Like with most market making operations, your main risk is adverse selection. I strongly suspect that this was what killed the zillow operation. Suppose zillow is on average right with their house price prediction, but in 50% of cases they offer 10% too much and in 50% of cases they offer 10% too little. In their backtest this will show as a fair price prediction. However in reality, they will mostly end up buying the houses where they overpay 10%. Only their bad quotes are being hit so they keep consistently overpaying for properties.