Zillow.com acted very bravely by participating in a panel discussion about the future of real estate information [OCR] at a Realtor convention.

The president of Zillow, Lloyd Frink, took the high road, yet was pretty candid about the future of the relationship between Realtors and their clients and customers.

“We believe the relationship between Realtors and their clients is going to change in the future,” Frink said in response to critics in the room. “As opposed to Realtors being gatekeepers of this information, they become much more of experts on what this information means.”

His is right and its already happening. 75% of buyers and sellers start with the Internet first before contacting an agent. Think about it, why would the Zillow concept, warts and all, be so popular? Is it because Realtors are accurate? Thats really not the point at all. Consumers want to gather information and digest it before they enter the sales process. The problem with Zillow, is its not consistent in its results so it promises more than it can deliver. Since the results come from a secret black box of algorithms, its a tough sell to real estate professionals.

But Realtor.com was pretty annoyed with Zillow [Telegraph] and went on the attack (aka the low road) which may have gotten some laughs and attention, but doesn’t help their cause at all. It paints a picture of the old guard, trying to keep things the same, which is not what the trade group needs to do.

Allan Dalton, president of the competing Realtor.com site, bitterly criticized Zillow.com, likening the site’s trademark Zestimates of home values to a carnival weight and age guesser.

Realtor.com, which is sponsored by the National Association of Realtors, provides listings of homes for sale by ZIP code from Realtor databases.

“The whole notion of suggesting to people that they can find out what their home is worth without a Realtor offends me,” Dalton said.

You’ve got to admire Zillow’s attempt to bridge the gap between them and the Realtor community. They are simply providing a new tool, valuable or not, to a trade group that is seeing the world change around them. However, its going to be a tough road for Zillow despite the fact that they are one of the most popular real estate sites on the web. Because a large portion of their target advertising market is real estate agents and the parent trade organization sees Zillow threatening their relevancy and causing more market confusion, its not a lovefest and probably never will be.

Whats interesting about the whole polarization of Zillow’s popularity, is that Zillow does not provide listings, yet are viewed suspiciously by agents. The initial rollout with promises of complete market coverage by Zillow, resulting in significant inconsistencies in results, is what has got many agents upset.

Zillow has promised more than it can deliver, which I have commented on before. Some market results are amazingly accurate, while some are not even close. The problem for the reader is having some way to measure its pricing reliability before it can be taken as a serious tool. Thats why the Realtors should not feel threatened at all.

Those that I have spoken to at Zillow are a very nice, earnest bunch of people trying to do what no one else has been able to. However, at the end of the day, (Of course I am not without bias here since I provide property valuations for a living.) the black box approach to valuation will always be viewed with suspicion. I guess thats besides the point.


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18 Responses to “Zillow Gets Pillowed In Old School Smackdown”

  1. Jim Duncan says:
    … and the parent trade organization sees Zillow threatening their relevancy…

    I don’t know that NAR has come out against Zillow, but Realtor.com certainly has because their business model is threatened.

    Zillow and Realtor.com have similar goals – to enhance their bottom line. Realtor.com answers to their shareholders and Zillow to their investors.

    NAR must answer to their constituency, but I am not certain yet that Zillow is anything but another tool for good Realtors to use. They in no way replace Realtors; they may even make my job easier so long as I can efficiently implement their tool.

    Realtor.com however, most assuredly is threatened, as they and Zillow are competing for the same dollar. Why else would Realtor.com have added a “What’s your home worth?” feature to their front page?

  2. Dave Platter says:

    Interesting that the realtors were so rabid. At the Inman News Real Estate Connect Conferences, I’ve never seen agents attack zillow in that way. I guess only forward thinking agents go to technology oriented shows.

  3. ed in texas says:

    “The whole notion of suggesting to people that they can find out what their home is worth without a Realtor offends me,” Dalton said.

    Wow, that’s a breathtakingly arrogant statement.

  4. John Philip Mason says:

    Thanks, as this is the most balanced viewpoint I’ve seen yet on this subject.

  5. jf.sellsius says:

    Zillow supplying factual data is noble & good for consumers, provided such data is accurate, complete and fresh. The recent allowance for owners to add or correct key data acknowledges this flaw and seeks to address it.

