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?

34 thoughts on “Zillow's Free Advertising – A Consumer Perspective

  1. The one listing I put in this morning is 200k higher in price than the ‘zestimate’. I simply added to the remarks that the zestimate is bunk and to contact the agent for a real feet on the street look at comparables.

    I’d rather have the listing there and being seen, than worrying about the horrible bogus ‘zestimate’. Plus, in my small neck of the woods, my own home that I’ve lived in for three years doesn’t come up on Zillow. I’m pretty sure I can make a compelling case that my data is better than Zillow’s when it comes right down to it.

    I still am impressed by Zillow enough to want to participate. This isn’t about anything other than wanting to sell property for my clients. Zillow is another tool to help make this happen.

  2. Ardell,

    You said:

    “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.”

    You should correct that statement or reread the source. 82% of the buying public doesn’t use Zillow.

  3. Pingback: Zillow Coverage - Day 2 » Personal Insights on Web 2.0, Blogging, and Business

  4. Ardell,

    “82% of all homes in king county have been viewed.”

    1 person could have looked at all 82% of the homes. (example)

    This is much different then what you said:

    “here in the Seattle area where 82% of the buying public is likely to have seen the Zestimate”

    Ardell 82% of all the buyers are not using zillow.

  5. Ardell,

    The inner nerd in me said, “Be the first in Portland to list a property!”

    But the calm, quiet voice of wisdom said, “Better think this through, wait for some of the fallout”.

    Your advice about getting approval from your clients is spot-on.


  6. Allen,

    Can you please quote your source of information for your statement regarding King County WA “”82% of all the buyers are not using Zillow”? Exactly how many buyers in King County WA HAVE looked at Zillow, if it is not the 82% noted? Does your data say 81%? 75%? What is the data source for your contradiction? I’m on the Eastside where 82% seems reasonable. Maybe where you are that is not the case. Would be interested in your data source. Or do you just want to say “Take that back!”

  7. Ron,

    Whether or not agents list their property on Zillow. Understanding the Zillow Zestimate is a “course” everyone should take, as these questions will come up.

    It is fairly easy to figure out where the Zillow number comes from. Knowing exactly where it comes from, is the first step to acceptance or rebuttal. Ignoring it…or simply saying “it is bunk” (Todd) is not an appropriate professional reaction to this publicly available valuation tool.

    Good move, Ron. Proceed with caution. I only jumped in because I had an advance presentation, otherwise I would not have done that so quickly.

  8. Ardell,

    I think the point Allen is trying to make is that just because “82% of all homes have been viewed” that does not mean that “82% of the people have viewed homes”. In other words, Let’s say that you had viewed 25 properties on Zillow since they launched. It would be a mistake to assume that the home owners of all those 25 homes had also viewed their property.

  9. Ardell –

    To answer the question you never asked; there wasn’t discussion about Pearl Harbor Day. Launch date was flexible — it literally firmed up 24hrs before launch — and as you saw, the site came in hot and heavy. This was a MAJOR retooling of our technology.

    We’re still working on a few bugs, so if you see any weirdness, please let me know [davidg at z dot com].

  10. Let’s try this one guys.

    If 82% of all homes that EXIST in King County have been viewed, and only 5% to 8% of them are for sale, then wouldn’t it be fairly safe to assume that 82% of that 5% to 8% have been viewed as well? Buyers and Sellers are likely twice as interested in knowing a home’s value, than someone who has no interest in buying or selling. So my statement that 82% of the buying public is LIKELY to have seen the Zestimate, seems like a rational extrapolation from that data.

    Or maybe it’s like this…82% of all people in King County have a real estate license, and all licensees looked at their own home’s Zestimate 🙂

  11. Ardell,

    The point is that you are quoting the 82% completely out of context. Please feel free to suggest that most home buyers have looked at Zestimates (which I doubt even in Kind County), but using the 82% value is the wrong place to start.

  12. We have not been blessed with Zestimates yet here in Maine, so please forgive me if I’m missing something.

    That said, I fail to see how a Zestimate that’s lower than the asking price is any more harmful than having an assessed value lower than the asking price. We’ve been dealing with the latter for all eternity and in my experience assessed value doesn’t amount to a hill of beans. Yes, buyers occasionally make noise about the assessment and try to use it as leverage when it’s in their favor, but at the end of the day they are going to place the most trust in the competition for sale that they’ve seen firsthand, along with recent comparable sales.

