[photopress:zillow_banned_arizona.jpg,thumb,alignright]Josh Dorkin of Bigger Pockets emailed me the other day and asked me to comment on his article regarding Zillow’s troubles in Arizona.
I delayed my response for a couple of reasons. Mostly because I do not share Josh’s view that disclaimers, of any kind, will resolve the problem. And yes, I do believe it is a problem, and do side with Arizona on this one.
As with any action, you have to look for the underlying reasons for the action, and not simply the specific legal issue used to support the action. I do not like to write about the negative sides of Redfin and or Zillow. I do, and have, told them both in person how I feel about their negative sides, but hate to highlight the weak points. I’d rather write about their stronger points. But this is “newsworthy” and so I agreed to Josh’s request.
To me it’s real simple, and I have personally told the people at Zillow how I feel about it. The Zestimate should pop up a RANGE of value. PERIOD! It is THAT simple. None of this “house is worth $723,000” and then scroll down, look this way, no look over here, down there and around the bend and THEN you see a “range of value”.
There should never be a SINGLE value attached to a property in the form of a Zestimate any more than an appraiser can guarantee a “TO THE DIME” value, or an Agent can say stoopid things like, “I will make sure you don’t pay a dime more than the house is worth!”. AS IF a property can be valued “to the dime”.
As for “of course people know that’s not the REAL and EXACT value”…NO, people do not KNOW that, and they never know exactly what a house is worth, and they are always looking for some basis for value. So I have to agree with the State of Arizona on this one. Zillow Zestimates should be a range of value and not a specific number.
I think it’s Ok to say this house is worth somewhere between $700,000 and $800,000…maybe. It’s not OK to say it is worth $723,000 and then add a bunch of disclaimers up and down and around the number. So Josh, no. I don’t think the answer is more disclaimers, to help counteract the damage done to the homeowner in the first place.
I’m going to do a “How’s Zillow Doing” post after we get a bit more into this season and real sold comps from high season. My guess is most sales will have fallen within the range. My hope is that not too many have fallen AT the Zestimate and BECAUSE OF the Zestimate.
In the meantime, if every State bans Zillow because homeowners are being damaged by people’s perception that the Zestimate is meaningful. If Zillow is banned because buyers are actually making offers at the Zestimate price (and they are). I say let the States protect their citizens as they deem appropriate. It’s one thing to not want the Realtor Organization to cast aspersions at new business models. It’s quite another to not expect State Laws to protect their citizens, from broad monetary damage, on their constituents’ most valuable asset.
Ardell, I think you make and important point and a strong case for your point of view. I think the State of Arizona has some real guts alienating a very popular web service such as Zillow, but I agree that Zillow should be giving people no more than a price range.
Ultimately, it comes down to what a buyer is willing to pay, and a seller is willing to accept. If you can’t get those two numbers within shooting distance of each other you won’t have a sale no matter what any mathematical equation tells you.
The Zestimate is just a random number, based on public information and in an individual negotiation or sale may or may not be meaningful. It doesn’t know anything about things like condition (or a host of other factors) that would play a role in an actual transaction.
That said, I like to think of it as an interesting data point and I think it would be a shame if it went away. On the other hand, it’s dangerous for people to take that single number too seriously. Especially when we don’t even know what the “Zestimate” is really based on (though we all have our guesses). But I agree with you that the range Zillow provides (if you can find it) is probably not too far off base in most cases because there is enough wiggle room there to account for a certain degree of uniqueness. (Is uniqueness even a word?)
Maybe appraisers and realtors would be less threatened by Zillow and less inclined to promote this kind of legislation if they actually did a better job of justifying their value (or, knowing what their value IS) and started looking at Zillow as a tool rather than a threat.
I have a feeling we agree on that one, for sure. 🙂
Sandy,
If you listed your house, your personal house, for say $799,950. Let’s say your Zestimate is $690,000.
Now let’s say you have been on market for 9 months and have three offers at EXACTLY $690,000. Three identical to one another start points of $690,000 that are exactly the same as the Zestimate. Let’s say none of the buyers have been willing to go past $700,000.
Would you say you obviously over priced it? Or would you start thinking maybe the Zestimate is hurting you somehow?
Maybe they changed it since the last time you looked at Zillow, but I just zillowed my house, and the range of values was front and center, clear as a bell, right under the Zestimate.
The footnote explaining what each one is, and isn’t, is right there in a pop up under the question mark.
I do agree that ,many sellers seem to be listing awefully near their Zestimate, however. Not sure if that’s because Zestimates are getting better, appraisors are getting lazy, or sellers, who would have listed lower than the Zestimate based on a standard appraisal, are getting greedy.
Thanks Biliruben. Very, VERY glad to see that they were listening. I’m sure that I have not been the only one recommending this change since day one.
I’m going to check and and do an update to the Article. I’m surprised they didn’t do a PRESS RELEASE when they made the change. Maybe they did, and I missed it. I’m sure this change wasn’t in effect when I was at Zillow for the last PRESS RELEASE regarding Q & A, because we again discussed the range of value issue at that time.
Thank you Biliruben!! for the info.
OH MY GOD!!! NO. The little popup had THE, THE Zestimate and the Range did NOT replace THE Zesitmate in the pop up.
IF you click on the popup with the Zestimate, and ONLY IF you play it to the next level of the game, does the Zestimate show under and much smaller than the to the dollar number.
AND…MY HOUSE went DOWN OVER A HUNDRED GRAND SINCE I LAST LOOKED!!!
Not good enough Biliruben. Sucks! See…home owners DO NOT like to see their home value go down a hundred thousand dollars, and then that erroneous value plastered all over the internet.
Totally sucks. I like the info as to tax records etc that the site provides. But this Zestimate is for the birds and has to GO!!
Hey Beitey! Can I sue them for dropping my home value! I’m ticked.
