Interesting and open, this is how I would characterize Jorrit Van Der Meulen, the Vice President of Partner Relations for Zillow.  I had the opportunity to hear Mr. Van Der Meulen talk at my monthly Forum XXII networking meeting.  He shared some of the history of the Zillow, the missteps, changes in direction, and future goals.  For those agents out there, Zillow is NOT our competitor, but is trying to be a partner in our real estate business. This piece is an effort to understand Zillow’s current and future business model.

Initially Zillow hoped to change the way real estate business was conducted. But shortly after forming, the company realized the real estate industry “takeover” was probably not going to happen.  The powers that be at Zillow recognized the real estate industry was far too complex to completely revamp.

Zillow has gone through several gyrations over the short history of the company.    After many focus groups the company zeroed in on giving consumers information regarding prices, thus the infamous “Zestimate” was born.  (*Zestimate is a registered Trademark of Zillow.) Zillow’s goal was to put a price point on every home in the United States.  Mr. Van Der Meulen admits there’s a huge disparity between MLS, multiple listing data, and tax records.    He stated Zillow is “not trying to give anyone the price for a house.”  The “Zestimate” is “the starting point of a conversation”.  He followed this with a recommendation for people to talk with real estate professionals, “someone who knows the real values”.

When asked about the 5 year plan for the company, Mr. Van Der Meulen talked about an expanded company offering. The company’s goal is to create an information site that generates revenue through advertising.  They’ve launched a free mortgage site that’ll be transformed into a future revenue producer for Zillow and lenders.  There’ll be a home improvement services component to the site and, again, the hope is to generate advertising revenue.     Zillow’s online discussions are great, giving people the chance to talk about a myriad of real estate issues.  There’s a whole host of question and answer pages which also give great information about the home buying and selling process. These pages are a great benefit to the public.

Back to the “Zestimate”,   Zillow has always been a big question for me because the information provided is often inaccurate.  Yes, they have all kinds of algorithms and tests to increase the accuracy of data and, yes, a home owner can claim a home and update the information.  But at the end of the day, most of the pricing data Zillow provides is inaccurate.  I rarely ever look at “Zestimates” for that reason.

But what’s the public’s perception of these values?  Do most people look at the “Zestimate” as the gospel on pricing or at a “starting point for a conversation”? Is the consumer better served with this inaccurate information or is this information a detriment?

I advertise my listings on Zillow because I believe homes should be marketed wherever buyers are looking online. But I’ve always been concerned about the inaccuracy of Zillow’s data when advertising listings.  The inaccurate Zillow data could influence a potential buyer or seller to make a bad real estate decision. 

 The comparables given for a home are nearby home sales, which may or may not have any correlation to a home’s value. For example, two comparables given for one of my listings, a ranch style home, varied greatly. My listing has new windows, carpets, moldings, doors, drop dead, private, gorgeous backyard and was impeccably maintained by its owners.  The first comparable Zillow used was a ranch style home, whereas the second comparable was a duplex style home in a planned neighborhood. Someone looking at the second comparable would have no way of knowing it’s a duplex, because legally it’s considered a “single family residence.”  Clearly, the duplex style home is not at all similar, but how would the public know?  Ironically, the ranch style home was more comparable to the advertised home, but only on paper.   Although similar in square footage, it was a completely different home.  It had absolutely no updating and everything was original.  It had an eyesore located in front of it and backed to the noise wall barrier of a busy highway.  The backyard was small and so noisy as to render it unusable. 

Joseph Ferrara’s blog, Sellsius Real Estate, has had interesting discussions about Zestimates and Zillow.   Sellsius’ believes home owners should have the ultimate decision as to whether their home’s value goes online.  To Sellsius, it’s a matter of choice, whereas, Zillow deems transparency of data is more important than choice, even if the data is inaccurate.  When I mentioned this ongoing Sellsius discussion at our meeting, Mr. Van Der Meulen was clear that Zillow’s “transparency” whether accurate or inaccurate trumped choice.  (And yes, I do know people can claim their homes and update the data.  Another Realtor mentioned some home owners don’t want to publicize, perhaps to the tax assessor, their home is not what Zillow states.)

Zillow is a company still in its infancy that seems to be looking to grow and develop a relevant business model.  They’re fortunate as a company to have the luxury to find their way.  Here’s hoping they do and are able to provide something truly meaningful and different to the consumer.  After all, it seems this was their original premise.  For now, as a real estate professional, I’d like to see disclaimers about the values given and recommendations for the public to talk to real estate professionals, since Zillow is the “start to a conversation.”