What’s most incredible about the iBuyers? That they will buy almost anything.

“Hey, let’s get Zillow. They’ll eat anything!”

Zillow is partnering with new home builders to take away their worst objection: “What do we do about the trade-in?” Zillow will agree to buy your old home – up to eight months in advance – so you can commit to buying the new home. OpenDoor has a similar scheme – except they are willing to wait nine months.

There is nothing of real estate wisdom in any of this, of course – except for the builders. They get to lasso two suckers at once, the foolish home-buyer making his next foolish mistake and the foolish iBuyer – already hemorrhaging cash, already inept at real estate – pretending that pretend “pricing algorithms” can predict the market eight days from now, much less eight months.

What’s even more fascinating, to me, is the inherent recklessness of agreeing to buy practically anything.

OfferPad has benefitted from my limited praise because, in Phoenix at least, they exhibit better discipline on both the buy and sell sides. OpenDoor has a huge overhang of unsold inventory, and Zillow has never met a pierced, tattooed white elephant it doesn’t yearn to tie up forever, but OfferPad seems to exercise actual prudence in its approach to real estate. Probably just means another funding round coming up, but better is better.

As with pricing, selecting properties for investment purposes is a skill that must be mastered – and hence is obvious in its absence. I have been told that Zillow’s ideas run the other way: They insist that any property that is bought right can be sold right – all evidence to date to the contrary. That would be the notion here, where the standard for “Should we buy it?” is obviated by the builder and the buyer: If they’re in, Zillow (or OpenDoor) is in by default.

Why do retailers buy at 50% of the full-retail price? Why do flippers try to buy at 80% or less of Fair Market Value – and why do they slash the price so quickly if no one salutes on resale? Because while almost any home will sell at the right discount, that discount can be quite a bit more than you had dreamed – and DOOP is death in every sort of retail business.

Underpants gnomes. The iBuyers are all clawing for market share, but there is no upside to any of this. Investors in these companies are fools, and we can hope they bankrupt only themselves.

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