That’s a good question. I am actually in that situation now (condo on the market, for more than the Zestimate…considerably more), so I guess I will be able to tell you exactly how I feel about it in 9 months if it hasn’t sold. 🙂
That said, I took advantage of the new functionality on Zillow to revise the Zestimate…although, that functionality is kind goofy in a way since it doesn’t show up on the public view until you get deeper into the site. The reason Zillow is low on ours is that we have a view of Puget Sound, but we are the only condo in our complex or our section of Harbour Pointe that does. Zillow doesn’t know we have a view and neither does the tax assessor. Obviously, that has been fine up until now as our taxes are a bit lower. The downside is Zillow doesn’t KNOW we have a view (because it has no eyes and has never seen the place…) so that brings down our Zestimate. We are, however, “within the range” on Zillow, so I am hoping that will prevent us having any problems.
By comparing our condo to other view condos (which the new Zillow functions let you do…even though it doesn’t show up for the public until you dig a little deeper) our list price is actually well under the revised estimate. But, will anyone who is using Zillow to figure out the right price look that far in? Well, hopefully if they are working with an agent that knows the area, they will. But, we will have to see how it all plays out.
Calmly repeat to yourself, “it’s just one data point, it’s just one data point, it’s just one data point.” That’s what I am telling myself about our condo, and it’s what I always tell my buyer and seller clients.
And there are buyers out there who will pay more than the Zestimate. I did on the place I just bought because I really wanted it (I fell in love at first sight, even though as an agent I do KNOW better than to do that…but it was so flippin CUTE!!!) and I figured it would go up in value enough to cover the difference and then some by the end of the summer.
It was a data point though…and had the difference been larger, had the rest of the numbers not basically jived, maybe the story would have ended differently.
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Could you take a deep breath and better explain what you are complaining about, Ardell (other than just losing 100K ;))?
The Zestimate accompanied by the range isn’t satisfactory, it sounds like?
Sure. Sue ’em. Of course you may have to sell your house to make your case!
I just pulled up my house and it did not give me a range! Just the zestimate! My zestimate is actually higher than actual market value because included in the comparables are several acreage homes which obviously sold for more due to the amount of land they are on. Doesn’t Zillow take into consideration lot size??
I agree with Ardell – a range of values should pop up, not a specific number. And mine is specific!!! $285,226 Seriously! I’m surprised they didn’t put some random number like 47 cents at the end of it!
Hey folks!
Zillow…HAHAHA.
There are a group of us down here in my neighborhood that are “very” interested in Zillows valuation procedures.
For just one block….a total of 15 houses…the cumulative undervaluation was approximately $50 million.
I smell a lawsuit.
oh…and to see for yourself…check out the 300 block of S. Hudson zip=90020.
and no…I’m not gonna tell you who lives in those houses.
It’s all play money until someone writes a check. Kinda like how my husband counts the commission checks before the deal closes (I keep telling him not to but he ignores me), and is always trying to figure out what his stock portfolio is worth.
The Zillow valuations may not be right a lot of the time, but shoot, I’ve seen agents mis-price their listings a lot too. Seriously, how often do we agents walk into a listing and think to ourselves, it will never sell at this price? On a nearly daily basis.
Anyway, while I think there are a lot of things I don’t like about their model I would hate to see Zillow driven out of business. I think it is something consumers like (well, I guess they like it when they agree with it!) and I think more information is always better than less. But, as with most things it’s not wise to put too much weight on one data point (ESPECIALLY when we aren’t even sure how the data was created). It’s our job as agents to be able to explain that to clients, both buyers and sellers. Although, as they say in Cool Hand Luke, some people you just can’t reach.
What worries me is when the Zestimates are off by hundreds of thousands of dollars. When I listed my house last year, the Zestimate was $200K ABOVE what I knew the market value was at the time. Good thing I listened to my agent or I never would have sold the place. I just checked the current Zestimate, and it’s still off by that much. The range isn’t even close.
For whatever reason, this much variance seems to be common in my neighborhood (Montlake). Maybe their computers think we’re in North Capitol Hill or something.
A range of values is still an appraisal under USPAP standards and will not change the Arizona ruling.
It’s not much of a ban, Ardell. Enter any property you want on Zillow and you’ll still see the Zestimate.
I agree with you the range of values would be more beneficial than the falsity of one set number (though that one set number isn’t nearly as inaccurate as most real estate folks will admit – we have light brown stucco and dark brown stucco as our two architectural styles here.)
This isn’t a case of the state “alienating a very popular web service” as the Arizona Board of Appraisal grandstanding for the sake of some free publicity for the industry.
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Ardell,
Why do you care if your house drop $100k in value over the short term? You purchased it for the long term. You love living in it. You can afford your mortgage. The price you could sell it for does not matter. Don’t stress just because some web site says it is worth less.
Arizona’s cease and desist will eventually be overturned by First Amendment protection.
Question: If Arizona wants Z to become licensed under the appraisal laws, then does Arizona ALSO make the companies that provide automated valuation models become licensed appraisers? For example, First American Real Estate Solutions has offered AVMs for years.
http://www.firstamres.com/solutions/property_valuation.jsp
Great point, Jillayne. We use AVMs from Chase and Citibank for second mortgages, too. (I can hear my appraiser growling now…)
Ardell –
I’m always available to discuss consumers’ understandings of Zestimate values. That is not what the AZ issue is about. According to Inman, the AZ Board of Appraisers has not received a single consumer complaint relating to Zillow.com. So the “underlying complaint” is clearly unrelated to Joshua’s concerns. I have tried to reason with Joshua and I ask you do your own research before joining his personal campaign.
Anyhow, back to the more productive discussion of Zestimates and consumers understanding thereof … it’s something we’ve given a lot of thought to and are always open to suggestions on.
We do provide a value range for all Zestimates and it’s not that hard to find – it’s right below the Zestimate on the home’s detail page.
We are obviously not going to stop publishing Zestimates. My experience in speaking with many homeowners regarding their Zestimate is that they understand that since Zillow has never visited their home, the Zestimate can not possibly be the final word on its value.
