices in the market for a profit, they'd, probably actually be profitable in this portion of their business, but they're not because margins in flipping real estate, especially for a corporation, are notoriously low. Flipping is really really fun when you can buy a house and by the time you fix it up the market's appreciated, because the real estate market can be very competitive and selling homes is expensive. Real estate agent fees are expensive and the same is true of redfin. You got to keep in mind zillow's, not just competing against against the open market. They're also competing against those off market deals with redfin and open door. Open door is the most profitable they bring in about four to five percent margin.
Off of these deals, redfin loses money, just like zillow does on these home flips. Now, if you take 1.471 uh billion dollars of revenue - and you divide that by about the average or median home price of about 350 000 you're, probably sitting somewhere around 4 200 homes, that zillow actually does these transactions on what's worth, noting is that right now we Are on track to sell 6.49 million homes in 2021, so zillow does 4 200 homes out of 6.49 million homes. The math means, when you divide this. That means zillow is on pace if you even round them up to doing ten thousand homes this year, because that four point that four point two thousand was just for the first six months.
Even if you round it up to ten thousand homes, that means zillow is taking about point one five, four percent of the market in terms of home sales - that's not one percent! It's point, one percent to put that into perspective. In my city, ventura california, we sell about a hundred homes per month. There are 120 000 citizens in the city point. One percent literally means zillow would buy maybe one home every nine to ten months in the city, the entire city, one home in the kind of rate that they're buying homes and selling homes for them, because there's so many home sales that happen all over the country.
The market is pretty resilient in terms of how many homes are bought and sold and how little institutional investors actually have an impact on home sales. You want to know what the biggest impact in home sales is talk to jerome prowl at the federal reserve. It's interest rates, not corporations. I understand it's easy to bag on corporations, but look right now.
Corporate home buyers make up maybe 15 percent of home buyers. 85 percent are people who just want to live in homes in very competitive markets, where it's really desirable for corporations to buy like miami or atlanta. Maybe you get to about 25 institutional and i'm not saying that they should be allowed to compete against home buyers or that it's fair or not fair, whatever i'm just saying we're. Still a vast majority competing against home buyers.
Home buyers pay more thanks to low interest rates. So if you got complaints, don't blame the corporations. Blame jerome powell blame jay powell with the money printer all right, but anyway, let's keep going on this on the average home that zillow is flipping. Zillow is losing two thousand dollars and they're only buying, maybe on average one home out of every 10 months of sales. In let's say my city now things might be more concentrated in some areas and less than others. I get that, but numbers wise. I don't see zillow buying 30 homes in one neighborhood, let alone in one city, okay, it's kind of crazy, because here's the thing one neighborhood or any particular neighborhood usually has about a three percent home ownership turnover rate. This means out of a thousand homes.
You get 30 houses turns over turning over. How far do you have to walk to walk by a thousand homes? You're gon na be talking about a big, diverse area to get to a thousand homes when you're a thousand homes wide for 30 properties. You're going to have a lot of variances in those properties because they're different tracks, they're different neighborhoods, they're, different floor plans and generally when we're looking at comps we're trying to get model matches close to square footage and close together. Zillow would really have to 100x their efforts in a particular city in a particular neighborhood and somehow capture all of those properties away from the majority of home buyers to actually have a meaningful impact on an individual neighborhood to like when you look at the numbers versus The conspiracy, this conspiracy is laughable.
It's it's a joke. Let me use a different example. Let's say you're in a stadium of 50, 000 people and zillow goes in the middle, with a money, launching cannon and says we're gon na launch money at the same rate at which we are buying homes in america. They would launch money at 76.5 people because that represents 0.153 okay.
They would launch money at 76 people. What are the odds that two of those people are sitting next to each other, pretty freaking low? What are the odds that of those 76 people? 30 of them are all in the same stand and zillow's gon na manipulate that stand of a market come on get out of here but see the problem is you can have a two minute tick tock of conspiracy, and it takes me eight or nine minutes to Break it apart, that's the problem with fake news, but that's why we have a channel here to talk about truth, not bullcrap, fake news, thanks for watching this video.
Not sure why this is such a lift for you. If you would perform som simple research, you will notice a trend around 2017 to early 2020, where homes were being purchased for very little and being put back on the market for exorbitant prices, especially in low-income neighborhoods. Of course those markets could be manipulated.
Imagine buying my home for 200k and being told it has appreciated to 450k in 3 years or so, especially in low-income neighborhoods. Every new home coming on the market selling for more. Home buying and ownership is a psychological trip. You know that. It is absolutely plausible that Zillow was engaged in this type of behavior and it worked. Let's wait for the state and federal investigations that is sure to come to understand the full nature of this possible scheme on the part of these real estate companies.
You're wrong Kevin. Its written on the wall. Too bad you're losing it. Unsubcribed your channel.
Seem to be a bit pompous and braggadocious. You must have stock in Zillow. Zillow bit out more than they can chew, hence the reason they're now backing down a little. They brought quite a few homes in my neighborhood and resold them at ungodly prices after shorty renovation. My neighbor is in the process of fixing shorty work done after purchasing their home a few months ago from Zillow.