    But when lacking critical data such as beds, baths, square feet, total rooms & even # of units (in the multifamily link below), zillow proudly publishes a Value, some think that’s fine & excusable. If you did it, you’d be labeled incompetent. I don’t understand the double standard. Should providing a free service excuse accuracy? Perhaps.

    http://tinyurl.com/nv243

    I am curious to know your opinion whether an owner should have the right to opt-out of their zestimate rather than having to register to correct it (even though it’s not actually corrected, just published beside the zestimate.) There is the potential risk that an owner trying to sell in the face of a grossly inaccurate zestimate might have buyer resistance or worse yet, have potential buyers pass the home by.

  6. Jonathan J. Miller says:

    jf – I don’t think there is a choice. The data used is in the public domain. They should have the right to refute the results and thats why they should have to log in, I believe. However, whose to say some crack head (bad neighbor) won’t ry to sabatoge the homeowner’s sale) by posting their own comments on the house if the homeowner doesn’t. Its a bad situation for the homeowner.

    Free infers less precision, so as long as the product is marked accordingly, thats ok. I think the turmoil created has been the assumption that the result was gospel, and people will rely on the results, which may or may not be accurate.

    It would be neat if they had a free and pay version. The pay version involved a higher level of calculation, or interaction with a person (self-serving for me, perhaps) for them to determine the accuracy level based on the data fed in. In mortgage parlance, its called “Appraiser Assisted Automated Valuations Models.” National lenders I speak with indicate that AVM’s are nearly all crap (a valuation term)) something like 10 to 20% are remotely reliable on their on.

  7. I am on Zillow’s side in that information should be made available to consumers, which is why I have a blog. I have direct contact with consumers and just can’t give them enough information, but my standards are stringent when it comes to accuracy. I sometimes have to do an hour or two of research just to write a couple of paragraphs. The old fashioned concepts of data integrity and being accountable for your data are still a priority for me, I won’t publish anything that may be inaccurate.

  8. NAR sounds like King Canute trying to stop the tides. “Data wants to be free” and Zillow is certainly responding to a consumer itch for data. Their proprietary algorithms are very likely to get better (they have too much money behind them to not focus on that).

    Zillow creates a huge opportunity for agents to explain what they do and how they add value. A consumer who comes pre-Zillowed should be ripe for a conversation about what elements Zillow may miss or mis-value in order to really understand what a property is worth.

    If I can’t persuade a seller or buyer that I know more about Manhattan loft valuation than Zillow does, I shouldn’t be in business very long. But I plan to stay, and I welcome the chance to demonstrate value to consumers. Agents who cry that Zillow is unfair (or worse) sound shrill, protectionist and (increasingly) irrelevant. Kinda like Alan Dalton’s “The whole notion of suggesting to people that they can find out what their home is worth without a Realtor offends me”.

    Like Zillow, Realtors® can only estimate what a home or apartment is worth. The only way I know of to actually find out what it is worth – as I tell buyers all the time – is to let somebody else buy it. That is the market price; that is the best indicator of “value”.

    Zillow doesn’t offend me, but what would it matter if it did?? It will either fail, metastasize or succeed based on whether consumers (advertisers) perceive value in it. Won’t matter what I think, or Dalton.

  9. Kevin says:

    Lloyd Frink weighs in with his own update of the panel discussion at the Zillow Blog. His version is pretty tame.

  10. skep-tic says:

    when realtors lose their lock on information, they become glorified tour guides.

    as a buyer, if I know the recents comps in the neighborhood, school data, mortgage rates/fees, tax assessments, etc– what “expertise” can a realtor offer me?

    If I am a seller and have the same information and can advertise my property online (where most buyers look), and the online site can allow me to schedule showings automatically, how much value does a realtor ad?

    If I am either a buyer or a seller and I have an attorney help me with offers and closing (who charges by the hour), why do I also need a realtor to charge me a fixed percentage of the deal?

    the reality is that realtors bring very little value to the buying and selling of homes once you take away their lock on information

  11. jf.sellsius says:

    Jonathan,

    I make a distinction between public data and someone’s “opinion” of the value of my home. The public data is of course free & should be open to all BUT it does NOT provide an opinion of value–it is merely data. The exercise of human or computer algorithm to arrive at an “opinion” of value is a proprietary, non-public number.