I totally agree with you that buyers and sellers are quoting Zestimates in negotiations. They’re negotiating and the fact that people are negotiating over the sale of houses should not surprise you — it is no grounds on which to argue to outlaw AVM’s. If those buyers & sellers weren’t quoting Zestimates they’d be cherry-picking comps. Personally, I think it should be easier to win a negotiation when your opponent clings to a Zestimate than if they have a few good comps to show you.
Alan,
It bothers me because as you can see from Rhonda’s comment, people do say “Zillow says my house is worth X” and buyers ARE bringing offers at the Zestimate price, and yes…they could RULE.
Let’s say all the agents go away, NAR gets squashed by the DOJ, eveybody starts buying online from Redfin using Zillow Zestimates.
Now should we “care”?
David G. from Zillow.
Why is it that nobody from Zillow has contacted me?
I sent in an email explicitly pointing out an area of particular interest.
There is no phone contact information that I can find for Zillow.
I think that when you value houses here in Los Angeles such as the Japanese Consulate, The Canadian Consulate and other…well…lets say…very influential people’s houses at 80% less than their value ($1,500,000 vs the $7,000,000 plus that the houses would actually sell for) that a little discussion needs to take place.
Will I be hearing from Zillow soon?
RCG has my email address I’m sure.
David G. of Zillow says: “I totally agree with you that buyers and sellers are quoting Zestimates in negotiations.”
David, our area doesn’t sell strictly based on comps. Seattle homes are very unique one to another. Two houses next door to each other can be $500,000 price difference or more. Averaging doesn’t work here, and finding three other homes almost exactly like this one, is often not remotely possible.
Your agreeing that buyers and sellers are giving the Zesitmate creedence in purchase and sale negotiations is EXACTLY what I am seeing. That is very dangerous and harmful to home owners. To some extent to buyers as well.
Say a property is worth $350,000 and the owner prices it at $349,950 and Zillow has it at $312,423. Without Zillow the buyer would start maybe at $325,000, but more likely at $340,000 and they’d meet somewhere.
Starting at $310,000 against $349,950 is a whole nuther ballgame.
What if that buyer really wants that property, starts the ball at $310,000, the Zestimate, and another buyer waltzes in and just buys it at fair market value, while the other buyer is didling with the Zestimate? Buyer loses property.
Lots of harm to both buyers and sellers to pin the number down to a single value. A range is one thing. A Zesitmate says it’s worth THIS unless it’s not. If the consumer doesn’t know how to value around the given number, they use the number given. It’s easier.
I absolutely can see an affect in the marketplace. More on the downside than the upside. Tell a buyer the Zestimate is off when it is higher, and they will be more than happy to believe you. Tell a buyer the Zestimate is off on the low side and they are not as quick to believe it.
EconE,
We would not be giving Zillow your email address.
Ardell…you have my permission to release my email address to Zillow provided it is given to someone in charge rather than just a lackey.
I have already spoken with and emailed Matt Goyer at Redfin regarding this and was told that my email would be forwarded as multiple google searches left me with no phone number for Zillow and the only way that it was possible to contact them was through their site and I can only assume that because I have heard nothing back from Zillow, (I provided them with my email address, my home address and my home phone# here in L.A.) that my “inquiry” has found itself at the bottom of a HUGE stack of emails from all the Arizona folk who are whining and crying over 10’s of thousands of $’s.
We are talking millions per house here in my neighborhood.
I estimate that the cumulative undervaluation of the 1200 houses that comprise my neighborhood (Hancock Park) is well over a Billion Dollars.
No longer nickles and dimes IMO.
I’d like to hear from someone at Zillow ASAP.
you can check back to this thread and I will fill you in on the updates as they unfold.
I will start canvassing my neighborhood *quite* soon and I’m sure that many of the Ego driven VIP’s (actors, directors, old money etc.) won’t be very thrilled to hear about thess “estimates” that could potentially cost them millions of dollars…and being that my family has lived here for over 30 years…we actually ARE able to talk to these people…we know many of them as close friends.
And the people who are in this neighborhood didn’t become as wealthy as they are by not watching their “pennies” or so to speak…but I’d be willing to bet that they have never heard of Zillow TM and even if they have…they probably haven’t ever “Zillowed” their house for a “Zestimate”.
It bothers me because as you can see from Rhonda’s comment, people do say “Zillow says my house is worth X
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Alan,
Anytime a 3rd party number is being used in negotiations between buyers and sellers, as Zillow admits they do, it affects home sellers. Think about the bigger picture. If this can happen to my house to such an extreme, it can happen to anyone.
Clearly anything that can potentially affect property values, affects everyone.
If I had an appraisal on the table for $200,000 less than an asking price at any house listed for sale, it would have an impact. People wouldn’t say “oh that’s just one “data point”.
I think, David from Zillow explained it well. Zestimate is an approximate value–think of this as an average market value of that type of house. Now go from there, use your judgement and come up with what you think the house is worth.
I can see why real estate agents are really freakin about that.
Zillow, redfin and many of these real estate website are making consumers more powerful by providing lots of information. Thus, buyers are less dependent of real estate agents and these agents are worried about loosing their jobs !
I don’t know a homeowner in this country who would understand how even an “estimate” or even “guestimate” could possibly drop from $969,000 to $700,000 in 50 days. How disempowered is a seller of a home when they can’t control that misinformation being spread all over the internet?
Anyone defending this kind of drop is being totally unrealistic.
Why are you criticizing a licensed real estate brokerage from offering opinions of value? Isn’t that what real estate brokers do?
http://159.87.254.2/publicdatabase/DetailEntity.aspx?Id=27181
Ardell I’m a little late to this party but back in post #3 you outline a scenario that leaves out something… the real estate professional.
Zillow doesn’t have ‘real’ sales comps that accurately reflect the current market conditions. If the house you used as an example is priced correctly based on the market it will get offers. Zillow isn’t the only place that the property would be marketed on.
And again, if the property is placed on the market correctly, as a buyers agent would I really want to represent a buyer based on the zestimate?? Don’t think I’d be doing my job.
