In the depths of the COVID-19 pandemic in June 2020, I bought a truck. And not just any truck, but a brand new 4×4 that was way bigger than the late model Nissan Leaf that I traded in.
When we returned to a semblance of normal life in the spring of 2021 (i.e. when Courts began to require in-person appearances), I realized how much I hated driving a truck on downtown streets.
Well, the actual realization occurred at the top level of the Williamson County Judicial Center parking lot, when there were no parking spots and I had to turn my giant truck around in a tight space and find street parking. I’ll yada yada the parts about me backing into a tree while parallel parking a few minutes later and, by the end of the day, getting a Carvana purchase offer.
But, long story short, Carvana gave me a no-questions/no-fuss offer on my (fixed) truck, in a process that was weirdly easy. I was used to having to run a newspaper ad and have strangers come to my house for test drives (or, worse, dealing with a used car salesman).
That’s their business model–disrupt the traditional market by making an onerous process so easy.
Which is exactly what Zillow was doing in real estate, and which ended in failure.
But don’t think that Zillow’s failure is an indictment of the business model. It’s alive and well in the Nashville market.
When I look at the recent property transactions in the Nashville Ledger, all I see are weird LLCs, buying lots and lots of properties. Look at the picture below. Sfr Xii Nashville Owner 1 LP. Opendoor Property Trust I. Mile High Borrower 1 Value LLC.
My personal favorite is the buyer named “Rich af LLC,” the new owner of some prime real estate on 1st Avenue.
The business model is straight-forward. These buyers approach owners with a quick, no-fuss, cash offer, and, then, they hope to flip the properties (after renovations or maybe not), safe in the assumption that the Nashville real estate market is going to justify their confidence.
Zillow’s failure drew a lot of national attention, but, if the past 60 days of transactions are any indication, the business model is alive and well in Middle Tennessee. In fact, Zillow’s crash and burn appears to be good for Nashville property investors–not only is there one less competitor, but there’s an assumption (among property owners) that “buying low/selling high” isn’t a viable business, and they’re lucky to get quick-cash offers on their properties.
When Carvana offered me nearly 95% of retail value for my 10 month old truck, I was surprised (and couldn’t get it there fast enough). I kept waiting to find out what the catch was–would there be some secondary negotiation or some other trick? (There wasn’t.)
I suspect Carvana was confident that they’d easily find a buyer in a great selling market, and I’m betting that’s what these Nashville property investors are doing too.