Cute fact about the Zillow thing is that even if Zillow's model was more accurate than local agent valuations, local agents/property owners can still win on average because they get to choose which houses to buy/sell.
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Also, why is Zillow simply putting in bids for all houses at their internal model valuation, rather than putting in bids specifically when the list price, which is say local agent valuation + Delta + random noise is < 10% below Zillow's internal pricing.
I expect it still works if you model Zillow’s bids as conditional on Zillow valuation > agent valuation, but I haven’t tried it.
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But it's not just that. The model is built on Zillow passively bidding without seeing a mkt price i.e. writing options (limit orders). But why would they do that? They can see a listing's price. And respond when internal model suggests crossing the market is not costly.
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So I don't get you get such a result while assuming that Zillow's fair price model is fine. Unless they did something monumentally stupid. To make a loss buying and flipping houses, your fair price model has to be consistently, systematically wrong.
End of conversation
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