Lastly, if buyers are using Zillow to wait out sellers… what if some new data set was entered into an area that suddenly showed a zestimate much higher than the asking price??
Zillow is very real estate agent friendly these days. I’ve had listings on there with notes saying that the ‘zestimate’ was way off and to contact me or another agent for up do date market information. Zillow left the listing alone (didn’t try to edit that out).
Zillow needs more data… from us.
Oh, my. (Forgive me if this posting is inappropriate– I am not “in the biz” but am a would-be first-time buyer whose agent recommended I start following Rainy City to get a feel for the character of the market in the Northwest.)
I’m afraid my gut reaction is, are buyers really this STUPID?
This is a computer program. It has no feet to walk over stepping stones in the newly landscaped garden, no eyes to admire the way the cathedral windows drench the kitchen in morning light– no nose to smell the mildew.
Never mind that it is extrapolating off public information that may be way out of date– there is no quality or quantity of data that will produce an authoritative computerized estimate of a house because a computer program cannot do the most important part of a professional estimator’s job.
A computer program cannot imagine living there.
I don’t think there is much Zillow can do about people being Idiots.
Todd –
Good point — Home QnA on Zillow is a great opportunity to answer potential questions about the gap between the Zestimate and list price. I don’t mind what you say about the Zestimate value as long as it’s on topic and respectful of your neighbors in the Zillow community. If I can ever help add to your explanation by confirming your analysis of a flawed Zestimate, please e-mail me the address of the listing [davidg at z]. This home’s a very good example of that type of QnA: http://tinyurl.com/3a5jsb
Ardell –
Cross-posting from the next post – it gets tough to keep up with the comments here on RCG when you’re getting beat up on two posts 🙂
You are quoting me out of context — please note that I am talking about negotiating, which as you know is nothing new to the buying and selling of Real Estate. I know that consumers don’t view Zestimates as “the final
Ardell –
Tree’s comment is representative of what I hear from consumers. They get it. What you’ve been hearing ARE “negotiations”.
Ardell, I completely agree with you. I had a chance to sit down with a couple of agents who were completely frustrated with Zillow providing an exact value. Consumers are telling them to forget having a professional appraisal completed and instead, they want to use the Zillow value, even after the agent STRONGLY recommended against this. The house ends up sitting on the market and the consumer in turn gets frustrated with the agent. This is a huge problem, it is misleading and people do not understand that “Zillow isn’t the real or exact value.” I like what Zillow is trying to do but they MUST do a better job….and obviously that is no easy task.
Ardell,
If the Zestimate for a house dropped from $969,000 to $700,000, may be, it’s an indicator that market to getting back to normal. last few years, run up in real estate prices gave sellers some false hope. since there are many investors in real estate market, the house values are also going like stock values–up and down. however, a house value will never go down to zero as happened to some of the stocks–good news for sellers.
I’ve never had a client who wanted to use Zillow’s estimate in lieu of an appraisal. I can’t even imagine that situation coming up.
I’ve had the estimates come up at listing presentations so I’ve started to bring them up myself. Better to attack the issue first than wait and be on the defensive.
And sometimes, the estimates are dead on.
Rich…try explaining my situation away.
What will Zillows reaction be when it is no longer Ardell and some agents that are upset but rather a group of people who’s houses are valued 80% less than a house down the street. Why is it that people like Ardell are discounted when they voice their concerns? Will the people in my neighborhood be discounted?
I emailed DavidG from Zillow and hope to hear from him this morning.
The houses that are selling as of late are houses that “Zillow” closer to the asking price, not the houses that have been owned for a very long time. I find that highly strange. Sure…some people may let a house fall into disrepair as it gets older but If that argument is attempted for my neighborhood it will get laughed out of court.
BTW…Mayor Villaraigosa’s house is severely undervalued also. It’s actually not his house but rather the “Mayors mansion”…kind of like the Whitehouse…but…he listens to people in Hancock Park.
I will keep you all updated.
Jonathan, I agree that sometimes the estimates are dead on. But I don’t think “sometimes” is good enough with the asset we are dealing with along with an audience the size Zillow has attracted. No strong business should say “sometimes their product works.” Easy fix = take down the exact value and more communication that it is only a rough estimate (ie. the Eppraisal and Coldwell Bankers (onboard) way).
Jonathan,
See it and believe it. That it is not happening there does not mean it is not happening here. IT IS and I have PERSONALLY seen it happen. I’ve seen the appraisal disregarded and the Zestimate used. I’ve seen three appraisals on the same house have a variance of $150,000 in a short time here, and the Zestimate used partly as a result.
We don’t have what you have Jonathan, you and I have been through this before. You have one style of house that comes in beige or chocolate. We don’t have that type of “easy to determine a value” property here, and I’ve seen an appraisal jump from $750,000 to $1,000,000, with no change in market conditions, practically overnight.
I have often and many times worked in similar markets where valuation is exceptionally complex. Anytime you have a City of older homes mixed with newer construction and remodels. Anytime you have view considerations, and Seatlle has a LOT of water and view considerations. We have Mt. Ranier Views, Lake Washington views, Lake Sammamish Views, Cascade Mountain Views, Olympic Mountain views and views of the Pizza Joint and neon lights therefrom.
We are not Arizona, Jonathon. We are SO NOT Arizona. Very, very little of our area is determined by straight comps, and most of that is in “not close in” property where there is sufficient land for lots of new construction, like Issaquah, and Fife. The MAJORITY of our area does not function like yours.
Remember that part in the real estate licensing exam that says “Appraisal is an artform and not a science”?…they were talking about Seattle. Proving value here is an art…and not a science. Counteracting the Zestimate REQUIRES that we KNOW where the Zestimate comes from, and explaining it away is not as simple as you make it out to be…not here anyway.
That they lump view property with non-view property is unconscionable. It’s not even a “good faith” effort to TRY to be somewhat accurate.
Rich says: “however, a house value will never go down to zero as happened to some of the stocks–good news for sellers.”
