Thread by @BillBrewsterSCG

Pardon my ignorance on this thread. I’m only half up to speed on $z and $zg.

Things we can agree on:
A. The CEO (and management team generally) are excellent.
B. Zillow and Redfin made real estate price discovery easy.

From what I understand Zestimate is going to basically become an offer button. But isn’t the fundamental value of Zestimate it’s accuracy? That’s what I really care about as a consumer. So if Zillow is offering an “accurate” price what’s their edge? That they avoid bidding wars?

Let’s say avoiding bidding wars is an advantage. Certainly buying residential real estate without emotion could be an “edge.” But aren’t they also going to get stuck with some lemons and have to close because their reputation depends on closing?

I’m sure they have an inspection period so maybe I’m on the wrong thought path.

Regardless, they are going to be long residential real estate purchased at efficient prices. How do you win there? By avoiding transaction cost (which are big) and/or flipping efficiently.

But isn’t flipping a game predicated on local scale advantages (crews staying busy might accept fewer dollars/hr)? Is that game really the core competency of $z and $zg? Seems like $hd $low or the home builders are in a better position there.

And then you have the mortgage angle. Doesn’t $z run the risk of underwriting mortgages to sell inventory? Isn’t this exactly what people complain about in industrials that use financing to move product?

Eliminating 3% on the buy and sell so big. Don’t get me wrong.

I just don’t know what I’m missing because it seems like this business model carries a lot more risk than the existing one but the stock is reacting as if it doesn’t.

One more thing. Real estate is super local. And interiors matter a lot. Zestimate hasn’t been able to make nuanced decisions from what I’ve seen over the past 3 years. Seems like they are structurally disadvantaged to me. 🤷🏻‍♂️

Please let me know why I’m wrong. Bc I’m baffled.