Zillow's Free Advertising – A Consumer Perspective

[photopress:warning.jpg,thumb,alignright] Before everyone jumps into the pool, every agent and owner must “LOOK before they LEAP”.

The Zillow Zestimate WILL appear, of course, in the same space as your “Property For Sale” listing. The printed data is also picking up the erroneous square footage info and number of bedrooms and baths from the tax records. So far it would appear that the owner can edit this data, but not the agent for the owner. Still playing with that.

Clearly, no agent should be listing a home where the Zestimate is less than the Asking Price, without first consulting with the owner, as I did last night BEFORE 9 p.m., having seen the proto-type last week. I am not particularly alarmed by this variance, but clearly the Zestimate being higher, rather than lower, would be a PLUS! 🙂 Attempting to turn a blind eye to the Zestimate, by not posting your home for sale there is no answer. Not here in the Seattle area where 82% of the buying public is likely to have seen the Zestimate, whether you invite them to do so or not. Seattle PI: “The company’s internal numbers (Zillow’s) indicate that 3.2 million people visited the site in November and that 82 percent of all homes in King County (WA) have been viewed on Zillow in the last 10 months.”

It is quite possible that the whole valuation process will pull in the direction of Zestimates, particularly in areas like ours with so many tech savvy buyers. In fact, I am already seeing a move in that direction for many properties on market and ones sold recently.

Whether or not you choose to post your home for sale on Zillow.com, these are issues facing everyone involved in real estate transactions. Buyers are making offers with the Zestimate price. Sellers and Agent’s for sellers will need to learn how to calculate the variance with some level of credible accuracy.

One of the reason’s David G. and Jeff, of Zillow, my parter Kim and I, met last week to review the new product, was to view first hand some of these potential pitfalls. While I did notice the Zestimate vs. Sale Price issue, the square footage discrepancy did not pop out at me during the presentation.

“Supporting New Business Models” and being an “Agent for Change” requires that someone jump in first to test the waters and assist with these little blips from the getgo, and not without the owner’s permission to do so.

To Galen, who notes that it is difficult to simply load up listings en masse, perhaps this is fair warning that adding a home for sale should NOT be done en masse. Every agent and every owner must consider the potential consequences of showing the Zestimate price side by side against their Asking Price, and be prepared to justify the basis for the differences between the two with regard to square footage, number of bedrooms and bathrooms, finished vs. unfinished space, etc. and price.

This “FREE ADVERTISING” and the info contained “in the AD” is not entirely editable by the owner and the owner’s agent…so far anyway. I’m still working on it. Not a small matter, and one that must be addressed rather quickly if Zillow’s erroneous data is going to show side by side the owner’s “corrected” data.

So what did I forget to ask David G. last week? Did Pearl Harbor Day come up in any conversations concerning Zillow’s choice of unveiling the new upgrade? Did unveiling it at 9 p.m. on the 6th, camouflage any refererence to December 7th, when most would be waking up to see “God-Zillow” in their sheets with the morning paper?

Appraisal Question

While the buyer is paying for the appraisal, they are paying for it as part of their loan costs. The appraiser is hired by the lender and works for the lender and his/her purpose is to inform the lender. I just saw an appraisal of a property I know would sell at about $950,000, come in at $750,000. The appraisal was for divorce purposes and it was a unique, difficult to value property. Appraising is an artform, not a science. There is no one absolute number pointing to what a home is “worth”.

The reason there is an appraisal is in case you do not make your payments and the bank has to foreclose. If you are buying a house for $500,000 and you are putting $200,000 down, frankly, the appraiser doesn’t have to agonize over the process. The bank is clearly going to be able to sell it for the $300,000 they lent you to buy it. Now if you are putting zero down, the appraiser is on the line in the event you foreclose and the bank can only sell it for $450,000.

You need to determine what the home is worth. It’s great when it appraises and everyone loves those few times when it appraises for more than the sale price (except the seller). But if it appraises “right on”, don’t take that as some great feat. Different appraisers will get different answers. Appraising for different purposes, like to value for an estate or divorce when the house is not being SOLD, will often produce different results than when the appraisal is for a home purchase.