Not true Rich. The house I grew up in went to zero. Not true, Rich. It absolutely can happen, and I’ve seen it happen.
“Appraisal is an artform and not a science
I wonder if title company custumer service departments provide sales comps, such as the companies in King County? Title Co. property info departments are not appraisers.
They do Rhonda, but they are worthless. I don’t even want to see what a Title Company has to offer. It’s just a bunch of sold houses with no consideration to relevance…kinda like Zillow.
Ardell…I “tried” speaking with David Gibbons from Zillow.
He feels that I am being irrational even while I point him to two houses that are on the same block where one “zillows” at $1,500,000 and the other house is just under $9,000,000.
The $1,500,000 house is a higher quality house and is on a larger lot.
David offered to “correct” the value on my fathers house. I told him that I felt that that would be unfair as I am not so much concerned with my fathers house value as I am concerned with how far off base Zillow is to the values in the neighborhood.
I can only guess…but I think that David was too concerned with his lunch hour and that is why he chose to rush me off the phone in the manner that he did even threatening to hang up on me. He even addressed me as “dude” which I also found highly unprofessional.
More to follow.
FYI…the two houses that David Gibbons saw. Yes…he claimed to be looking at Zillow at the same time as I was pointing him to the relevant data.
336 S. Hudson. Los Angeles Ca 90020
and
356 S Hudson. Los Angeles Ca 90020
try a search on these adresses
and sorry for the typos
EconE,
Let me know if you want me to fix your typos and delete that last comment. More than happy to do so for you.
I will be speaking with David G. as well, but it’s really somewhat irrelevant if they fix my house and your house, isn’t it?
Until they start using algorithms more in line with real estate valuations, it is broke. Until they stop lumping view houses with non-view houses, it s broke. Until they stop pricing a new house based on averages of old houses, it is broke.
When broke is being plastered all over the internet and affecting home owners in price negotiations…time to FIX.
EconE –
What was irrational was that you did not introduce yourself when you called, you would not tell me your address but instead insisted on discussing your neighbors’ Zestimates, you didn’t let me finish a sentence and you did not listen to the feedback I gave you or the fact that I asked you whether we could schedule a call for a time when we were both available on Monday. That was highly irrational.
As I said, I’ll make time to discuss how you could best use Zillow to promote your father’s home when you list it but it’s not a good use of either of our time to discuss the relative accuracy of Zestimates in your neighborhood. I hope you understand.
I have to back up David G. here. I have also had EconE call me in the past, and he does not given enough info to verify that he is who he says he is and lives where he says he lives.
Not saying I doubt him, but he is an “anonymous caller” and anonymous callers and posters are just not…well, let’s leave it at not.
If someone is going to take the time of a professional, time is money, they should at least be able to know with whom they are speaking besides a “moniker”.
Honestly, is it really Zillow and Redfin that have your knickers all twisted up? Or could it be, deep down, you know the “threat” they represent is only possible because you are paid too much for what you actually contribute to a transaction?
Information technology creates efficiencies in markets and lowers costs by cutting out fat. In this case the fat is 6% commissions. There is nothing you can do except specialize, or learn to take advantage of IT to do more transactions, or both. Ask any travel agent that is still in business. Whining about services that empower consumers (Zillow), or reward them for taking advantage of available technology (Redfin) is as useless as the RIAA suing college kids.
In the meantime, just pray the Japanese don’t invent a robot that can get a key out of a lock box, open a door, and say things like “This room gets SUCH great light”.
Ardell and David
Yes Ardell. I do choose to remain relatively anonymous. Most people in my neighborhood choose the same. I provided David with my Fathers address. I have also provided Zillow with my name, my address here in Los Angeles, my home L.A. telephone number plus my cellphone that still has my Missouri number that I have left unchanged so that my friends in Missouri can call me and still have it be a local call.
How much information do I need to publicize? Would you like to know about my mother passing away in Jan 03 due to collorectal cancer? Does my father need to get some sort of notarized statement attesting to who he is and where he lives?
David did little more than laugh at me and treat me as that “anonymous” person on the internet. After all…what would I be doing blogging on Seattle RE blogs and not L.A. blogs? It is because I want to move back to Seattle where I lived and worked for 7+ years after college.
I did introduce myself by name when I called. David was upset that I did not wish to conduct a conversation where I couldn’t hear him through the speakerphone that garbled his words and requested…a number of times…that he switch to the handset so that I could hear what he was saying.
David offered no feedback other than How Zillow can help promote my fathers house. That is not the issue as far as I am concerned.
I suggested that someone at Zillow actually take a look at my neighborhood down here so that they could see what the situation that their estimating model has created. I was told that that wouldn’t happen.
I suggested that they just admit that they are so far off on my neighborhood that maybe they should just “black it out” and was laughed at and told that that was “not going to happen” to paraphrase the response.
I have since telephoned Rich Barton and left a message with his secretary letting her know how condescending the Director of…well…whatever the David Gibbons is director of…to a customer (someone that uses their website) that calls expressing a valid concern.
I tried calling you also today Ardell…in fact… but you didn’t answer…maybe it was because I was using my MO number…you’ll be receiving a phone call from the 323 area code so when you see your caller ID you will know it is me….and that I actually do live in L.A.
EconE,
The value of a house is market driven. Zestimate is just a starting point. And again, different people can start at different point but the equilibrium price in the market will be the true value of the house. hope you understand this as you are “EconE”.
Zillow has a license for appraising and they are just doing that. I think that is better than what a seller “THINKS” his or her house is worth.
Good Realtors can add a lot of value but we need a Charles Schwab type system where people can choose the level of advice they need – from full service advice to simply MLS access with someone to document the legal transaction.
Also, a question to the Realtors – why haven’t there been more efforts to create barriers to entry for the profession. Why not at least make the accreditation process more difficult?
Rich…yes…having a degree in Econ does help me to understand market dynamics, supply and demand equilibriums and all that other “stuff”.
now…let’s take a closer look at your statements for commentary purposes….well…let’s just look at the ones I’ll have the most fun with.
