[danielvf]

Zillow has such reach that they can low-ball every offer so that 99% of people won't take it - but as long as 1% of people do, and Zillow can avoid terrible houses, then Zillow will be buying properties at a huge discount from the market, plus collecting a substantial fee. Thus, they can sell at market rates and make a big profit per house.

The key advantage here is that they can make these low offers to a much bigger audience than anyone else can do. This should allow them to be either be more profitable per house than anyone else, do more volume than anyone else, or hit any mix of these two better than anyone else.

Of course, they can shoot themselves in the foot pretty well if they:

- Try to go for volume over profitability, and then catch a downturn. - Do a bad job of running repairs. - Don't do a good job of catching houses that are much worse than they appear.

However, there's no physical reason this can't be extremely profitable. They have the data to see their current home investors making money. If they feel they can identify the most profitable attributes of these flips, then they can route all the extra profitable ones to themselves. The only losers here are the existing people in Zillows home flipping program. They are almost guaranteed to now be getting the second best homes, once Zillow has skimmed off the profitable ones.

[x1798DE]

Why are they in a unique position with respect to reach? I would think that it would be hard to scale across so many jurisdictions when you need to hire licensed contractors to do repairs and have lawyers allowed to practice real estate law across many states.

Maybe that's not a big part of the cost?

[jldugger]

> Zillow has such reach that they can low-ball every offer so that 99% of people won't take it - but as long as 1% of people do

It'd be pretty inconsistent to put in a lowball offer when your company publishes an estimated value for every home in the market.

[danielvf]

And yet Zillow has been already been doing these low offers successfully, but with only third parties making the lowball offers.

Sometimes people just want sell now.