Response from Zillow: Whatever Gets Them Through the Night

On June 12, I posted a piece about Zillow (see below). On June 13, David Gibbons of Zillow posted the following response (my reactions to his comments are in red font below):

To set the record straight, we don't consider ourselves in competition with Real Estate professionals. Quite the contrary; through our consumer-focus, Zillow is growing a large and productive audience for our advertising clients, most of whom are Real Estate service providers. Zillow simply saw a gap in the market for a service that equips buyers and sellers to enter the market better informed. That would be like saying "We saw a gap in the stock-trading industry, so we thought we'd post stock prices that are not inaccurate in an attempt to have buyers and sellers enter the market better informed with information that is not accurate." David, I like your moxie, but your logic and reasoning skills need a LITTLE work. What you REALLY mean to say is that you saw an opportunity to:

• Create a website with a great concept (which you did; too bad it's not possible to pull this off in reality)
• Create a massive buzz about the site (which you did)
• Roll the site out prematurely, because it was NEVER about accuracy, it was ALWAYS about GLITZ and DRAMA and PUBLICITY (BRAVO!)
• Get a huge flow of visitors to the site (which you did)
• Sell advertising on the site to the very people we are harming: Realtors! (GENIUS!)

It's the classic website formula for success: buzz + traffic = advertising revenue. It's textbook. If you would simply ADMIT that this was plan from the start, you will have my complete respect and I will shut up forever on anything and everything relating to Zillow. If you continue to hide behind the "no, really, it's legit" smoke screen, you'll only throw endless gasoline on the fires of people like me.

Clearly there was pent-up demand for this data. If by "pent up demand" you mean "people have an insatiable curiosity for information of this nature," you are correct. EVERY human being is curious to know what others think their home is worth. Hell, I looked up my home as soon as I heard about Zillow. Everyone that I know did this. That's curiosity, David. It's not "pent up demand." In every city in America, any home owner on any given day can get 10 Realtors in their living room THAT SAME DAY providing REAL estimates of the value of their home if they wanted to. Trust me when I say that there is NO such "pent up demand." Realtors fall all over themselves to provide this information to people FOR FREE. If you truly believe what you wrote, you know nothing of the industry.

We believe that by educating consumers we have facilitated a more productive discussion between homeowners and their RE service providers. If by "educating" you mean telling people that "1+1=3," or "monkeys can fly" or "the earth is flat," and having them believe you, then, yes, you are doing a GREAT job of educating consumers.

A valuation discussion is a great opportunity for you to demonstrate your expertise to a potential client and win their confidence. Zillow.com provides a framework to have that discussion around facts, not just opinions; even when the relevant facts are Zillow's accuracy in the area in question. Let me get this straight: you are saying that I am somehow ahead of the game when you put me in a position where I have to debate with my clients the accuracy of the information that Zillow provides? HOW? What it does is create a hurdle that I and everyone else in my industry has to overcome every time we meet with someone that wants to sell their home. I have been able to overcome this quite easily, to be honest, because I pull out my laptop and go straight to my post on the Zillow blog that I wrote long ago (and, now, I'll direct them to my blog and this communication that I'm having with you). This gives me instant credibility. But what about all the other agents that aren't quite as tech savvy as I am? Stated more directly, BAD information NEVER improves ANY situation.

I am surprised that you would consider that discussion a waste of your time. We clearly need to work on educating professionals on how to use our website as a tool in their daily interactions with consumers. Ouch, Dave. I suppose that's a thinly veiled insult. What you "clearly need to do" is to provide data that is ACCURATE! How about we start with that? There is NO WAY to use Zillow as a "tool in our daily interactions with consumers" in any productive fashion. Here's how the discussion goes, EVERY TIME:

• Client: "We'd like to price our home at $550,000"
• Realtor: "With all due respect, that is not even remotely realistic based on the comps. I have them with me. Why don't we review them and I'll show you upon what data I am basing that opinion. May I ask where you obtained your number?"
• Client: "From this awesome new website called Zillow.com. It's AMAZING! You just put in your address, and it tells you what your home is worth!"
• Realtor: "I am sorry to be the one to break the news to you, but Zillow's information is HORRIFICALLY inaccurate. I can give you example after example of instances where Zillow's estimate is off by literally as much 300%. You simply CANNOT rely on information from that site"

At this point, the Realtor has a problem, because the client WANTS DESPERATELY to believe the bad information that Zillow has so recklessly provided to them. And, as so many humans do, they often "opinion shop" until they can find SOMEONE, ANYONE who will agree with their "pie in the sky" belief that their home is worth dramatically more than it is. Sometimes, they'll move on to the next Realtor...and the next...until they find one dishonest enough or desperate enough to agree to their crazy price. Zillow has become the GREAT ENABLER of sellers who want to overprice their homes (which is MOST SELLERS).

As to the accuracy of our Zestimates, we are improving daily but more importantly, please note that we measure and report on our performance. You will find aggregate reporting on Zestimate accuracy by region here (http://tinyurl.com/fgz5k) and a discussion of how we report our confidence in each house's Zestimate here (http://tinyurl.com/qt4r8). Lastly, I'd gladly take a look at your home and reply with my assessment of why we got it so wrong. We learn from and are improving on our algorithms based on this type of feedback. You can send me your address at davidg [at] zillow [dot] [com]. I have ZERO interest in helping you do your job properly. ZERO. And I have no confidence in YOUR estimates of YOUR accuracy. Allow me to repeat: what you did in rolling out Zillow in such a radically premature condition was unconscionable. I shudder to think of how many bad decisions have been made by how many good, honest people based on the faulty data that Zillow spews forth daily.

If there's any good news in this from my perspective, it's this: BECAUSE you rolled your site out in such a sub-Beta condition, you have completely misplayed the incredible buzz you had going at the inception of the site. People WERE talking about Zillow for a while. Now, it's just another real estate technology novelty. I've listed several homes recently, and I brought up the topic of Zillow just to get a reaction. In the last three situations, all my clients said the same basic thing: "Oh, yeah, we know about Zillow. We looked up our home's value. It's not even remotely accurate. I hope YOU aren't basing any of your thinking on that site."

And, please, allow me to repeat, ONE MORE TIME, I have NO issue with Zillow's concept. It's a GREAT idea. It just isn't realistic at this time. I'm sure technology will evolve in the future to the point where a site like Zillow can provide good, accurate, meaningful information. But that day has not arrived.

Thanks for writing and good luck with the blog. Thank YOU, David. Your post has inspired me to start another blog, which is called "Zillow is Awful." Look for it at http://zillowisawful.blogspot.com/. I look forward to collecting a collage of horror stories about the negative fallout from Zillow. I already have a few nice anecdotes to share. Here's one: I know an agent whose own MOTHER stopped talking to her because the mother looked up her condo's value on Zillow and now believes her daughter gave her bad advice on the purchase of the condo. Isn't that heartwarming? NICE WORK, ZILLOW!