Las Vegas real estate agent Sean Gotcher posted a video to TikTok last week in which he outlined how an iBuyer (Instant Buyer) could aggressively buy up houses in pretty much any American neighborhood and artificially jack up real estate prices.
In the video, Gotcher laid out a hypothetical scenario with an unnamed company buying up homes in a neighborhood for $ 300,000.
In Gotcher’s scenario, after buying up 30 homes, the company pays $ 340,000 for "an equivalent home," therefore jacking up the prices of all other homes it owns.
Read more about Gotcher’s theory below.
TikTok Video
Gotcher described in detail how a company could easily fix prices by buying up properties in any given neighborhood, instead of letting the market decide.
"What that just did is create a new comp," the real estate agent said in his video, as reported by Inman.
"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," he explained.
The video quickly went viral, generating millions of views and more than 12,000 comments.
iBuyers Respond
Though Gotcher refrained from naming companies that could, at least in theory, do what he described, many TikTok users suggested that Zillow, Redfin and Opendoor could easily buy up a bunch of homes in a given area to boost the prices and profit.
Redfin CEO Glenn Kelman was quick to respond to Gotcher, writing in a Twitter thread that his company would "never intentionally underpay or overpay for a home" because that would be "madness."
"We offer every homeowner a choice of a cash offer or a brokered sale, sharing the data we use to price the home," Kelman said.
Zillow’s Response
Zillow echoed Kelman, saying that Gotcher’s video was full of "misinformation and falsehoods."
The company said that "the simple truth is that through our services and tools, home shoppers have more power than ever before at their fingertips when buying, selling or renting their home because of the information we make available to them."
"We pay market value for every home we purchase… And on every home that Zillow buys and sells, we are transparent: the purchase and re-sale prices are publicly displayed on the property page on Zillow.com."
Experts Speak Out
Real estate analyst Mike DelPrete told Inman that the scenario Gotcher laid out sounds "possible," but that "doesn’t mean it’s probable."
DelPrete explained that iBuyers hold just one percent of the market share, which means it would take them years to take over the market in the way Gotcher described.
DelPrete also noted that Opendoor has failed to do what Gotcher outlined despite being the dominant company in this space.
As Slate reported, some claim that real estate prices have gone up in recent years due to companies like BlackRock buying up homes across the country.