#1…tiktok buddy never said Zillow. #2 tiktok buddy is talking about Las Vegas… Kevin's market is Cali. #3 Amazon took over while having losses on its balance sheet for years.
Zillow is the Instagram of homes. It’s manipulating (inadvertently) mass psychology.
In the metro Phoenix area they have been in 749 transactions in the third quarter. This is three thousand homes a year which is a notable portion of our inventory when in a tight market.
Overall iBuyers are approximately 12-15% of the metro phoenix market. Claiming Zillow or other iBuyers are not making an impact when running numbers nationally when they are not buying homes nationally (yet) and calling out fake news is under researched and misleading to regional markets where they are focused.
I feel like this video has been sponsored by Zillow.
I think your “facts” and “data” is too generalized and do not give the true picture. The fact is Zillow is not in EVERY city of the US. So you can’t use the whole US stats when you do your calculations. Also, I do know in my city…they have MOST DEFINITELY bought way moreeee houses than you are implying in this video! I normally love your content and explanations…but this one is over simplified and not giving the true picture we are dealing with…I don’t feel like it’s objective.
There are multiple empty homes for each homeless person in the U.S. How do we have a housing shortage?
I don't think a shortage is an actual problem.
Sounds like some capitalist bs to me. I have never found a case where a corporation had the motive and opportunity and wasn't willing to kill 1000 grandmas to see it through. The argument that they wouldn't pull a novel (and therefore more difficult to prosecute) scam out of ethical concerns or that it's hard to make money doing it is ridiculous. He didn't break down a conspiracy here, he fed you some laughable capitalist propaganda. He literally says 'corporations' as a non sequitur, revealing where his loyalty exists.
Most realtors should be in jail for fraud If a realtors lips are moving they are lying
I agree with everything you are saying Kevin. However in my particular market and Antonio Texas we have definitely seen an increase in Zillow and homes for sale. I definitely do not think they are going into neighborhoods and buying 30 homes. So I am not saying that. All I am saying is I think in particular markets they are making a bigger impact than other markets. I love your content btw
Tell me you own Zillow stock without telling me. You can actually look up homes that Zillow bought and flipped for 100,000 months later. Taking away affordability to first time home buyers and families that shouldn’t have to rent. It’s an artificially created housing crisis. Just talk to anyone that has a medium household income trying to buy into the market.
Hello! If you buy a house in a low income zipcode… that zipcode goes up .
Ejemplo I live in explosión distrito in Sf… houses were 500k to 700k, someone buy few and solo them 900k so now to buy a house you need to bet 999999.99k to compete… for renting was $3500.00 now renting is $5,000.00 if you buy one hose in every district, you helping go up that zipcode… mean not even bad neighbors are affordable this is why children living in wal☆mart parking lot! And that its a fact! Childrens living at walmart parking lot, fake news, I dont think so!
Stop buying and selling to Zillow and other ibuyers. They are screwing everyone. Boycott !!!
I do drive by bpos in arizona. I have seen them overpay value by $80k and $25k over the highest comp.
I can attest that most people in the trades have been forced out of the market and discouraged from entering. Too many under the table contractors not paying certified tradesman along with overseas migration of work. With immigration crackdowns there is no cheap labor to be had for agriculture or uncertified labor.
Jacksonville, FL is extremely concentrated with Zillow and OpenDoor. Just in our suburb of Fleming Island, Zillow and OpenDoor are holding about 30% of our sales. They are affecting our market way more in our city than you have mentioned.
In the city of Phoenix Zillow currently has 51 of the 1510 open listings. So around 3%. Most are ones they bought and immediately tried to flip for a profit but have steadily decreased and are now upside down on.
Zillow is manipulating the market. A lot of homes are own by zillow all you need to do is look it up.
Zillow and open door are bottom of the barrel service providers and generally scamish.
First the say we biulding more houses for low inco.e, then to apply its very hard for low imcome lol they have 1 or 2 apartments for low income and 10 to 30 very expensive making the housing problem even worse
So Zillow isn't doing this strategy, but it sounds like a good idea for someone else to do with a lot of money, right?
How much stock does Kevin have in Zillow?
Seems like Zillow is pretty new to doing this and it would make sense that they're not profitable in it yet if they're constantly buying more. There's so many tax breaks for real estate debt
Because a person is in a trap of their own mind there is a serious disconnect between numbers/data and a person’s real world experiences. It isn’t easy for an individual to understand the incredible amount of home sales everyday. Try to associate large numbers with a measures a person may be more familiar with. For example: one million seconds is 11 days, but one billion seconds is 31 years.
Artificial shortage we already knew that but real estate agents don't want you to know.
Instead of buying build it yourself and cut out the landlords and real estate agents as much as you can.
Isn't that hard. They make it seem hard.
Its very hard almost impossible to get loans now man, since covid kept businesses close for 1.5 years everyone lost 2 years history
Got a great breakdown of how they aren’t doing it n ppl still in the comments thinking it’s being done 😆… Math hard 😂
And it’s not a conspiracy just like when Walt Disney bought all that land in secrecy in Florida same things going on with the housing market.