Viral TikTok accuses Zillow and competitors of manipulating the housing market. Here's what's really going on.

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No, Zillow isn't buying all the homes in your neighborhood. But the rise of so-called iBuyers does raise regulatory questions.
Are companies like Zillow ZG, -3.40% and Redfin RDFN, +4.57% manipulating home prices by purchasing properties across the country? That's what one real-estate agent claims in a video that went viral on the social-media platform TikTok — but real-estate experts say the reality is much more complicated.

In a video that's garnered more than 2.4 million views on TikTok, Nevada real-estate agent Sean Gotcher criticizes the "iBuying" business model, in which companies buy and sell homes for a profit. In the video, he proposes that a nameless company has a website where many people search for homes "when they're bored," and he says that same company "uses that information to go into that ZIP code and start purchasing houses."

In other words, he's suggesting that companies such as Zillow are using the data they glean from people's perusal of home listings on their sites to make decisions about which houses to buy as iBuyers.

Gotcher later argues that the company will buy 30 homes at one price, and then purchase a 31st home at a higher price. "What that just did is create a new comp," Gotcher says, referring to comparable prices on nearby properties, which appraisers user to determine the value of a home for sale. He then says the company can turn around and sell the other homes at that new, higher price.

In subsequent videos, Gotcher takes on Zillow and Redfin more directly, criticizing their respective business practices.

"I'm happy to see the conversation that's occurring at every printer in every real estate office about data storage, mixed with buying power and recognizable marketing is finally happening outside our office doors so more can participate in the discussion," Gotcher, who works for Level Up Real Estate in Henderson, Nev., told MarketWatch in an email.

The video subsequently garnered even more attention on Twitter TWTR, +0.79% , when a person with the username Gladvillain shared it after learning that the user's mother had sold her home to Zillow.…
Jacob Passy
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