“Consumers love it, so I love it,” Stireman said. “But it’s not perfect.”
Seattle-based Zillow is firmly established as the nation’s most popular real estate information website with more than 76 million unique monthly visitors. The company uses real estate listings obtained from a variety of sources, including brokers, multiple listing services and country property records, to sell advertising to real estate-related businesses.
“It is not a multiple listing service,” said Kim Pontius, executive vice president of the Traverse Area Association of Realtors (TAAR). “It’s an advertising portal that uses real estate listings to draw eyeballs.”
Zillow Buys Trulia: Now What?
Its popularity with consumers and its power to influence how real estate is bought and sold is likely to grow through its recent $2.5 billion stock acquisition of Trulia, another online real estate information giant.
Zillow and Trulia plan to maintain separate websites, but some industry analysts expect them to eventually be combined. Zillow’s revenue jumped from $11.2 million in the first quarter of 2011 to $92.3 million in the fourth quarter of 2014.
“It really enhances the consumer experience and that’s something our industry has been slow to understand,” Pontius said. “A lot of people are stuck in the business models of the past.”
The real estate industry trumpets its own website, Realtor.com, but acknowledges that Zillow has leaped ahead in its appeal to consumers.
“It’s been a game changer,” Pontius said.
“Riddled With Errors”
But TAAR’s Pontius and other local real estate professionals say Zillow’s listings are riddled with errors, such as outdated listings and inaccurate valuations, causing friction among agents, buyers and sellers.
“A client will call and say, ‘You didn’t send me this (listing on Zillow).’ And we’ll tell them it sold six months ago,” said Brad Platt, co-owner of Century 21 Northland in Traverse City.
Zillow gives local listings a broader visibility and has enhanced the education of real estate consumers, said Jonathan Oltersdorf, an agent with Oltersdorf Realty in Suttons Bay.
But he, too, said he’s frustrated with the amount of errors in Zillow listings and the difficulty in getting Zillow to fix them.
“Accuracy isn’t their primary objective and I think that shows,” Oltersdorf said.
Real estate professionals also are critical of Zillow’s “Zestimates,” which estimates the value of some 110 million homes that are actively for sale, for rent or not on the market.
Home buyers and sellers often cite those values to real estate agents. But they can be far off the mark.
On its website, Zillow said the median valuation error rate for its 3.6 million homes in Michigan with Zestimates was 8.2 percent in February. That means that half of the homes were valued within 8.2 percent of the selling price and half were off by more than 8.2 percent.
The company did not post error rates for counties in the Grand Traverse area.
Some real estate professionals also grumble they have to pay for leads on listings they’ve provided to Zillow essentially for free.
Zillow’s Premier Agent program allows agents to purchase listings in a zip code area and have their contact information placed next to the listing. The listing agent’s name also appears, but in a less prominent location.
“That’s the big bugaboo,” Pontius said. “Realtors feel like they’re buying back something they already had.”
Agents Going Away? Not Likely
But Zillow’s dominance in online real estate information business is being challenged by dozens of other growing sites, such as Realtor.com and Yahoo! Homes, and by a dispute with a syndicator that provided a large share of listings to Zillow and Trulia.
ListHub, the syndicator, terminated its agreement to provide listings to Zillow and Trulia as of April 7. ListHub is owned by Move Inc., which in turn is owned by Rupert Murdoch’s media giant NewsCorp.
Move Inc. operates Zillow competitor Realtor.com jointly with the National Association of Realtors and owns a half-dozen other online real estate information websites.
Zillow continues to get listings from many large real estate brokers, including Reology Holdings Corp, which owns Coldwell Banker, Century 21, Sotheby’s International Realty and others.
It also gets listings directly from real estate agents and dozens of multiple listing services.
Pontius said his association’s multiple listing service, Northern Great Lakes Realtors MLS, does not provide listings to Zillow because Zillow has for-sale-by-owner listings.
He said it’s too early too tell if the Zillow-ListHub dispute will hurt the local real estate business.
“The sun came up today and the earth didn’t stop rotating on its axis,” he said. “I think it’s going to take up to 90 days to know if we’re going to see any change.”
Local real estate professionals say they are trying to steer clients to Realtor.com, the local MLS and their own websites because they say the listing information is more accurate and up to date.
“The important thing is that our association data is regulated and held accountable by our members,” Oltersdorf said.
Some real estate industry analysts say they think the ultimate goal of Zillow and other real estate websites is to move the entire process of buying and selling real estate online, eliminating local brokers and agents.
Zillow founder Rich Barton also started Expedia, one of a number of companies that disrupted the travel agent business.
And Redfin, another online real estate company, has hired its own agents and cut commissions.
But Zillow CEO Spencer Rascoff has downplayed the idea that real estate transactions can be completed online, telling Bloomberg TV last year that real estate “will always be a professionally assisted transaction,” and that any fundamental change “will play out over many years.”
Local professionals say real estate will always be a local business requiring brokers and agents with intimate knowledge of properties and the market.
“I think the consumer needs us more than ever,” Century 21 Northland’s Platt said, citing increasingly complex regulation of the industry.
For example, new consumer protection rules under the Dodd-Frank Act that take effect August 1 require home buyers receive the mortgage closing disclosure form three days before closing (see article on page TK).
And there are additional rules that apply if changes are required in the disclosure form, he said.
“We also have to deal with inspections, title searches and multiple offers on property that require a human touch,” Platt said. “That’s something that technology can’t touch.”