Scrolling through homes on Zillow is basically a pastime for many Americans, to the point that fantasizing about home buying was parodied by Saturday Night Live last season. But one viral video forced the company to address its business practices this week following some considerable outrage.
I’ve never linked a TikTok in my life but here we go. pic.twitter.com/J7oMvXISkW
—
(@Gladvillain) September 22, 2021
A TikTok made by a Las Vegas real estate agent named Sean Gotcher went viral this week that pitched a theory about an unnamed company utilizing user data about popular markets and their relative values to scoop up houses for themselves and essentially fix prices on the market.
What Gotcher lays out is relatively simple: a company that has data on what homes are worth could, in theory, buy up a bunch of homes at market prices to establish a baseline, then intentionally overpay for a home in that same area. With that new baseline for value, they could then sell those houses at the new price they intentionally overpaid for and profit tremendously from that market inflation.
“What that just did is create a new comp,” Gotcher says. “So when they go to see these other 30 homes, that extra $40,000, that you can say this one just sold for $340,000, just made them $1.2 million.”
The video is fairly captivating in its own right, especially with a very funny interruption of a small animal happening offscreen. But the implications are particularly nefarious, and though the company went unnamed by Gotcher it’s pretty easy to conclude that it’s an iBuyer like Zillow he’s talking about.
What the TikTok addresses, a listing company purchasing homes rather than simply being a vehicle for others to purchase homes, has been reported on extensively in recent months. So there’s some truth to the fact that it’s happening. And the video — which got more than 2 million views on TikTok and went viral in its own right on Twitter — caused enough waves that both Zillow and competitor Redfin pushed back significantly against those claims this week.
As Inman detailed, Zillow’s CEO issued a statement denying the business practices despite never being explicitly named in the video.
In a statement emailed to Inman Wednesday, the company characterized the video as an example of “misinformation and falsehoods.” The statement continued, saying “the simple truth is that through our services and tools, home shoppers have more power than ever before at their fingertips when buying, selling or renting their home because of the information we make available to them.”
“We pay market value for every home we purchase,” the statement added. “When we looked at homes that sold traditionally after they declined a Zillow Offer, we learned that on average, those selling traditionally sold for only .09 percent more than the Zillow Offer. And on every home that Zillow buys and sells, we are transparent: the purchase and re-sale prices are publicly displayed on the property page on Zillow.com.”
And Redfin CEO Glenn Kelman responded to the video on Twitter as well.
1 of 6: Where Redfin’s concerned, this is untrue. We offer every homeowner a choice of a cash offer or a brokered sale, sharing the data we use to price the home. We tell the owner he or she will net more money via a brokered sale. We would rather sell the home without owning it.
— Glenn Kelman (@glennkelman) September 18, 2021
Kelman was also adamant that Redfin “would rather sell the home without owning it,” but it’s all fairly alarming developments in a real estate market that’s soaring despite all the other economic uncertainty out there. As Inman noted, iBuyers like Zillow, Redfin and Opendoor own as much as five percent of housing markets like Phoenix, Arizona. So there’s certainly a lot of power out there that these companies wield, and judging by how much noise a single video made it’s clear many are worried it isn’t being used for the good of regular people.
[via Inman]