    From what I understand, Zestimates aren’t much more than a tweaked assessed value, adjusted for recent sales and some other fudge factors. So what is the difference? Am I missing something?

  13. Franz,

    I agree, when we are in a seller’s market and/or when a property is “hot” and has a couple of offers, it is of no consequence. From what I can see on Zillow, it turns out to look like “range pricing” which is common in some areas. I have never been a big fan of range pricing, but some have used that method successfully.

    However I do feel that an owner’s permission should be required to show in an “AD” a price lower than their asking price, given neither the owner or the agent has any control over that number.

  14. I completely agree, Ardell.

    Assessed value and market value are not the same. In California, assessed value only increases 1% per year unless the property is sold, at which point it basically starts at the price for which it sold.

    I have two properties side by side where the Zestimate on house #1 (the smaller one) is $200K higher than on house #2 (the larger property). Having that Zestimate on house #2 in no way represents anything close to market value. It is equally in accurate for house #1, but at $200k over, it may help the seller.

  15. Bob,

    I’m going to write a post on this, as assessed value in Seattle is world’s apart from assessed value in CA. I mentioned this in an old post from when Zillow opened, but it bears mentioning again, especially for Seattle buyers.

  16. Bob,

    That’s cause the WANT it to be a “parlor game”. Test it. Go do a townhome in a large townhome complex, or house in a big newer development. Test it. If you do that, is it really THAT off?

    There is a “Zillow problem” I will highlight in my article…sometime by Wednesday. Constructive criticism and potential lawsuit issue. Clue…they need to look up the word “comparable” in the dictionary 🙂 Should say “Homes sold nearby” not “Comparable Homes” and the Price per square foot needs to adjust for lot size…a few bugs.

  17. I dont think consumers want a parlor game. Most are objective. I have seen zestimates in newer areas where they are off by 30%. The use of tax data that is more than 6 – 9 months old skews the numbers.

    Another property in the same tract that I mentioned is above is listed by another agent. The seller kept quoting the Zestimate as basis for a list price 20% too high. They have the largest floorplan on one of the largest lots in the development. However the placement of the the pad in relation to the surrounding lots makes it one of the least desirable lots. Adjusting for lot size isnt good enough.

    Thats 3 examples on one street where there are only 10 homes.

    I believe Zillow is setting it up so the list price will replace the Zestimate, but unless you do your homework, advertising on Zillow can be counterproductive. Advertising on a medium is a tacit endorsement. To then argue the legitimacy of the Zestimate to a prospective buyer seems foolish to me.

    If you are representing a buyer who wants to use a Zestimate as an evaluation, its easier for me to objectively debate the merits of that if I’m not actively using Zillow as a marketing partner.

  18. I apologize for confusing everyone with the assessed value analogy – here in Maine, assessed values are supposed to represent market value at the time of assessment. When the assessments are fresh, they are actually reasonably close in most cases.

    Regardless, I’m still having trouble seeing the problem with posting the higher-priced listing on Zillow. The Zestimate is going to be on Zillow whether or not the home is marked “for sale”. The only information you’re going to keep secret by not posting the home is the fact that it’s for sale, and the asking price. I don’t see how this in any way helps sell the home.

    I agree that agents should be prepared to justify the price of the home based on square footage, bedrooms, bathrooms, condition, location and anything else of significance. But, that’s basic real estate brokerage, nothing to do with Zillow. If you can’t justify the price, the problem isn’t the Zestimate, it’s the price.

  19. I am still trying to understand why the Seattle PI article is considered news. Zillow publishes information available to the public about the inaccuracy of their reporting in their FAQs. A few clicks and anyone can read the FAQs. The Seattle PI article should have focused on why users don’t know about the data inaccuracies or ignore them. Zillow is a nice toy.

    Michael P. Lindekugel
    Financial Analyst
    RE/MAX Commercial
    Team Reba – RE/MAX Metro Realty, Inc

  20. Pingback: Blue Collar Agents - Zillow good for discounters

  21. Blue Collar has “monitored comments”, so while my comment is “awaiting moderation”, I’ll duplicate post that comment here.

