Have You Been Zillowed?

Technology has done a lot of great things for the real estate industry. Not only for the real estate agents, but for home buyers and sellers. It is now easier than ever to research great neighborhoods, find walkable communities, compare schools and find a great agent, all from your laptop computer.

But with that technology also comes another set of problems. Take the site Zillow.com for instance, or any of its competitors, like Trulia or Realtor.com for example.

If you haven’t already heard of them, websites like these take a bunch of publicly available data, like tax assessments, square footage and recent sales information, plug them into a computer program, and spit out a “Zestimate.”

The only problem is, computers can’t think, and sometimes those estimates can be wildly off base.

If there is something wrong with your listing (for instance, if it doesn’t take into account a recent renovation or new tax assessment), you have no recourse. Zillow, and all the websites like it, do not allow you to “dispute” what it deems to be the market price.

That’s not so much a problem when Zillow guesses high. But when it guesses low, potential buyers researching your property may assume that you’ve priced your home too high, and will look elsewhere.

And this is a bigger problem than it sounds.

The MLS website, a realtor-run compendium of buildings on the market, is extremely good at pricing houses, relying as it does on the expertise of realtors and not on a computer algorithm. On MLS, homes sell within $10,000 of their list price 99% of the time, according to the National Association of Realtors. In contrast Zillow.com told BusinessWeek that its “estimates are typically on target, falling within 10 percent of the actual home-sale prices 62 percent of the time.”

Even worse is the business model that Zillow and similar sites run on. For decades, real estate involved two parties, the buyer, and the seller, each of whom had agents to represent their interests. Now, you have a third party involved, one that often promotes inaccurate information, including reviews. That’s right. Zillow and other sites have begun selling “Featured Agent” spots on their websites. These agents might not be the best; this only indicates that they have deep pockets. So if you search on Trulia for “Fairfax realtors,” unlike on Google, you will not get the realtors with the most traffic or who are most active in producing accurate content, or who have a long history of working in the area. You’re getting Realtors who paid to have their profile come up first.

While Zillow and similar sites might have been started with the best of intentions, currently they are nothing but a hodgepodge of inaccurate information with no oversight or dispute process. Talk to your realtor today to find out how best to avoid being Zillowed.