Zillow’s Sold Data Could Cost You

While franchises, brokerages and agents fume and plot how to regain control of the listing data, Zillow Group (ZG), realtor.com, CoreLogic and others are sucking down the MLS-style sold data — that’s what is going to kill you.

The brokerage industry is now running scared because the four main portals capture about 50 percent of all real estate-related Internet traffic, with ZG owning most of it.

ZG is better at marketing the industry’s own information than brokers are. It snags and publishes active listing data, and both Zillow Group and its investors love the profits they make through advertising fees paid by brokers for a shot at the business that those same brokers weren’t skilled enough to attract on their own.

But published listing data is not your real problem.

The fees earned through advertising paid on actively for-sale homes is simply the short-term cash flow to keep the ZG machine running in order to capture the full transaction processes of selling and buying real estate.

You see, portals have survived off dusty old county record data for a decade. But with each property displayed at these sites — and eventually sold — they have slowly built up a national database of rich sales information, and this is accelerating exponentially today.

The grungy old county records data barely offered them a style, size, bed and bath count, lot size and some government-conjured tax valuation for creating their Zestimate. But, oh, that rich MLS-style data with text descriptions, pictures and lists of inclusions, which comes as each active property becomes a sold property — that’s gold, or will be before long.

The Zestimate will soon integrate all of the luxurious text descriptions and inclusions from all of those sold properties into its valuation model — another huge chunk removed from the broker model’s foundation. Other companies with access to this kind of data will do the same.

From analyzing all of that sold data, the ZG sites could shortly integrate keyword-matching algorithms into their buyer search tools — another chunk out of the broker model’s foundation. Buyers will flock to ZG, thus more sellers will demand to be there, and more brokers will have to advertise there — and on and on.

Currently the Zestimate claims a median error rate of 8 percent, and brokers scream that’s not good enough. It will get much more accurate with a decade of rich sold data — and you have another problem.

Now that ZG is making money on listing data, and now that it can improve the buyer search tools and value estimates with a decade of accumulated MLS-style sale data — it can turn its efforts toward controlling the entire sale process.

Every time a potential buyer visits a ZG site, there is also an opportunity to track that buyer. It would be a smart business move for ZG to create learning algorithms and artificial intelligence to understand what actions buyers take just before becoming serious. ZG has all of the active properties, a decade of sold properties, and it gets to witness every action a potential buyer takes. ZG knows who’s about to buy — what’s that list of leads worth to you? Oh, it’s going to be more than what it costs to paste your picture next to somebody else’s listing — place your bid.

Do you agree that sold data from listing portals like ZG could end up costing you more for leads? Do you think this change in data consumption will change the face of the real estate industry? What are your thoughts?

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  • Dan Scott

    I believe that this author is correct. I have noticed that Trulia is asking agents if they sold the property and want the agent to give details of the sale. There has to be more fees coming from these companies to get the leads. One must always look at what they are doing and the possible ramifications of their actions. As a busy agent/broker, it is hard to stay on top of everything that is online these days. It is a barrage of information through which we must sort. The more accurate the zestimates, the more trust will be there for Zillow. Let’s all put on our thinking caps!

  • Craig Flint

    For those of us in the know, Zillow’s Zestimates have always been Zillarious. I have been a real estate broker for 35 years and hold myself to a standard of + or – 1% when placing a value on a home.
    Accurate value conclusions should include both objective and subjective input, ie. both science and art, not to mention actually seeing the property, (God forbid)!
    Zillow’s success is a living testament to their ability to be first, not necessarily best. I for one fed this beast at one time through the purchase of territories, for the privilege of being called a “premier agent”.
    If the consumer only knew that these agents “buy” their reputations rather than earn them. And Zillow has full knowledge of this but can’t see past their own pocket books.
    I say starve the bastards out! Stop buying their Kool Aid, and let them peddle there goods elsewhere.

  • RE_Insider

    Another email from one of our readers: Back early this year I listed a lease for my daughter in Santa Monica. The lease was asking $7700/m for short term lease. Zillow advertised the same listing under a bogus name for $4500/m and that the showing can be done only after receipt of deposit. I contacted zillow who immediately took that bogus listing down as the impostor was trying to collect money from would be applicants using my data.
    Zillow’s policy of taking such false listings need to be stopped.

  • Carol Lynn

    Zillow, to me, is a royal pain. Often the information is misleading and their “Zestimates” fall terribly short of anything accurate. Additionally, the fluctuation of their valuation mode during the property’s listing life is beyond annoying. There are too many things that go wrong with Zillow, but they have the public’s eyes and ears, so realtors are forced to deal with this added nonsense. It angers me that they know absolutely nothing about a property that they present on their site, nothing about the realistic comps because they don’t see the houses, the neighborhood, the conditions. They have set up a false reality in real estate. I’ve read some of the other negative comments here and have also experienced all of these issues. Furthermore, it seems they are immune to being accountable for anything incorrect, where we, as realtors, can have all sorts of fallout if something is wrongly presented.

  • Surbiton

    The Zestimate ‘Median error rate of 8%’ is meaningless, especially when 17% of Zestimates are more than 25% inaccurate according to analysis by Clareity Consulting. What’s the point of ‘harvesting luxurious text descriptions’ as the article states when Zillow refuse ALL homeowner requests to correct substantially inaccurate Zestimates. All Zillow does is create chaos & confusion for home buyers who specify search criteria based on their budget. When they check the home out with their Buying Agent they find the home is actually 10% or 20% outside their budget and the whole process was a waste of everyone’s time.

    The time has come for our elected officials to catch up with technology and introduce some form of regulation to protect Homeowners from Zillows nonsense ‘click bait’ Zestimates. As a minimum there needs to be a DoNotZestimate opt out in the same way as Phone Users can opt out of unwanted spam calls.

  • Short Sale Angels

    I have been waving my arms and jumping up and down hoping to point out this very issue to Realtor Associations for nearly a decade now. The issue is that Realtor Associations are not run by data forecasters, and the members whose right it is to vocalize concerns are also not particularly focused upon data and forecasting.
    Nonetheless, this INVALUABLE resource that has been freely handed over to the online sites such as Trulia, Zillow, Realtor.com, and others for many years has been literally GIVEN away to the MLS platform companies. These would be, in my experience, Rappatoni and Paragon. While we pay them the big bucks to provide our associations a lovely, well functioning platform upon which to showcase our listings, they have quietly retained the right to sell the data we place on those platforms. OUR DATA!
    THE SOLUTION: To nip this issue in the bud, we Realtors must rally our associations and demand that all future contracts with our MLS online platform providers include strong language retaining ownership of the listing data. We need to recover the control of the data we own, and continue to control it.
    Should all associations around the country agree to demand these terms at one time, we would recover our ability to develop our own leads and connections and the business of real estate would be at least somewhat wrested from the clutches of IT CEOs and bigwigs. This is a tall order, I realize, but it is a growing issue, and one I hope you will continue to investigate and report on.