Zillow.com – Ally or Adversary?

Zillow.com and similar sites like Trulia.com are popular online residential real estate sites. Many home shoppers flock to these sites as their first stop in the home buying process.   A home buyer and home seller might think that they are being helped by these “.com” businesses by promoting their homes, helping to research current home values, or help to find current homes for sale.  But do they help or hinder consumers?

I asked a local real estate agent about Zillow.com, and they very frankly responded with, “They are great when looking at home pictures, but not good for much else…” I then asked, “don’t these sites help you to sell your listings?”  Well… No.  Consumer sites like Zillow.com don’t sell houses… According to the New York Times in April 2009, Zillow stated that it is a media company that generates revenue by selling advertising on its web site.  Their business model is neither to promote homes nor provide accurate information.  They are in business to sell advertising space to real estate agents and mortgage companies. Indeed, Zillow.com takes all properties from Multiple List Services (MLS) (that are provided to the public for free) and sells them back to listing agents for a pretty penny.  Their profits stem on which real estate agent wants to pay to be “suggested” to the consumer without consideration of personality, market knowledge, and experience.   Agents also pay to be featured on these sites ‘per area’ despite their proximity to you or the homes you’re looking at.

Websites like Zillow and Trulia are consumer gathering sites in that they have more content relevant to the process of home buying/selling to draw in those searching for homes and less actual information on houses currently available. In fact, these sites have been found to contain far too many already sold listings and houses that have never been for sale.  What good is a website that claims to help you find a home if it has wrong information about homes for sale? ( I mean, if you were shopping for a vehicle, you wouldn’t want to see those that have already been sold…would you?) 

Some real estate savvy home buyers may even argue that sites like Zillow upload their information directly from Multiple List Services and therefore has to be accurate. It is true that MLS is where the information originates, however, many agents inadvertently miss information when imputing their listings.  Also, when a listing is updated or the price is reduced, there can be a 9+ day MLS lag time for the consumer sites to upload the change from MLS.  Some of this data can be very old (i.e., over twenty years) and so even home descriptions may be inaccurate (i.e., change in size/structure). This may mislead buyers who may feel asking prices are way out of range when compared to the ‘Zillow price’ and work against sellers because Zillow lists homes as worth far less than their actual value.


Zillow’s “Zestimates” or home website home valuations are disgracefully off by thousands in our area. “Why?” you might ask.  A ‘Zestimate’ does not take into consideration home-specific factors, like recent remodeling or age.  Zillow’s algorithm only looks at raw data, like number of bedrooms, bathrooms, and square footage. Geography and proximity of a home to another ‘similar’ home is what Zillow focuses on. Although there is an option to update the information for a particular home on Zillow, many owners/sellers/agents just don’t utilize it because you have to create an account and disclose their e-mail.  Common sense should tell you that not all 3BR/2BA 1500 square foot homes are equal, even if located next to each other.  On the flip side, Zillow’s ‘Zestimates’ work well for homes in sterile subdivisions where all the homes are the same floor plan, built by the same builder at the same time, maintained in the same way over time, and at least three similar homes within 10 miles have sold for full price within the past three to six months. For our area, where two 3BR/2BA homes located next to each are often completely different, this is a problem. According to Fortune, “Zillow has Zestimated the value of 57 percent of U.S. housing stock, but only 65 percent of that could be considered ‘accurate’—by its definition, within 10 percent of the actual selling price. And even that accuracy isn’t equally distributed.”

I’m not saying that real estate websites like Zillow.com and Trulia.com are completely terrible; In fact, they are a great place to look at pictures of homes! However, if you want accurate home information, prices, or an estimate on your homes’ worth, see a Realtor with intimate knowledge of your local market. Contact your “Hometown Real Estate Company” at 301-689-0100 today!

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