As I am sure you are aware, the real estate website Zillow.com is causing a serious controversy within the industry. If you aren't familiar with this site, they claim to be able to estimate the value of your home by simply typing in your address. I did this with my home, and the value that came up was LITERALLY about 1/3 the actual fair market value of my house! That's not a typo: I said ONE THIRD. The current value they show for my house is almost 20% less than what I paid for it NINE YEARS AGO. Every home on my street appeared to be undervalued by at least 50%, and in most cases more. An agent in my office checked her home out and Zillow.com says it's worth about 43% of what it is actually worth. Worse yet, I've received calls and emails from several clients about this site since the Wall Street Journal ran a story about it recently. That story is clearly creating quite a buzz for Zillow.com.
Why this is a very bad thing for homeowners and Realtors alike:
Why this is a very bad thing for homeowners and Realtors alike:
- It causes our clients to make decisions based upon potentially inaccurate information (one of my clients wants to list their home at a price that is FAR above reality based on what Zillow.com says their home is worth; now I have to take the time to explain that Zillow.com is not accurate; even if I am successful, it's been a poor use of my time, and, maybe worse, my client may think I am not doing my job properly)
- Many people assume because information comes from a website, it is accurate (we know that this is not true, but many people still believe everything they read)
- In situations where Zillow.com's estimate is artificially high, sellers will lean on us to price their homes above market rate (as my client wants me to do as mentioned above)
- In situations where Zillow.com's estimate is artificially low, buyers will use this to justify lowball offers
Before I go any further, let me also say this: I have no issue whatsoever with fair business competition. I have nothing against the concept of Zillow.com. If these people are smart enough to come up with a way to estimate the value of my home accurately, my hat is off to them. The problem I have is that it is incredibly reckless and irresponsible to publicly disseminate erroneous information on such a large scale. Imagine if some website started posting stock prices that were inaccurate, and you made investment decisions based upon that bad information. I know I would be more than a little upset. This is PRECISELY what I think Zillow.com is doing.
What is my point in telling you this, you are probably wondering? It is my opinion that we need to let Zillow.com know how seriously they can affect our industry in a very negative way. If you are in agreement with me, then please go here (http://www.zillowblog.com/) and let Zillow.com know what you think of what they are doing.
What is my point in telling you this, you are probably wondering? It is my opinion that we need to let Zillow.com know how seriously they can affect our industry in a very negative way. If you are in agreement with me, then please go here (http://www.zillowblog.com/) and let Zillow.com know what you think of what they are doing.
1 comment:
Hi Michael, it's David from Zillow.com
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. Clearly there was pent-up demand for this data. We believe that by educating consumers we have facilitated a more productive discussion between homeowners and their RE service providers.
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. 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.
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].
Thanks for writing and good luck with the blog.
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