It’s everywhere. You’ve probably heard the term “big data” referred to in a less than positive way.
The fact is, data both reports on and drives consumer behavior.
We can see this clearly with Zillow.
Like many real estate professionals, I have a love/hate relationship with Zillow.
I love that Zillow provides a way for a client to look up a property and see the final price if it’s sold. I also think it’s great they show data on available homes. And I love that my clients can review their agents on Zillow. This transparency makes it difficult to bad agents to hide and shines a light on great agents. But Zillow also costs me a lot of time, energy, and stress in my business. Let me share why.
This is Zillow’s term for the estimates of value they offer. And guess what? They’re not very accurate, at least in my market. If you dig through the fine print on Zillow’s site, you’ll find they disclose this. But it’s hard to find that information.
Homeowners who are considering selling often check Zillow first, “to find out how much their home is worth”. Because of Zillow inaccuracy as a pricing tool – and they’re usually high, not low in their estimates, homeowners get an overinflated idea of their home’s value. Then, when I meet with them to discuss their home’s real value they’re disappointed.
That’s not the way I like to build rapport with my clients.
Let’s set aside the problems with Zestimates. Zillow doesn’t rapidly load data from the MLS. So a property’s status is often inaccurately reflected on Zillow. Again, this leads to disappointment when a buyer calls me about a property they found on Zillow, and I have to tell them that it is, in fact, already under contract.
Holding agents hostage.
Like most property portals, Zillow’s business models are based on revenue from agents. Zillow doesn’t incur costs to list property (that’s borne solely by agents and their firms), yet they take the data, and the access to that data, and use that to then build a product buyers and sellers want. They pay for their costs by charging agents exorbitant amounts to advertise on the site as a “Premier” agent. For many zip codes in my market area, this can reach $2,000 or more per month. Remember, this is a repackaging of data created from the information that agents themselves provide in the MLS.
While real estate data portals are here to stay, I hope that those who work to benefit both consumers and real estate agents – such as Realtor.com – will continue to grow their market share, leaving less opportunities for the Zillows of the world.