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Explain This to Me, Public Consumer Type People

Explain This to Me, Public Consumer Type People

Could someone please explain this to me?

Zillow, the advertising site that happens to have (wildly inaccurate) real estate listings and other (equally fantastic) real estate information, readily admits on its own site that the Zestimates it provides on properties should not be regarded as accurate valuations.

Wait … Zillow doesn’t just admit it such a thing. Zillow provides a chart to show the public just how inaccurate it is in different markets across the country …

So … here in the Phoenix market, according to Zillow’s own numbers, 72.4 percent of all homes for which there is a Zestimate are misvalued by at least 5 percent, 49.4 percent of all homes for which there is a Zestimate are misvalued by at least 10 percent and 23.9 percent of all homes for which there is a Zestimate – better than 1 in 5 homes across the Valley – are misvalued by more than 20 percent.

Is it okay if I repeat that last one? One out of every five homes (a hair more, actually) have Zestimates inaccurate by 20 percent or greater.

And yet … and yet … people searching for homes continue to look at Zillow. The listings are accurate less than 1 time in 3, the Zestimates are off by more than 20 percent on more than 1 and 5 homes, and yet the national media continues to quote Spencer Rascoff at earnings time, continues to report Zillow’s “statistics” on the market despite the glaring, overwhelming flaws, all without asking one simple question …

“How the hell can you be that flipping incompetent with data and still be in business?”

The answer, for which the media is somewhat to blame, is no one other than a handful of us who sell homes for living seems to take the time to explain that not only is the emperor not wearing clothes, but if he were wearing clothes they’d be three sizes too small, like many Zestimates seem to be. And because of this, because of the public relations campaign both the media and real estate licensees more worried about purchasing leads and mollifying sellers than educating the public, the public continues to view Zillow in droves believing the fiction on the site to be real.

Oh, there are disclaimers

Some counties provide all the data we could hope for, but others are lacking such key things as the number of bedrooms and bathrooms, or, in some cases, the square footage of the home.

Which, to my mind, is much like Werner von Braun saying “the rocket should launched just fine … except we weren’t given some data we needed, like the effect of gravity on an object. But it’s okay, we’re able to calculate it to within 80 percent of reality at least 75 percent of the time.

It’s not Zillow’s fault for publishing terrible data; it’s everyone else’s fault for not providing Zillow “all the data we could hope for.” (Quick note – square footage is easily available here in the Valley and price per square foot is the general starting point for creating a home valuation. Another excuse is needed.)

Zillow does provide a platform where homeowners can update the information on their property; for sellers who are staring at a far-too-low Zestimate appearing below their chosen, market-driven list price, this amounts to blackmail – either give us all the data we want or we’re intentionally going to provide the public an inaccurate opinion of your property’s value.

Can someone please explain to me why the public puts up with it?

Oh, and one last note on the blackmail concept. From Spencer’s Active Rain blog …

To emphasize the mobile point further, let me stress that not putting listings on Zillow, REALTOR.com and Trulia is tantamount to abandoning any hope of finding a buyer who is using a mobile device.

In a word, bullshit.

(Sorry, mom.) This site is mobile enabled (albeit with a Diverse Solutions driven site; Zillow bought Diverse Solutions, an uncomfortable reality here at the beagle barn) And, in case Mr. Rascoff hasn’t heard of this thing called “Siri” on a device called an “iPhone”, but when you ask Siri to search for homes in a city, she goes out to Google and pulls the listings. Yes, the advertising parasites rank high but they aren’t the only sites listed. Which is to say, please save the apocalyptic claims for agents who are too busy baaaing to think for themselves.

(One more quick aside … can anyone explain to me how this even makes sense …

Putting listings onto top real estate sites is what sellers want, because it helps sell their homes. But don’t take my word for it — let’s look at the data. Zillow data shows that homes which receive the top 10% of page views sell more than a month faster than their counterparts in the bottom 10% of views.

Page views where, on Zillow? Does that mean some pigs are more equal than others? Has anyone else tried figuring out what is being said here?)

For me, the bottom line falls somewhere around here, as Mr. Rascoff said …

It’s obvious, but if you give your listing exposure to lots of buyers, it will sell faster and at a higher price. The data proves it.

