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Zillow and Realtor.com Lock Horns

In today's news, we learn that Allan Dalton, president of Realtor.com attacked Zillow's co-founder Lloyd Frink for "Realtor minimalism." Dalton said that consumers, armed with home valuations, are now searching for the cheapest Realtors without regard to competence and experience. Frink defended Zillow, saying that the site encourages consumers to seek professional guidance and that Zillow is Realtor-friendly.

This clash took place yesterday in Long Beach, as part of the three-day California Association of Realtors convention. Dalton and Frink were on a "technology & Real Estate" panel that also included Brad Inman, founder of Inman News.

Some highlights:

1. Zillow's Frink admitted there is an average 7.2 percent margin of error in zestimates, but that they are working to improve that margin.

2. NAR's Dalton suggested that valuation sites like Zillow should only provide comparable information, and should advise viewers they are only getting a ballpark valuation and should seek professional help when buying or selling a home.

3. Brad Inman urged Realtors to embrace Web 2.0, and provide real content on their sites instead of simple information. "That's what the new Web is about. Those (Realtors)who participate will be victorious, those who do not will be victims. The public wants everything they can to make the biggest investment decision in their lives."

4. Dalton said he plans to ask the NAR Board to consider revision of the way Realtor.com offers online valuations, such as only providing comparable sales. He challenged Zillow to do the same.

The internet is changing and it is great to be able to witness (vicarously) these real estate web leaders publicly hashing out our own concerns. Comparable sales alone just may not be the best valuation models in many of today's markets.

Posted by Roberta Murphy - Carlsbad Real Estate North County San Diego Realtor on 10/18/2006 11:34 AM

Comments (19)

nar, zillow, brad inman, inman news, allan dalton, online valuations, web 20

19 Comments on Zillow and Realtor.com Lock Horns

OCT

2006

I hate it when my buyers tell me they checked the zillow value and want to offer such and such on the house... there is more than a 7.2 percent error in the majority of my market.

And in ours. Most of our sellers would trade their firstborn to be able to sell at Zillow's zestimate (just joking, of course!)

Hi Roberta, It's David G from Zillow.com.

The 7.2% accuracy Lloyd quoted is from reporting on our site which you will find here: http://tinyurl.com/fgz5k.

We report zestimate accuracy for each state, county and major metro. This statistic for your region could be useful information to have on hand if you ever discuss Zestimates with a client. The report also illustrates well how much Zestimate accuracy varies from county to county.

David

If my memory serves me...Zillow notes the statistcal accuracy right alongside the Zestimate. I don't know why everyone is fussing so...it is a pretty useful tool when the data is available. It won't replace a Realtor and I don't think it's intended to (that could be me being naive again). Any information is better than operating blindly.

Roberta... thanks for the great post. I totally agree. Zillow is way off and is very confusing to most consumers. It provides a lot of mis-information. If we as Realtors were to do such we would be sued. I wish they would be held accountable. Again, zillow is way off! For instance I heavily market in my own subdivision (Chicagoland area) and I have represented the most number of sales in this subdivision... zillow... priced one house 40K under and 60K over on another. Such sites do not take into account a number of factor that we as professionals do on a regular basis... we just need to point out the value of our service to the consumer. Part of our job is to educate them not just throw randow stats or estimates at them... I just hope that Dalton and realtor.com get their act together as well. I'm not sure this is the right move for realtor.com

OCT

2006

David G: Thanks for your comment and link. Zillow faces the same dilemma appraisers do in many of today's real estate markets. Even agents are applying different formulas and factors to their valuations. Pending sales are more important than ever--and those numbers are only whispered (if that).

Joanne: I agree. All relevant information should be considered, and Zillow is certainly a factor.

Dan: Thank you. Realtor.com needs to stay closely tuned into its membership to retain loyalty. Some agents are pullling away.,..

Zillow is a joke and I wish it would go away. Is Zillow going to sell them a house? Well then why are they listening to them. It's just like walking into a car dealership and asking for the Edmunds.com value. They will laugh you out of the store.

That's a very valid point...what is the point of Zillow? What do they have on the horizon?? As I was reading the comments, I too wondered how in the world these folks at Zillow can give information so readily that appears to be incorrect and yet not get sued. That's a puzzle. Perhaps, it's like being a weatherperson, sometimes wrong, sometimes close, and sometimes right...have they been right???