“Zillow has a license for appraising and they are just doing that”
then I would assume that they “know” what they are doing.
“I think that is better than what a seller “THINKS
Good point, Zag. Here’s the dirt on that: Agents are cash cows. Its a numbers game: Brokers suck them in with the promise of “make your own hours” and lots of cash with the hope they stick around long enough to make the broker some money from their “Spheres of Influence “(ie. handing out biz cards to friends and family until someone feels sorry for them and thows them a bone). Then Brokers nickle and dime the newbie Agent’s visa card for everything from training materials, to marketing materials, to a “desk fee”, so more Agents churning through=more Visas to ding.
90% give up when they can’t make a living and it turns out to be harder than it looks (especially when you are the career-challenged type that seems to fall for this), so they quit and are promptly replaced by the Broker’s recruiting efforts.
The 10% who are actaully good at it and add value to the process, build a pipeline and do well for themselves AND the Broker at the same time. Sooner or later, the true Pros either negotiate a better split or become Brokers themselves.
Not exactly a system designed to attract and keep the best and the brightest, but its proven to make money for Brokers, so it stands, and its the reason you can’t throw a frisbee in the park w/out hitting a licensed RE Agent. Of course, this is a HUGE reason why people see Realtors as not much better, or worse, than Used Car Salesmen or telemarketers.
Your Conscience…
argumentum ad hominem
google it.
“I say let the States protect their citizens as they deem appropriate”
protect them from whom, Ardell? Licensed real estate companies offering opinions of value?
I’ll expand that for you a bit, Brian. From Whomever and However, they deem appropriate.
Better?
Morning Ardell…..the sleuth @ work…..
As a real estate broker, I believe Zillow has a place in our industry. One of the things they do is enhance the value of a real estate professional, provided that person is well prepared for their listing presentation. Zillow cannot seem to account for location. I have also noticed home sales not being reported in the MLS, tend to really sku their numbers. I have reviewed their zestimates compared against actual sales. Half are higher, and half are lower.
Why should Zillow be held any more accountable than a listing agent’s CMA? If home values were sacrosanct, then maybe the appraiser should not be given the sales price, when they set out to appraise a property for a lender.
Econ, I can do ad hominem here, watch — Either you are a poser, a frustrated agent, or a bored Trustafarian with nothing better to do than worry about what Zillow thinks your Daddy’s house is worth. Maybe all three. Congratulations on remembering some latin from the private education you are wasting.
The larger point that the underlying fear of Zillow, Redifin, Zip, etc etc is rooted in Old Real Estate’s unsustainable business model is germaine to this topic.
Feel free to google that.
“As a real estate broker, I believe Zillow has a place in our industry”
how much of a place and in what capacity?
“One of the things they do is enhance the value of a real estate professional, provided that person is well prepared for their listing presentation”
could you elaborate on this comment please?
“Zillow cannot seem to account for location”
really? you don’t say.
“Why should Zillow be held any more accountable than a listing agent’s CMA?”
show me a listing agent that would be as far off base with their valuations in my neighborhood. Zillow the addresses mentioned in post #50. Click on the listings to get that “birds eye view” compare the homes…the properties…even the style of home…the pictures are surprisingly clear so it shouldn’t be hard. I’d be willing to bet that one wouldn’t need much more than a 4th grade education to accurately state that Zillow messed up big time here.
isn’t the problem just a wee bit obvious?
Just becasue we live in the information age, that doesn’t mean all of the information is correct. I have met with many homesellers who tell me that they must have “x” number of dollars from the sale of thier house. Since when did a persons financial position determine the basis for the value of their home?
Why does Zillow enhance an agent’s CMA? When Zillow provides a value on a property they use other homes in the area. Take a property on a busy street, compare it to other homes in the area away from the traffic and noise and it will potentially sell for 3-5% less. Now add a just recently closed sale that is 3 doors down. It closed 8 months ago at a price indicitave of the market and just sold again 35% higher. Now the property is in foreclosure and it appears that there could be evidence of mortgage fraud.
An agent who is experienced and knows the area will factor this into an anlaysis. Chances are an agent with a 4th grade education (as stated in your example) might not decipher the data. I don’t think any one ever said the latin term for gospel is Zillow.
“I’ll expand that for you a bit, Brian. From Whomever and However, they deem appropriate…. Better?”
More clear but I completely disagree. I’m from the camp that believes we need to be protected from the government and its abuse of power. This action in AZ is a prime example or bureaucratic bullying to protect a cabal.
I doubt we’re ever going to agree on this subject; completely different ideologies. Thank you for your clarification.
Off topic. I don’t know the answer you asked at Active Rain…yet. (scores and rates). I’ll work on it this week.
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Zillow will fight the cease and decist order and win.
So the states need to protect their citizens from Zillow??
What are we in China?
Ardell- If you were Queen of Washington would you outlaw the Zestimate??
Appraisals and CMA’s are always right on the money right??
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I am a realtor and have my house on the market. I have been personally damaged by Zillow’s Zestimate not because I’m not willing to negotiate the terms of sale, but rather Zillow has INCORRECT TAX ASSESSMENT INFORMATION for my property which in turn affected both the Zillow range as well as the Zestimate. Zillow was off by approximately $100K in terms of the assessed value by the county government. I have asked them to change it three times via email =of course because I can’t find a phone number for Zillow for life of me. I even included a link to the county government real estate tax assessment site so they could verify themselves and to date–no change. In the meantime, buyers who express interest and the one couple who made an offer continue to justify their offer based on Zillow. I would too if it was $100K less. I applaud Arizona and maybe they’ll be a class action motion soon. I am disappointed that facts are trumped by fiction according to Zillow.
KLJ,
I’m wondering if one of the attorneys around here would comment on whether posting an invalid value on the internet, that is actually affecting offers, is actionable?
