Zillow and Redfin Forced to Respond to Viral Video

September 24, 2021
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Real estate giants Zillow and Redfin have both responded to a viral social media video in which a realtor speculates on nefarious iBuying practices.

Las Vegas real estate agent Sean Gotcher took to social media to put forth a "what if" scenario in which a company "that everybody used" bought up all the housing stock in a given area to artificially inflate prices and exacerbate the housing crisis.

Since it was posted last week the TikTok video has had 2.3 million views and 12,000 comments and over 8,000 retweets on Twitter.

 

@seangotcher##housing

♬ San Tropez - Illect Recordings


Although no companies are named in the video, the obvious implication is that Zillow and Redfin are the hypothetical culprits.

Specifically, the scenario Gotcher lays out sees an iBuyer collect a lot of consumer data from their portal operations to learn where exactly people are looking to buy. The unnamed company then gradually buys up many houses in the area before going on to "create a new comp" by paying over the odds for the last few, thus inflating the prices of the stock it already owns.

Redfin CEO, Glenn Kelman responded to the tacit allegations within a couple of days, stating on Twitter that "Where Redfin's concerned, this is untrue" and going on to say:

"We'd never intentionally underpay or overpay for a home. It's madness to overpay for a single home in order to set a high-water mark for other sales."

"There is a conspiracy between iBuyers, but it's to pay lower commissions to the brokers representing the buyers of the homes we sell, by about 60 basis points so far. This may be one reason some brokers dislike iBuyers."

For its part, Zillow did not respond in public to the video, instead emailing a statement to US agency publication Inman.com on Wednesday in which it labelled the video an example of  "misinformation and falsehoods".

The statement went on to assert that Zillow pays market value for all homes that it buys saying that:

"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.”

As Inman and others have pointed out, the likelihood of Gotcher's 'hypothetical' scenario playing out in real life is currently very slim. The iBuying sector is becoming far more competitive rather than monopolistic with brokerage companies and others entering the market to try their luck.

The court of public opinion, however, is unlikely to take notice of the nuances. There are nearly 1.5 million agents in the US many of whom feel threatened by signs of a cooling market and the proliferation of new models such as iBuying, and they well be mobilising their friends and followers more often in the coming months and years.

September 24, 2021
Edmund got to know the world of portals and marketplaces working at Mitula Group (which became Lifull Connect after the buyout in 2018). He worked directly with hundreds of portals across the world in his role in the content department for three and a half years before transferring to the SEO department to understand the inner workings of listings sites. He joined Online Marketplaces as Head of Content in March 2020.

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