Perhaps, when they start getting Pending Sale info they will be able to get a little closer to the truth.

As far as Realtor.com, Did Dalton happen to mention why they decided to do the same thing and get involved in how much a home was worth or did he mention how they continue to find just another way to get money from Realtors for their web page?

I hope he realizes that having Realtors behind him which is how it all started to begin with, would be in their best interests.

Can you tell that I'm just a little miffed at them?

DALTON GOES "SPRINGER" ON ZILLOW AT C.A.R. SHOW.

NEWS AND DETAILS AFTER RE-RUNS OF COPS ARE OVER....

http://www.inman.com/blogger/2006/10/who-threw-chair-brad-inman-wont-give.aspx#comments

TPT: Interesting blog. Enquiring Minds would like to know more! :-)

OCT

2006

Providing everyone with factual data is admirable and noble and needed. But...

Factual information is valuable provided it's accurate, complete and fresh. Zillow's recent decision to allow owners to supplement and correct factual data is an admission of this flaw in their data input, causing errors of unknown proportion in the individual case (averages sidestep this issue). Still they are addressing the problem in some way. Fine.

But when critical factual data such as beds, baths, square feet, total rooms, & # of units in this multifamily (link below) is MISSING, and Zillow nonetheless proudly displays a Zestimate, it strikes me as contrary to your stated goal to help buyers not overpay and sellers to know value. If a professional were to do this they would be called incompetent and worse, yet zillow gets a pass. Why the double standard? Does providing free information excuse you? Does claiming you're only a starting point excuse you? If that's the consensus, I'm on the outside.

http://tinyurl.com/nv243

My final point is that given the example above, if that property is in fact worth much more than the published zestimate---why must the owner be forced to register to update the data for zillow? Zillow will not change the zestimate in any case---it is still displayed. Why can't that owner contact zillow and ask that the zestimate be removed? I am suggesting owners have the right to opt out of the zestimate (it is NOT public data, it just uses it). David G. has said zillow will not not let an owner opt out under any circumstance.

I would like to carry on about "unzillowables" and conspicuous disclaimers but I'd be abusing your readers' indulgence to my already verbose comment. Mea culpa.

Joseph: You present your case well. If one's credit report is erroneous, the reporting agency is obliged to investigate and correct if necessary. Were this not the case, very real harm could befall the reportee.

If a homeowner asks that information on their zestimate be corrected, it is something, imo, that should be investigated and corrected if necessary. Otherwise, very real harm could befall the "zestimated." (Did I just create a new word?)

OCT

2006

Hi Roberta, it's David again.

You are right - the reporting agency in our case is the public record. If the public record is corrected, Zillow's data providers agregate that information and pass it on to us -- and we update the changes made at the county.

This process can take time - some owners have done it - and some owners don't want to go contact their county but do want accurate facts displayed on Zillow. That's understandable So we now allow owners to complete and correct their own home's facts on Zillow - and publish them along side the public record. It's important that owners edit their own facts on Zillow rather than e-mailing us, because we require owners to authentcate themselves as the owner before edits can be made to their home's facts or estimates - to protect the owner from malicious requests to change their data. This is a transparent process to owners and othe visitors to the site - and it seems to be working well.

Gena -

As to our "purpose", one of the common themes I hear from visitors to Zillow is that their Zestimate "reminded them" - to refinance - to consider buying a smaller place - to get an appraisal or a CMA - to invest in a second home or to re-do the kitchen - sometimes even to update their county records. Just one reason that Zillow's a great place to advertise.

joseph -

You are right in that missing data is actuallythe bigger challenge (vs. incorrect facts). Because of this we also publish a value range for each Zestimate - which widens with the absence of good / fresh data. And no, I never get tired of hearing about "Un-Z" :-)

OCT

2006

I've heard people mention on a number of the discussions concerning Realtor.com vs. Zillow that Realtor.com offers the same service. Either people are throwing out a lot of "misinformation" about Realtor.com or I am totally ignorant on this subject. I have gone to realtor.com and looked everywhere and I can’t seem to find a single place where the Realtor.com website will “GIVE ME AN ESTIMATE OF MY HOME VALUE.”

I did find an area that gives a few recent home sales and then it tells me that if I want to learn what my home is worth, I should contact a real estate professional - with a link to a database of Realtors or a display of a Realtor who works in that market.