KLJ, I understand where you’re coming from – but if the buyers are basing their offers on Zillow, it would seem they are not being represented by a qualified agent that understands what the competitive market price of your home is when formulating an offer. Likewise, it would seem that even if some of the buyers are mistaken in making a low offer, that there would be other buyers out there that have shopped around enough to know what the home is worth relative to other homes on the market.
If every offer you have received is based on the Zestimate, I’d have to wonder if the home is being marketed in a way that potential buyers seeking similar homes are just not finding it.
On the other hand, there are alot of crappy homes on the market now that would have sold last spring, but are no longer desirable because they’re competing with every other run down rental house that landlords have decided to unload as of late.
Good houses have held value and are selling quickly. Borderline teardowns with lousy floorplans are a dime a dozen. If they’re priced at last years levels, they’re probably overpriced.
Ardell says:
“KLJ,
I’m wondering if one of the attorneys around here would comment on whether posting an invalid value on the internet, that is actually affecting offers, is actionable?”
Please, please tell me you aren’t being serious.
By continuing complaints about Zillow and Redfin, from mainly realtors (consumers love them!), it tells me they are worried. These two companies are obviously on to something. If they weren’t, realtors such as Ardell wouldn’t spend hours blogging about it.
If Zillow is really off as you say they are then it would have never gained traction in the first place. The fact people are believing the Zillow numbers rather than YOURS, what does that say? You aren’t doing your job.
And for you guys responding to EconE, don’t bother. He’s a known troll on seattle housing forums. See Urbnlivn, SeattleBubble, ect.
Dude,
Does it really have to be all one sided. Can’t we like some things they do and not other things? Is it “for em or against em” time and no intelligent discussions? That’s a shame, really.
Is it Zillow’s fault people are making offers based on their number? But comments like your that act as if they are NOT off make matters worse. Are you saying they must be correct merely because the site is “popular”? That popularity alone makes your home value correct? Hate to ask if you own a home, but DO you own a home?
Yes, I DO own a home. Zillow gives an estimate, I know that. When time comes to sell, if people come and say “but Zillow says it’s worth this”
It doesn’t have to be one sided, however you’re the one asking if legal action can be taken against Zillow.
It’s not Zillow’s fault people are making offers based on their numbers, it is the realtors fault. Zillow gives an estimate…hence the name Zestimate. It has the friggin word ESTIMATE in the title!
If you guys can’t convince them that the number is not accurate, what does that say about the job that you are doing?
Dude,
I asked because KLJ mentioned “class action suit” and I was wondering if he could try to make an individual case. Just thought the answer would be interesting.
I’m asking if the middleman gets knocked out of the picture and all of the offers you received on your home were from buyers direct with the Zillow price, and those were the ONLY offers you had…how would you react? As a seller, you don’t exactly always get to “talk it through”. You get an offer. In writing. You take it or you counter. If everyone leaves UNLESS you agree to the Zillow price…what would you do?
You can’t talk a price. The only way you get a higher price is if a different buyer brings a higher offer. If no one brings an offer different than the Zestimate…the Zestimate becomes the price. Simple as that. Are you ready for that? If not, what would you do about it if you were KLJ and all of your offers were at Zestimate? Just agree and say, I guess that’s the way the cookie crumbles?
Independent of my own experience with Zillow, if my case is not an exception and the application they are using to extract tax information is indeed flawed in terms of accuracy, it’s just a matter of time before it catches up to them. The buyer’s agent representing the buyers in question is known to be a very credible agent. For many people, there is tremendous safety in what’s published on the internet. Just ask the Center for Missing and Exploited Children. I posted just to provide an example of a magnitude of variance that is SIGNIFICANT and as such I felt noteworthy. In terms of whether its actionable, we’ll soon see…
Comparing missing and exploited children to incorrect tax records?
Two totally different leagues buddy.
LOL dude.
Zillow is still way off base here in CA. Call me a troll all you want. Who is it that you represent? Why are you here on RCG? I do agree with your comment regarding “missing and exploited children” to be in a totally different league. Maybe a Tarot site would be a better comparison.
BTW…when I called 411 on my cellphone…they told me Zillows phone# is 206-470-7000
Rich Barton and Lloyd Frink are the ones who will ignore your call and not return it.
Why would Zillow waste their time with you? You’ve proven with both Ardell and Zillow that you wish to hide behind a door and remain hidden. If your intentions were true you wouldn’t be so scared to reveal your true self.
You’re a classic keyboard warrior – big guy behind the keyboard but when it comes to revealing anything about yourself you go running for the hills.
Ummmm…dude. David G at Zillow has my home phone number and address. I have spoken with Ardell on the phone also…twice.
You are the one with the moniker “dude”…pot…meet kettle.
And I really don’t need Zillow to “waste” their time with me.
I confirm EconE’s statement both as to me and David. We know who he is 🙂
What ever happened to “buyer beware?” Some based their negotiations on a point estimate by a free online service?
Zillow is a cool tool that gives information that may or may not be accurate on an individual basis. But it is fine to show aggregate trends.
I own four houses which I have been tracking in Zillow. For various reasons I have had professional appraisals on all four. Zillow was always within 1%. Pretty good track record if I do say. In fact it was much better; always higher that the values suggested by realtors interested in marketing my properties. Realtors are always protective of the services they provide (fixup tips, listing price, and the infamous Multiple Listing Service). I would be too, but that doesn’t mean it’s right.
Stephen,
Just because Zillow and your appraisers say your house is worth $X does not mean that it will sell for today. Market perception is one thing that AVM’s (and sometimes appraisers) don’t take into account. In my area, homes that are priced near what Zillow values them at end up sitting on the market for months. Sure, Realtors are protective of their services (as any business should be), but one of the core value proposition of a Realtor is to help you make a smart decision when choosing to sell your home.
If you were to list a home that Zillow values at $600,000 for $600,000 vs what a Realtor might tell you to list it for (say $590,000), your house might still be on the market in 3 or 4 months. Factor in your carrying costs and you could be missing out on more money if you would have listed it lower to begin with. Give what the market in Seattle was like 12 months ago, you could have even flipped those numbers around to make a case against Zillow and appraisers undervaluing property.
