Veiled Accusation of Market Manipulation by Big i-Buyer?
By: Charles Sells
A real estate agent based in Las Vegas has posted a now-viral video that appears to accuse Zillow or one of its equally large competitors – the agent refers to the unnamed iBuyer only as a company using a “massive, user-generated database to scheme the local housing market” – of manipulating the local market to drive up prices once a large volume of properties have been acquired by the iBuyer. The two-and-a-half-minute video describes a scenario in which a company “buys 30 homes within a two-mile radius” for $300,000 each. “Then, on the 31st home, they buy it for $340,000,” he said. The agent implied the company was driving up home values to increase profits from the iBuying operation.
Not surprisingly, commentors on TikTok immediately identified several potential iBuyers as the culprit mentioned in the video. They mentioned Zillow, Redfin, and Opendoor. Twitter users retweeted the video and named these companies, resulting in Redfin and Zillow both reacting directly to the indirect allegations. Glen Kelman, Redfin’s CEO, called the entire video “untrue,” tweeting, “Where Redfin’s concerned, this is untrue. We offer every homeowner a choice of cash offer or a brokered sale, sharing the data we use to price the home.” He emphasized that Redfin tells the owner they “will net more money via a brokered sale” and stated, “We would rather sell the home without owning it.”
Zillow responded in an email, “We pay market value for every home we purchase. 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 0.09% more than the Zillow offer.” The company also noted that the goal is “to buy at market rate, then sell quickly at market rate.”
As the retweets and responses continued, homebuyers and sellers complained they would not be able to compete in today’s real estate market due to the enormity of the companies buying much of the inventory. “How am I supposed to buy a house to live in when I’m competing against a multibillion-dollar corporation that’s doing it for profit?” one asked. Another demanded, “Name an industry where the entrance of a middleman benefits the consumer,” adding “I will never believe that Redfin as an intermediary on housing transaction is a positive for average residential buyers.”
Kelman alleged the “conspiracy” between iBuyers is nothing more than “to pay lower commissions to the brokers representing the buyers of the homes we sell, by about 60 basis points so far.” He concluded, “This may be one reason some brokers dislike iBuyers.” OpenDoor did not respond to requests for comment.