Scrolling through homes on Zillow is basically a pastime for many Americans, to the point that fantasizing about home buying was parodied by >Saturday Night Live last season. But one viral video forced the company to address its business practices this week following some considerable outrage.
I've never linked a TikTok in my life but here we go. pic.twitter.com/J7oMvXISkW
— 🦹🏾♀️ (@Gladvillain) September 22, 2021
A TikTok made by a Las Vegas real estate agent named Sean Gotcher went viral this week that pitched a theory about an unnamed company utilizing user data about popular markets and their relative values to scoop up houses for themselves and essentially fix prices on the market.
What Gotcher lays out is relatively simple: a company that has data on what homes are worth could, in theory, buy up a bunch of homes at market prices to establish a baseline, then intentionally overpay for a home in that same area. With that new baseline for value, they could then sell those houses at the new price they intentionally overpaid for and profit tremendously from that market inflation.
“What that just did is create a new comp,” Gotcher says. “So when they go to see these other 30 homes, that extra $40,000, that you can say this one just sold for $340,000, just made them $1.2 million.”
The video is fairly captivating in its own right, especially with a very funny interruption of a small animal happening offscreen. But the implications are particularly nefarious, and though the company went unnamed by Gotcher it’s pretty easy to conclude that it’s an iBuyer like Zillow he’s talking about.
What the TikTok addresses, a listing company purchasing homes rather than simply being a vehicle for others to purchase homes, has been reported on extensively in recent months. So there’s some truth to the fact that it’s happening. And the video — which got more than 2 million views on TikTok and went viral in its own right on Twitter — caused enough waves that both Zillow and competitor Redfin pushed back significantly against those claims this week.
As Inman detailed, Zillow’s CEO issued a statement denying the business practices despite never being explicitly named in the video.
Source : https://uproxx.com/viral/zillow-price-fixing-houses-tiktok-reaction/438