That’s just one example and I am sure that Ardell and others chime in with their own opinions. But the moral of the story is that higher valuations does not mean you can sell for more.
Rebecca,
I hear what you’re saying. However, in today’s mortgage market I imagine that the people in control of the money are going to place much more scrutiny on appraisals and the income claims of their clients. In years past loan values usually maintained some level of sanity in property values.
That said Zillow is a tool which allows me to establish a relative snapshot of the value of my properties. Individuals of average intelligence should recognize that the Zillow estimates assume average condition, average upgrades and ignore micro location perturbations which might afford certain properties desirable views.
I further believe that Zillow has every right to make available their property value estimates based on their proprietary algorithms in conjunction with information available from public records. At most a disclaimer might be appropriate as to the limitations of the system I mentioned above. Individuals can price their property however they wish and seek help from realtors if they desire. Personally I believe that restricting my access to Zillow’s estimate is censorship.
Do you feel that the average realtor has the qualifications or training to establish the value of property?
KLJ,
Any luck getting the tax assessment data corrected?
I have a similar example of a Zillow error that is causing harm. I currently have my house on the market. While updating my owner info in Zillow I noticed that my Zestimate is 7% lower than an identical house 4 doors down. The only difference is an incorrect sale history on my house that shows a sale in 2003 for less than the house was worth at the time. Zillow confirmed that their data was in error and that their Zestimate was based on the incorrect data. They indicated they would correct the data, but it is now 5+ weeks later and although the Zestimate has been updated multiple times, the incorrect sale history is still being used. Zillow hasn’t responded to my recent requests to correct the data or remove the Zestimate until it is based on correct data.
I am getting surprisingly good traffic from potential buyers, everyone loves the house but hestitates on the offer. It would be hard to claim that the admittedly incorrect Zestimate isn’t damaging my ability to sell my house.
I happen to like Zillow although I would like to see many improvements. My problem is that they need to use correct data.
Based on your comments I need to go confirm the tax data as well.
What happened to the Arizona law suit? I’m in Arizona but hadn’t heard about it. Time to follow-up.
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Zillow’s zestimate has been a point of contention with agents since the day it launched several years ago. It has always been flawed and while they claim its accurate, the range often is well over $75k. It is a worthless hook that was designed to get the company into the space. Zillow has deemphasized it (with the exception of their mobile app, because it has good consumer PR appeal). This demphasis was done, in large part, because Zillow realized that their original strategy (build consumer audience and the agents will buy ad space) was flawed. Zillow now takes the same approach as Realtor.com by using agents to drive traffic to their portal. As a result, they’ve been able to build audience, increase ad revenue inspite of not even having full inventory.
Any flaws in Zillow or their influence on buyers and sellers is the fault of the brokerages and the agent community. Both have done an extremely poor job of informing clients of Zillow’s shortcomings (lack of inventory, inaccurate zestimates, ect).
For three years, brokerages have failed to provide their agents real tools. They give up listing for nothing and allow zillow to come into offices, pitch ad programs and framing of their beloved zestimate. If there is anyone to blame, it is agents for not demanding their brokerages put more presssure on Zillow to get rid of what is essentiall a marketing gimmick.
THE LISTING ARE THE VALUE PROPOSITION
We shouldn’t be handing them to Zillow and then paying for additional exposure in the form of premium advertising on their portal. If anything, NAR should convert realtor.com into a national syndicate and feed all listing to Trulia, Zillow or anyone else who wishes to display them. These portals should then rebate back NAR a percentage of ad revenue collected from all these sites and pass that onto agents in the form of better infrastucture, training and lower associate fees.
Zillow is working the real estate community and agents are too disorganzied as a group to even take notice
you communicate your value to clients by explaining how and why zestimates are always behind real market value. If you can’t manage that conversation, they aren’t the right client, or you aren’t the right agent.
Rob…not fair to say they are always “behind”…sometimes they are higher, sometimes they are lower, and sometimes they are dead on…pretty much like most agents and most appraisers 🙂 No one is ever always “right” about valuations.
Ditto…
I agree entirely, simply because of when you said “NO, people do not know that.” It is and should be the responsibility of any group that is specialized in a certain area (real estate) to provide complete and full disclosure as to what they mean and to not confuse the consumer. That’s basically the whole reason behind having real estate agents in the first place.
Thanks a bunch,
Mitch
Well here it is 2010 and I just listed my custom, three story home, on a lake and zestimate valued it at under 80k. Gee, do they think the beavers on the lake built the house, or live in the house, or that the house has no plumbing? I’m contacting my lawyer. I have never been so furious about such a gross and disgusting misrepresentation of the value of my property. I actually got my property appraised before I listed it and its very close, to suprise surprise, the price at which it is listed. I don’t care what zillow disclaimers it slams all over its website. To grossly misrepresent the value of a property to such an extent is clearly actionable. And no, there are no 3 story custom homes in the area that comp at under 80k. Furthermore, the zillow people are non-responsive to my complaints. Thats fine. They can scare off all the buyers they want, I’m going to sue them and frankly I think that they should go out of business. Seriously, why don’t I just create a web site and just you know, make up, the value of property? Why, because its fraudulent, because I have no expertise and its misleading at best. They need to retire sites that gueestimate values of homes. There is a valid reason for appraisers. They are a far cry from that. Class action suit is whats needed and they and others like them need to retire from the internet. If a group of appriasers wanted to give value to homes on the internet for free — fine — otherwise — if you are not an expert you have no business valuing a house and causing homeowners and buyers angst and distress.
Its grossly inaccurate at times. It has a custom home I have listed at 2.5 (which comps out at 2.3) as being 1.0. It states the taxes are over 40,000/year and they are 9000? It has the square footage off by 800 sq ft, it has the age wrong. It has…..pretty much everything not only wrong, but not even ball park. 2 standard deviations off.
What a Zoke