    To the extent z’s “opinion” is grossly inaccurate and can interfere with the marketing of my home, I assert the right to demand zillow not publish their “opinion” of value. I liken it to having a “for sale” sign on my home for $400K and zillow standing across the street with a sign saying “Buyers do not overpay, that home is only worth $275K”.

    I should not be forced to register to supply the missing or incorrect data that renders the zestimate grossly inaccurate. Besides, zillow would NOT change the zestimate. David G. of Zillow has told me that zillow will not let an owner opt-out under any circumstance. This issue remains to be resolved.

    I am also curious whether you have an opinion regarding the need for a conspicuous “non appraisal” disclaimer on zillow’s home page and beside each zestimate, as some brokers are legally required to display on their CMAs, given zillow’s preamble that buyers should not “overpay” and sellers use it to “help set a price”.

  12. and here is the pretty tame stuff that Frink of Zillow had to say on his blog about the event: http://www.zillowblog.com/zillow_blog/2006/10/zillow_at_car.html

  13. How dare Zillow attempt to minimalize the value of engaging the services of a professional Realtor to obtain a home valuation. The sheer audacity of these people simply amazes me.

    Don’t they know the rigorous standards maintained by the National Ass’n of Realtors and its state associations for entry into the profession. Why, in Michigan, you have to take a forty hour course to get a license! That is five straight days in class, for eight hours a day. And that doesn’t include the lunch breaks, either! (Although my instructor did give credit for time spent in potty breaks).

    And these Zillow geeks think that a computer could do a better job? What a bunch of morons. They should be in the carnival.

  14. Jonathan J. Miller says:

    Allan Dalton of Pres of Realtor.com was just promoted…. http://www.rismedia.com/index.php/article/articleview/16389/1/1/

  15. Yesim Numan says:

    Skep-tic: As a broker, I would like to say your statement is true for brokers who think their job consists of taking clients to open houses. However, there is much more value added to the process by a broker who does his/her homework by gathering accurate information and presenting it to the buyer/seller in a timely manner. Buyers use brokers to avoid the hassle of going through thousands of listings on line (including many with insufficient or incorrect information), gathering information on the building and apartment, making (and keeping track of) MANY phone calls, finding out small but crucial details (length of time apt has been on the market, initial listing price, offers, deals that fell through, etc which are determining factors on the owners motivation to make a deal), searching comparables in the building and the neighborhood, and last but not least preparing application packages. True, the information is available, but most people can’t or don’t want to take the time to search for it. You would be amazed to see how much handholding brokers need to put in a deal. As far as sellers go, it is a huge mistake to think all it takes is advertising for your property on line and voi la! Enter buyer! NOT! It takes accurate pricing and a carefully planned marketing strategy. Most important of all, it takes a lot of time and PATIENCE. Please understand that real estate is the most personal and emotional business transaction; and naturally, sellers are biased when it comes to their homes. It is much harder than you think to stand there and listen to someone bash the custom-made built-in entertainment unit that you are so proud of. Not to mention the process of qualifying buyers and the cumbersome paperwork.
    I think your statement about brokers bringing little value to the process is unfair to brokers who do their job right.

  16. joe says:

    >I think your statement about brokers bringing >little value to the process is unfair to >brokers who do their job right.

    Think about it this way:

    In the stock market, you can go to bear-stearns and pay hundreds of dollars per trade, and you get access to all of tehir research, opinions and expertise.

    Or, you can go to scottrade, pay $7 per trade and do it all yourself.

    There is room in the market for both, but the weaker hands will be forced out.

  17. skep-tic says:

    Yesim,

    How much of what you stated is due to realtors having a lock on market info? if consumers could get this info directly, maybe for a small fee, how much would a realtor be worth?

    I understand that realtors provide a service besides information gathering, but it is hard to believe that all of this handholding is worth 6% of a deal. That is what underwriters of an IPO charge.