The first thing to know and understand about Zillow is that it is a lead generation platform. The entire concept has always been about getting people to go to the website to see homes for sale or the 'value' of your current home. They built the company by then getting those people to hit one of their buttons that generates a lead and they sold those leads to realtors and lenders. For those in the industry that had an ounce of business sense it has always been clear that the ultimate goal for Zillow would be to use that capital for lead generation to build the company and then start lending and providing the realtor services itself. A number of years ago, I even had an interaction with a Zillow executive in a professional group where I stated this is what they were doing. He swore up and down that I was making it up and lying and didn't know what I was talking about.... a few years later they started Zillow Mortgage and they have been doing more and more on the realtor side as well over the years.
The second thing to know and understand about Zillow is that it sucks. For valuation and listings. It does not have direct access to MLS so it used third party companies to get listing data. That data is often wrong, late or there will be homes still listed as for sale but had been sold months prior. On valuations, I have never understood why their AVM's (automated value matrix) is so consistently bad but it is. If you see a value on Zillow, it is a good bet that the actual home is worth anything but what it says with an actual appraisal or even a CMA (comparative market analysis which is what a realtor can do). I have seen it countless times. Literally the only data that I have not really seen it consistently off on is the tax history which likely because it is easily accessed.
If you are buying or selling a home, don't even look at Zillow.... actually, if you are selling then you do, go in and claim your home and then update/correct all the information on your home because people will still go there and look at your home there. However, a decent realtor will be able to explain that the "Zestimate" is poo and to be ignored. After all, the realtor should have an idea of the value and in the end, that is what an appraisal contingency is for.
100% accurate. It is a lead generation platform that costs quite a lot for Realtors. I know some that pay $15K/month for Zillow leads, most of which are junk especially for the listing and rentals side. It's a way to get buyers if you are just starting your realtor career and can afford the high cost and the low hit rate of like 2-5%. Fact is quality sellers and buyers don't click on the "contact a Zillow agent". Everyone knows 5+ Realtors. They just call the ones they know or one that has had signs up in their neighborhood.
Essentially they put agents that pay for their service (Zillow Premier agents) next to the data provided by other Realtors (like if I have 3 listings, my name will appear next to those but at the very bottom in non bold font, and they make other agents (those that pay for Zillow Premier) appear to be the agent and get the leads from the data on our listings. We used to pay them $s for only our name to appear next to our listings, but they removed that option several years ago to force agents to pay for the far more expensive Zillow Premier.
They have tried to manipulate this into other businesses (lending, flipping, closing, Zillow brokered agents, etc) but almost all have failed. I'm actually surprised they couldn't get the secondary businesses to succeed. It should not have been that hard. They could have easily bought brokerages and ancillary businesses to roll under their umbrella. Part of it is they have terrible support for the agents that pay for Premier. And that poor customer service was worse in the ancillary business attempts.
For valuations ... wrong data, poor choices of comps, and Zillow obviously having no information on the inside condition of a home such as improvements and remodeling reduces the accuracy of the Zestimate. We can update the info on behalf of our clients once we get a listing to make it higher. But once a house is listed the valuation goes away and it just posts the list price (though you can look at the price chart and still see what it was prior to listing). So zestimate/redfin/realtor.com/etc type estimate is a good starting point in a uniform community, but it's not very accurate if the homes in the vicinity aren't essentially cookie cutter houses.
Can't argue their business model. They've essentially taken data from other sources and turned it into an online advertising/lead generation platform. But their inability to do anything with attempted ancillary businesses like Zillow Offers or their expensive purchases of Postlets and Trulia is odd and mostly due to poor executive management (as was the layoffs of 25% of their workforce).
