As a professional in the housing sector (Broker, Licensed in the State of Oregon) I have members of the general public ask me if Zillow.com‘s pricing estimates (styled as “Zestimates”) are accurate. At the risk of raising ire, my honest answer is this: I have never personally seen a “Zillow Zestimate” even closely resemble an appraised value or be close to an actual Comparative Market Analysis.
How Does Zillow Make Its Millions???
When questioning the veracity of a source of information, it’s important to understand how Zillow makes millions providing such “free” services to the general public. Sites such as Zillow make money by netting consumers looking for real estate services and then selling those captured leads to local Realtors. As one local agent quipped: “Zillow wants to charge me money for the privilege of doing business in my own area” (okay I said that a few years ago). Therefore, telling a potential listing client the GREAT NEWS that their house is worth a modest fortune increases the chance the potential client will fill out the online form and that Zillow will get to charge a local agent a fee for providing the lead. As such, there is incentive for such websites to embellish with little culpability for outdated/incorrect data.
If you’re curious about how actual Realtors get paid here’s an interesting article.
How Accurate is Zillow on Listing Info?
Buyers frequently complain that they “saw a listing on Zillow” but it turns out that the information on Zillow was incorrect or extremely outdated. Such websites are not required to update any listing info and a result is that certain high traffic real estate listings seem to stay up well past being sold. And, when hundreds of buyers inquire about the long-gone listing Zillow is only too happy to refer them to a local agent who pays Zillow for the service. Frustrated buyers trying to escape this gill-net of national websites will try and research more about properties to find the actual listing broker and a small minority of persistent buyers finally get to me. When these more savvy buyers inquire about “the perfect house they saw on Zillow” we often find that the house they are viewing online actually sold months ago. So, if the national websites are getting thousands of users viewing a listing online they would lose revenue by telling the truth: that the listing is already sold or cancelled.
Who Has Skin In The Game?
In closing, Zillow and similar sites have accomplished their goal by simply getting the public to visit their site and fill out lead forms. Then, Zillow charges fees to agents who want the right to work those sales leads. Whereas, a real estate broker is bound by all sorts of state and federal laws and actually has to provide a tangible service (representing you in purchase/sale) websites that are not actual broker or agent sites make their money simply by you clicking. The result is that websites such as Zillow are encouraged to provide lower quality information whereas agents/brokers who actually provide a service to their local community hold themselves to a much higher standard.
By Richard Lockwood
Real Estate Broker
Licensed in the State of Oregon