iBuyers like Zillow have an algorithmic blindspot : Planet Money : The Indicator from Planet Money With troves of data at their disposal, iBuyers like Opendoor, Redfin and Zillow have been trying to make money buying homes online and selling them — quickly. Armed with high-tech algorithms, what could go wrong? Lemons, for one thing.

iBuyers, Zillow, and 'the lemons problem'

iBuyers, Zillow, and 'the lemons problem'

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Joe Raedle/Getty Images
J Myers (left), Zillow Offers national renovation manager, and Claudia Teyssandier, Zillow Offers renovation estimator, evaluate a home for a possible purchase by Zillow in August in Lauderhill, Fla.
Joe Raedle/Getty Images

Companies like Zillow, Opendoor, and Redfin have troves of data on real estate prices and what homes people are scoping out. So when they started buying houses for cash, touching them up and selling them, you'd think it would be a surefire moneymaker. Armed with high-tech algorithms, what could go wrong?

Lemons, for one thing.

Today on the show: we break down iBuying. And Gregor Matvos — who's been studying these tech-powered-house-flippers — explains the economic conundrum in iBuyers' business model.

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Correction Nov. 10, 2021

An earlier version of this episode incorrectly said that iBuyers reportedly own 10% of homes in the Phoenix area. The story has been updated to clarify that this number refers to 10% of homes for sale.