{"id":103809,"date":"2016-05-12T09:00:45","date_gmt":"2016-05-12T16:00:45","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=103809"},"modified":"2016-05-12T09:13:16","modified_gmt":"2016-05-12T16:13:16","slug":"point-counterpoint-zillow-valuable-tool","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2016\/05\/12\/point-counterpoint-zillow-valuable-tool\/","title":{"rendered":"Point-Counterpoint: Is Zillow a Valuable Tool?"},"content":{"rendered":"

Anyone who has read this site for any length of time knows that I am not<\/a> exactly<\/a> Zillow’s<\/a> biggest<\/a> fan<\/a> (to put it lightly). However<\/strong>, I like to keep an open mind, and I don’t want Seattle Bubble to become an echo chamber.<\/p>\n

Therefore, I’m happy to present a point-counterpoint on the topic of Zillow’s value in the real estate marketplace. Rather than participating myself, I’ve invited two long-time Seattle Bubble regulars and local real estate professionals to debate the subject for us all.<\/p>\n

Presenting the “anti-Zillow” position: Kary Krismer. Kary is an attorney and Managing Broker at John L. Scott\/KMS Renton<\/a>. Kary is also an occasional guest author here on Seattle Bubble<\/a>.<\/p>\n

Presenting the “pro-Zillow” position: Craig Blackmon. Craig is an attorney in Seattle, where he has practiced real estate law for over a decade. He owns and operate his law firm, the FSBO Law Center<\/a>, where he helps people buy and sell homes without an agent (as well as handle other legal issues relating to owning a home). He is also the founder, designated broker, and managing broker of Quill Realty<\/a>, a new model real estate firm.<\/p>\n

Full disclosure: Craig is a Seattle Bubble advertiser, but no money or other consideration was exchanged for participation in this post.<\/em><\/p>\n

\n

Point: Zillow is Inaccurate and Adds No Value<\/h2>\n

by Kary Krismer<\/em><\/p>\n

\"KaryPeople who dislike Zillow probably do so for many different reasons, but my primary complaint regarding Zillow is inaccurate listing information. <\/p>\n

While not true for every MLS, Zillow does not receive direct feeds from the NWMLS. This has several drawbacks for buyers using Zillow. Some listings will never appear on Zillow, some will only appear after another buyer is in contract, and some will remain on Zillow weeks or even months after a listing is pending.<\/p>\n

There is a simple solution to all of these problems. Seattle is a tech city where the regional broker sites are significantly better than those of most national firms. Broker sites like Redfin.com, JohnLScott.com, Windermere.com and Estately.com will give buyers both better data and better search options. Those sites will be updated multiple times per day and contain every NWMLS listing. As to which site is best, that would largely be personal preference, but it would also likely depend on a buyer\u2019s needs.<\/p>\n

This is not to say there are not some things Zillow does well in its search functions. Zillow is certainly better than some of the national brokerage websites, which is probably the reason Zillow even exists! But in the NWMLS area Zillow is not better than the local options, and thus would not be a likely first choice of informed buyers even if their data was accurate.<\/p>\n

I have other complaints regarding Zillow. The most significant is that the reason Zillow exists is not to help buyers find homes and owners sell homes, but instead to provide a medium for agents to advertise. While that is also true to some extent for the broker sites, the broker sites are also trying to sell their clients\u2019 listings. A buyer picking an agent based on advertising on either type of site is hardly desirable, but that is Zillow\u2019s primary purpose.<\/p>\n

Does this mean buyers should ignore Zillow? No. Zillow has other uses, including allowing FSBO listings (Trulia and Realtor.com do not) and has some limited information on foreclosures (although better sources probably exist). Also, \u201cZestimates\u201d is a source of automated valuations, although those are of limited use. And clearly sellers should not avoid Zillow\u2014they should pick an agent whose listings appear on Zillow, as well as all the other major sites. That Zillow is desirable for sellers does not make Zillow good. It just means some buyers are looking in the wrong place!<\/p>\n

\n

Zillow Provides an MLS Alternative – A Very Good Thing<\/h2>\n

by Craig Blackmon<\/em><\/p>\n

\"CraigThe data provided by Zillow is of lower quality than the data available via the NWMLS. Kary is correct on that point. Zillow is a good thing for a very different reason.<\/p>\n

There is widespread recognition that real estate needs innovation<\/a>. Because of Zillow, new and more efficient business models in real estate are possible.<\/p>\n

