I don't think Levine successfully disputes the importance of adverse selection here. Sure, if you make a million low-ball offers, a handful will be accepted for God knows what reason. That doesn't mean that adverse selection isn't a serious danger when you attempt to scale up, as Zillow did.
I mean, why did Zillow go straight from making profitable purchases of few houses to losing money on tons? If there's some sweet spot in the middle that would have allowed them to scale up profitably, would it really be that hard to land on that spot?
I think it's obvious that homeowners know much more about the houses and neighborhoods they live in than Zillow, and this creates a big risk for Zillow.
I mean, why did Zillow go straight from making profitable purchases of few houses to losing money on tons? If there's some sweet spot in the middle that would have allowed them to scale up profitably, would it really be that hard to land on that spot?
I think it's obvious that homeowners know much more about the houses and neighborhoods they live in than Zillow, and this creates a big risk for Zillow.