Many of us have been doing that since before Zillow and its particularly inaccurate data came along, through our own sites, through use of IDX, even through the old Point-2-Agent sites if we go back in history far enough. (My apologies to my Canadian friends if P2A is still around, it’s been a long time since I’ve heard a word.)

Despite what they may want agents and consumers alike to believe, Zillow and Trulia and Realtor.com are not the end-all, be-all of listing exposure. In fact, given the wide array of inaccuracies, the exposure in a logical world should have very limited benefit. Sadly, individuals are smart and people as a group are stupid; it’s easier to accept what is being presented, even from an interested party, than it is to think for themselves.

And because of this, there always will be days like today, when a buyer decided to offer far less than list value based on a Zestimate that falls in the “more than 20 percent off category.” The agent, try as she might, could not get them to see the reality through regular comps because the “comps” on Zillow said otherwise.

This person isn’t going to get this home. Or any other, not relying on Zestimates for home values.

But that’s okay because Zillow has its disclaimers and, at the end of the day, the site is about advertising and not consumers. To those willing to continue viewing inaccurate information, caveat emptor.

Photo courtesy of Robert Gallant photography via Flickr Creative Commons

Comments

  • San Diego appears to be one of Zillow’s  big winners, but we still struggle with Zestimates that are 25% too low–and which encourage buyers to make losing bids in a market with very tight inventory. Nobody is served well with this mis-information. Not the homeowner. Not the seller. Not the buyer. Not the agent. Not even Zillow.

  • Tammy Emineth says:

    Unfortunately the public doesn’t know this, doesn’t know where to find it or just doesn’t care. It’s that ignorance in a lot of things that we just sit by and wait for someone else to bring it to light… hence….

  • frustrated seller says:

    You’re right…..but I’m not sure it matters. My Zestimate on a flip I’ve done is more than $100K below asking…and I KNOW that folks are seeing that Zestimate and saying, “hey they’re CRAZY to want another $100K…no thanks!”

    But what the Spencer posse can’t see is this was a complete gut and reno. As in it was a pit when we bought it, gutted it, redid all mechanicals, new drywall, trim, baseboards, windows, appliances, granite, soapstone, fixtures…yadda yadda yadda.

    It don’t matter, because the Zestimate works in the buyer’s favor, it’s a buyer’s market….and hence Zillow is gospel.

    You can be damn sure that if it swung the other way with crazy Zestimates over sales prices…buyers would be screaming about it’s fairy tale calculations.

    Oh, and the head economist over at Zillow? We’ll, undergrad is history as I recall, and I think if he has a masters it’s in Urban Planning or the like. In other words…his ‘algorithm’ is most likely something based on country appraisal, which as we all know is based largely on tax base and local budget and not true ‘value’. Lest anyone doubt that…what happens when the town needs more money? Do they revalue your home? No, that would be too much work. They raise the % applied to your assessment.

    You don’t use assessment for home value…but Zillow does.

    And the fact they don’t disclose the methodology says they aren’t confident about it…as well they should be. Because it sucks and does nothing but cause problems for both sides of the tx – buyer with plans to take your $500K home for $380K and sellers who have a glaring lowball price right below their carefully researched listing price.

    Just awesome. Thanks Spencer. Enjoy your unearned millions.

  • frustrated seller says:

    Zillow is also biting the hand that feeds…..$50mm in agent advertising a year!!!! How are they helping YOU sell your inventory with those ads? They aren’t. As we all know, they’re making your life more difficult.

    I hope the trend continues with independents pulling their feeds to the monster that is Zillow. If enough did that, you can be sure they’d quietly do away with the Zestimate.

  • Surbiton says:

    Frustrated Seller explains the case for our elected representatives imposing some form of Regulation to protect homeowners from Zillows nonsense inaccurate zestimates. There is no other spect of everyday life of such significance that is unregulated in this way and as a mininimum there needs to be a DoNotZestimate opt out in the same way as phone users can register with the DoNotCall website to opt out of unwanted spam phone calls. When 17% of Zillows 106 million imposed Zestimates are more than 25% inaccurate that’s a lot of spam inflicted on millions of homeowners.