    “Ardell does raise one objection, that posting a home that is listed at higher than Zillow valuation is somehow a bad thing. I respect her opinion, but personally don’t see what the big deal is.

  22. Michael,

    Writing off Zillow as “a toy” is not fair play.

    I have seen cases where Zillow has been more accurate than both the agent and the appraiser. But no one talks about those “Spot ONS!” Well, I guess I just did.

    I can’t “post” the spot ons that I know about yet, as they are pending sales. At least the ones I know for sure where Zillow was righter than anyone. I’ll give it 60 days or so and post the “spot ons”, and call it “the half FULL part of that glass”.

    What you have just done, Michael, is what we call “pulling an Allan Dalton” :-), effective maybe…but not “fair play”.

    P.S. Allan, not a criticism…you did a Fabulous Job! and you are absolutely entitled to take that shot. But agents and NAR and MLS systems are not entitled to that same shot and viewpoint. For you, it is good business. For licensed brokers and agents…it’s trying to shoot out the consumer’s options. Big difference.

  23. Ardell,
    Thanks for the quick response and clarification, and sorry to pick on you – I think we are mostly in agreement, but you articulated what I think will be the primary agent and seller objection to Zillow.

    1. To me, it’s a stretch to say that listing a home for sale on Zillow is range pricing. The asking price is clearly displayed at the top of the page in big letters after the words “For Sale: “. The agent didn’t compute the Zestimate, Zillow did. If you’re saying that the agent is implicitly endorsing the Zestimate by listing the home there, I understand where you are coming from but don’t agree.
    2. Yes, keeping sellers informed as to how and where their home is advertised, especially any venue they may find objectionable for any reason, is our job. I would explain to sellers the benefits of Zillow exposure and the fact that buyers will see the Zestimate whether or not we list the home on Zillow.
    3. I agree with you that it’s ultimately up to the owner to authorize where a home is advertised. I expect most homeowners will see the benefits of putting the home on Zillow for free and want to be on there.

    Personally, I can’t wait for Zestimates to come to Maine!

    take care,

  24. You’re still missing it Franz. The SELLER needs to KNOW the Zestimate, and see how it will show along with their sale price, WHEN they say OK to advertising in Zillow.

    Hell, I was the first agent to try to get in there…so stop acting like I’m creating an “obstacle” in some “biased” fashion. The seller can’t say “yes” to Zillow without knowing that the “range price effect” is part of the decision process.

    Running around in my towel with no contacts in…so not “picking on you” just rushed.

  25. Ardell, I get it, I get it! Yes, of course I would show them the Zestimate. I can’t imagine trying to explain it without showing them – it would be the first thing they’d want to see.

    To sellers unfamiliar with Zillow, I’d explain it something like this:

    Kelly Blue Book offering to publish an ad for your car right next to all the book values, FOR FREE! Of course, they are going to publish the Blue Book regardless, and buyers who read the Blue Book are going to see the book value regardless. Wouldn’t you want to let them know that your car is for sale, and take the opportunity to describe all of the special features on your car that make it worth more than the book value?

    Zillow is going to let you do this for your house. [Pointing to the Zestimate for their home] we’re going to put all of the pretty pictures right here, and right over there we’re going to tell them all the great things about the house. [Maybe show them an example of a nice fully filled-out Zillow for-sale listing]

    I would think any seller with half a brain would see that it’s only to their benefit to list the home, since buyers will see the low Zestimate whether or not they add their listing information. But if a seller said “no thanks please don’t market my home this way”, that is their choice and that would be fine.

    Make sense? Am I still missing something?

    Oh yeah, make sure they know the Zestimates get updated periodically (“just like the Blue Book…”) so they don’t go into shock when they log on a month later and it just dropped by 50 grand.

  26. Franz,

    Agree. But I saw a FSBO listed at $430,000 or so, side by side his “Zestimate” of $290,000!!! Whoa baby!! So no, I don’t think it will be obvious to everyone, without the agent’s knowledgeable direction and input.

Leave a Reply