by

Suburban Phoenix Real Estate Broker

Author website

Ya think it's easy?

“Imagine a puppy who takes three years to house train…”

Well. It turns The Incumbent has a calculator on his phone. Even billionaires can identify a stupid business – eventually.

On July 19th, 2019, I took OpenDoor’s business praxis apart in public, demonstrating all their foolish marketing errors. Hundreds of OpenDoor staffers read that article. I think Eric Wu’s parents read it. Even so, precisely zero people from OpenDoor reached out to me to learn how to do better.

In that same week, I also took OfferPad and Zillow Offers apart, documenting the fundamental real estate errors that make the iBuying idea ridiculous. None of them followed up with me, of course. Who needs free market research – that turns out to be telling the truths you won’t see? I asked Rich Barton on Twitter how he managed to lose $160,000 on a $200,000 house and he blocked me. Nice move, Incumbent.

I haven’t been following Zillow’s flaming Icarus news. Krupke, I’ve got troubles of my own. But I told you the problems they would have in that same week in July of 2019: A retailer without a discount rack must cut the prices for all of the inventory all at once, not just the stuff that isn’t moving. Zillow bought stupidly on its strength, and now it is discounting stupidly – in what is still a killer market for listers – because it cannot hide the fact that it is a crippled lion.

There’s always another Icarus, but there are two easy takeaways for anyone who can latch onto the obvious facts of reality faster than your average billionaire:

  1. There is no upside to owning non-producing assets. All the money in real estate brokerage comes from socializing the risk to the seller – being ONLY the agent, not the owner.

  2. Big-feet real estate players are inherently catastrophic: Make a mistake in real estate, you lose money. Make enough mistakes, you get a job. But if you make market-wide mistakes, you take the whole market down with you.

Go away, iBuyers, all of you. You don’t know what you’re doing, and you don’t want to know how to do this job right, clearly. But when you screw up, as you will, you will screw up everything.

Go find a job you can do. Rich Barton did.

In other news:

Rich Barton: Here is what we told shareholders and employees about our decision to wind down Zillow Offers, our iBuying operations.

As is obvious, we are back online. I will have more news tomorrow.