One of themes that arose in discussions yesterday on Facebook was the ease with which data can be changed on Zillow to make the Zestimate more accurate.
Setting aside the sense that this is a form of blackmail – either tell us everything you can about your property or we’ll estimate it’s value incorrectly and hamper your ability to sell at market value – adjusting your listing doesn’t change the larger picture.
If you look above the “s” in Escuda, you’ll see a home carrying a $200,000 Zestimate; the new owners likely will be very happy about this, seeing as they just purchased the home a week ago for $195,000.
They’ll also be a damned sight happier than the seller would have been had I placed the listing on Zillow; until the closing, the Zestimate was in the low $180s. At no point did the value based on the comps change – Zillow was wrong.
Now turn your attention to the red dot at the top right corner of the screen. That home’s currently for sale and, while I’m not displaying it here out of respect to a listing agent who likely doesn’t know what’s being displayed, the Zestimate is about 10 percent or so below the list price.
Question 1 … since Zillow displays the list price instead of a Zestimate when a house is on the market, how would it look to potential buyers if someone posted a listing for $105,000 – next door? Before you give the knee-jerk answer – that buyers would research further – keep in mind most consumers believe the number they see and, even if they research further, still are going to have that value in the back of their heads?
Question 2 … using the current Zestimates (which, incidentally, are wrong for the entire block as they don’t take into account the presence of Beardsley Road behind the homes), what would be the reaction of a buyer staring at a $240k price tag when there are only two other homes in sight that begin with a 2?
Question 3 … if you’re the seller, wouldn’t you be more than a little concerned that on your listing at $240,000, potential buyers are being told the home is worth only 90 percent of that figure? Is that listing really working to your benefit whatsoever?
Taking the last question first, it’s conceivable that seller and/or listing agent can adjust the information Zillow has on the house to make the Zestimate match the list price.
But …
That does nothing whatsoever about the potential problems with Question 1 nor with the absolute problems with Question 2. Buyers aren’t going to see only the one home when they search on Zillow, they’re going to see Zestimates for everything around the house.
And as much as Zillow equivocates by saying the public understands the Zestimates only are starting places (plausible deniability, that) and as much as agents say that consumers will continue researching and/or listen to their agent, eight years of experience says that once a buyer sees what they perceive to be a too-high price, the game’s over.
Anyone who attempted to explain to a buyer that a short sale listed at 75 percent of market value was not the baseline by which all other homes should be valued should already know this lesson, though some seem to have forgotten.
And let’s go one step further …
Using an incredibly basic search – detached homes for sale by an agent – Zillow shows 166 homes for sale in ZIP code 85382. Unfortunately, as of the moment, there only are 80 homes truly for sale as listed in the Arizona Regional MLS.
Buyers using Zillow don’t know this and, believing there is twice as much supply as there really is, they may not have the same sense of urgency that they might have if they knew what the real supply was. Does any one home stand out more when it’s 1 of 166 than when it’s 1 out of 80?
The standard argument is we need to post our listings to Zillow and Trulia because that’s where consumers go to see what’s available. But that’s an untrue assumption. If consumers really wanted to see what was available, they wouldn’t go to a site where the data is so thoroughly in error; once a buyer calls on a couple of homes, the truth becomes apparent.
Could you imagine going to Amazon.Com only to discover 4 out of every 5 items you see, when you went to purchase them, really weren’t for sale? Would you ever return?
Buyers may start with Zillow or Trulia but eventually find their ways to where the homes really are, either by going to an agent or broker site powered by IDX or picking up the phone and making contact with an agent.
Searching through homes not for sale is an excellent way never to purchase a home. And call me crazy, but it strikes me that it’s in my sellers’ best interest to focus on buyers who are ready, willing and able to purchase.
Using ZTR can make one question the “willing” part of the equation as, again based on experience, the anxiety of calling a real estate agent disappears in most cases when someone’s really ready to buy.
To a degree, I feel like I’m repeating the same arguments but they bear repeating, if only to attempt to disabuse the real estate agent masses of the knee-jerk responses that come when Zillow, Trulia or Realtor.Com are discussed.
ARG Realty in San Diego is proving what other companies already have found – one doesn’t need to syndicate either to be successful or to sell a home. Deep down, most agents know this – we know what causes a home to sell.
The question is whether we have the courage to stand by what we know.
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