It appears to me that Realtor.com does not give home valuations, but does tell consumers to work with a Realtor if they want one.

That seems a lot different from Zillow. In fact, I don’t see anywhere on the Zillow site where it says that you should contact a Realtor for the value of your home. Zillow’s lack of support for real estate professionals seems disconcerting to say the least.

I don’t suspect that Barton and Zillow have any more respect for Realtors than they did for travel agents based on these comments from Zillow CEO Richard Barton in the New York Times:

"…is it rational to pay Realtors what they are paid?" He says he thinks they are overpaid…
http://www.nytimes.com/2006/02/08/business/08real.html?ex=1297054800&en=5892d422b169a166&ei=5090

What a slap in the face to Realtors. They won’t even mention Realtors on their website and they’ve publicly stated that, “Realtors are overpaid.” Why would any Realtor support Zillow? Baffling to say the least!

This reminds me of the famous “Trojan Horse” story where they come in peace bearing gifts at first… Then in the middle of the night, when they least expect it… the kingdom is slaughtered.

Lonnie: Your sobering response deserves its own blog status.

NOV

2006

I never saw the site or have ever heard anyone locally mention it. So I went to it.

It listed the tax accessed values of the homes in my area. Not the market values. A home I am planning to list in the next week or so was off by about $150,000 on the low side.

Now if my seller uses this, he will think I am God for selling it at the true market price. If potential buyers were to use it, the opposite will be true.

MAR

2007

Thank goodness for Zillow!

It's impossible to get accurate and fair information from a realtor or from the local MLS. For example, my house sold on December 5th and the MLS did not report it as sold or show the price. As soon as the house sells, the home no longer appears on the local MLS (the one that actual homeowners can access) - and it takes months or longer to actually see the selling price.

I checked on Zillow and actually got the selling price! ALso for my neighbors home which sold 1 month ago.

As most realtors won't tell you what is actually happening in today's market it is important to get accurate information - something that you can't get in the current monopoly system of MLS.

As with most people - I am quite saddened by the professional realtor lack of candor. Even the best agents are ignoring the current beginning of the bubble and will put peoples economic lives in jeopardy to make a buck.

Zillow is attempting to break the unfair stranglehold of a basically unregulated and dangerous profession - the modern realtor. So many people have swelled the ranks of realtors in the last 10 years because of rising home prices and a commision which has swollen in proportion.

Are realtors overpaid? Are you kidding! Here in San Diego the average house is $575K. The upscale houses are 1-2 million dollars. A 6% or even 5% commision on a 2M house? 100K. This is the reason that many people have quit their jobs as teachers, moms, architects, moms, policemen, hot dog vendors, and ditch diggers to become realtors. Take a test, put on a suit, and start robbing people! The quality of realtors has gone down in direct proportion to the increase in housing prices. Yet this vast group of people are less and less qualified. The old time realtors should kick their butts out! By old time I mean any realtor who has been in the business - knows the local schools, teachers, parks, etc. something 80% of the current realtors have no clue!

The next 10 years should tell the tail - everyone is a realtor today! I used to respect the realtor - they REALLY knew the market and every home on the market. Here in San Diego everyone is a realtor - the old time professionals are the rarity.

More information = better decisions by buyers. Anyone who buys into this market now - is a sucker - and the realtors are the P.T. Barnums!

Bryce,

Thanks for your response, I may not agree with much of what you say, but couldn't agree more with what I believe you are implying:

Real estate is a profession and real estate agents should be required to have more rigorous training prior to licensure. On that point, we could not agree more. That alone would remove a large percentage of the incompetents.

As for Zillow, other instant online valuation services and even our own San Diego Union Tribune: They are all relying on tax recordations of closed sales--when they county gets around to reporting them.

Far more valuable to savvy real estate investors is pending sales information. That data will show that San Diego buyers are stepping forward and absorbing available single family inventory at a surprising rate.

Realtors as PT Barnum? Not likely. Lemmings follow shallow reporting and the hysterics, aka bubbleheads.
Our clients are very, very satisfied with the buys they are making and the guidance we offer--which includes hints regarding best teachers, best schools and best neighborhood restaurants.

Do we earn our money? Every cent. And our clients appreciate the savings.

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