Zillow EXPOSED | Price Fixing Against Home Buyers | Explained.

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

gonna 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 gonna 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

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and zillow's gonna 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

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