Most real estate agents I know HATE Zillow. Most consumers I know LOVE Zillow. Why the disconnect?
I believe agents dislike Zillow for 3 main reasons.
Â· Agents are afraid that consumers will gain access to information that previously only agents could access. Asymmetry of information pushed clients to agents because it was difficult to understand how houses were priced and how the real estate market worked.
Â· Agents are afraid of what Zillow could do to our business model. Most agents are not tech savvy and do not understand how they will need to adapt as real estate consumers do more research on their own. Compensation models could evolve and agents that have been in the business for many years do not look favorably at changing how they are paid.
Â· Agents believe that the pricing information Zillow provides is not necessarily accurate because it has no idea about the condition of the home, location in a neighborhood, etc. Agents have years of intangible data about area houses locked away in their brains and an algorithm machine like Zillow can never access this information.
Agentsâ€™ loathing of Zillow is something of an overreaction because there are some definite benefits to the site. Obviously I am a fan of consumers having all of the information they need to make educated decisions. I wouldnâ€™t be writing this blog if I was concerned about keeping real estate topics a mystery. The Wiki that Zillow provides is an excellent place to get general information on real estate transactions. Recent sales price data can be interesting to analyze. And using Zillowâ€™s pricing tool to understand the potential range of pricing for your home, your neighborâ€™s home, or your bossâ€™s home satisfies the curious.
However, there are some faults with Zillowâ€™s pricing model that users need to understand.
Â· If you live in an area that has both multi-family and single family homes, Zillow will compare these. A competent agent would never compare a multi to a single family because multis are typically used for investment purposes. You would always do a different type of financial analysis.
Â· Zillow often pulls homes that are in adjacent, but differing neighborhoods. I live in Hartford, but close to the West Hartford town line and Zillow often pulls comparison homes from West Hartford. Houses in West Hartford cannot be compared because of differing school systems, tax structures, crime rates, etc.
Â· Zillow has no way of knowing the condition of your house or the condition of the neighboring houses. You may live in impeccable home, but your neighborâ€™s home may be a dilapidated shack. This will greatly affect your home value, but Zillow has no uniform way of identifying this information or adding it to their pricing model.
Zillow is a great place to start if youâ€™re simply looking for a rough estimate of your homeâ€™s value, are curious about other home values, or just looking for real estate information in general. If youâ€™re thinking about selling, or just want to understand a more accurate price range for your home, calling an agent is still your best option.