Yes, Zillow’s iBuyer business is cosmetic flipping. If you see a difference, it’s because they’re so bad at it.

Shoe pinch?

Here’s an heretical thought: I like Twitter. That could be because I don’t read Twitter, but I like the imposed character limit as a way focusing the mind. This is me yesterday, picking up on a Real Deal article:

Rich Barton wants to make it crystal clear that Zillow is NOT a flipper!

“We’re not flipping this property,” Barton told Inman at the event. “We’re not trying to get an artificially low price, we’re not trying to take advantage of anyone in a bad situation, we’re not looking to hold it and do a big renovation.”

No True Scotsman fallacy. Investors take note: Barton defines “flipping” as profit-seeking. Zillow doesn’t do that. Meanwhile: Flipping is buying for resale, fast or slow, with or without rehab. What Zillow is doing is cosmetic flipping. If you see a difference, it’s because they’re so bad at it.

“We’re looking to move it as quickly as possible and earn our money off the transaction fee,” Barton said.

That’s funny two ways: They don’t move properties quickly; until I told them why turning over the inventory matters, they clearly did not know. And making money off the “transaction fee” is another shifting of the earnings target. Lending? Title? Data-mining? Referrals? Nope. This time it’s the “transaction fee” – the de facto sales commission.

Every one of those streams of income is worth fishing, but, by moving the target with every interview, what Barton seems to be saying is this: NONE of them, all together, is covering the nut.

Step 1: Go into a business you know nothing about – one that bankrupts 19 out of 20 new entrants.

Step 2: Hire big-money college-bred eggheads to make absurd claims about the business you and they know nothing about.

Step 3: Blow huge money on ridiculously-ambitious software that will someday almost-certainly almost-fully-automate the business you know nothing about.

Step 4: Piss away $25,000 or more per real estate “investment” – all while managing to learn nothing about the business you know nothing about.

Step 5: Watch helplessly, mouth agape, as every dipshit with a line of credit gets to your prospects before you can even demonstrate your massive ineptitude in the business you know nothing about.


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