Here in the Northwest, literally every licensed broker is also a member of the NWMLS (but one, my firm, Quill Realty). As with any MLS, to list on it a seller must hire two brokers: one to list the property, and one to \u201csell\u201d it. This \u201cselling commission,\u201d paid to the buyer\u2019s agent, is inefficient and bad for buyers<\/a>.<\/p>\n

Until the Internet, buyers had to hire brokers just to know what was for sale. Today, most buyers search the listings themselves.<\/p>\n

As result, there has been price pressure on the listing commission, and today there are lower-cost alternatives. Sellers can list the house themselves on the MLS (essentially paying one broker instead of two) for a few hundred bucks, or get full service from Redfin for 1.5%. Yet the typical selling commission remains stuck at 3%.<\/p>\n

It will remain there as long as brokers maintain their monopoly on market data. Unlike other industries disrupted by the Internet, real estate brokers create and maintain the electronic marketplace. This allows brokers to set the rules. The biggest – and unofficial! – rule: Sellers gotta offer the full 3% selling commission.<\/p>\n

Theoretically, the \u201cbuyer rebate\u201d model popularized by Redfin should have led to a reduction. The initial value proposition – rebates well into the thousands of dollars – should have been enough to disrupt real estate. Large numbers of buyers should have turned to Redfin, leading large numbers of sellers to reduce the selling commission accordingly.<\/p>\n

But it didn\u2019t happen. Perhaps the rebate model is too complex. Or perhaps market and price pressure must be applied directly by the consumers that actually pay the inefficient fee. Regardless, the \u201cRedfin Lesson\u201d is clear: Buyer rebates will not lead to widespread innovation or a reduction in the selling commission.<\/p>\n

So innovation must be driven on the listing side. Thought-leaders have for a long time believed the MLS would be \u201creplaced\u201d by technology<\/a>.<\/p>\n

Zillow allows both owners and non-MLS member brokers the ability to effectively market a home online. This gives consumers the opportunity to sell without offering a selling commission.<\/p>\n

The seller may be asked to pay one by the buyer in the offer. It is then a negotiated term. Because it is negotiated, the commission will be reduced and the seller ends up paying less than 3%. Plus, the cost is effectively passed through to where it belongs, the buyer, via the negotiations over price.<\/p>\n

Yes, the MLS works well, better than Zillow. At a cost. Specifically, the 3% selling commission. Zillow gives all consumers an alternative. That means Zillow is a good thing.<\/p>\n

\n

Response: A False Sense of Empowerment for Buyers<\/h2>\n

by Kary Krismer<\/em><\/p>\n

Craig is correct that the Internet has allowed buyers to more easily search for listings, but he is mistaken thinking a different form of advertising will somehow drive innovation that impacts commissions. The Internet has merely replaced the Sunday newspaper for real estate advertising. The information available on the Internet may make consumers feel more empowered, but for most buyers that is a false sense of empowerment. Making buyers feel good is the goal of Internet sites, because they want viewers to come back to their sites.<\/p>\n

Although Internet listings are undoubtedly better than newspaper listings, the better information does not allow anyone to adequately judge a house. That requires an on-site visit. Even when a buyer sees a property in person, most buyers generally still need significant help beyond just \u201copening a door.\u201d It takes experience to understand the pros and cons of each property, and most non-flipper buyers lack that experience. Buyers need that experience and it does not come for free. Having buyers deal directly with sellers without expert guidance would only lead to problems.<\/p>\n

As to Zillow changing commission structure, the first mistake is thinking finding listings is a significant or difficult part of an agent\u2019s job. That is easy, and many buyers are not good at it, making their agent\u2019s job more difficult. But Zillow\u2019s underlying purpose is selling advertising to agents, so Zillow is not attempting to change the industry; they are part of the industry. Zillow is merely trying to capture clients for agents.<\/p>\n

\n

Response: Zillow Allows Fundamental Change in Real Estate<\/h2>\n

by Craig Blackmon<\/em><\/p>\n

According to Kary, the Internet is just \u201ca different form of advertising.\u201d He could not be more mistaken.<\/p>\n

The Internet has fundamentally changed the way the world works. As to information-based industries in particular, there are two types: those that have changed fundamentally as result of the Internet, and those that will eventually. Real estate falls into the latter category (travel agents and stock brokers fall into the former). Real estate has yet to see fundamental change driven by the Internet.<\/p>\n

Today, Zillow allows for that fundamental change to occur. Will change result? I hope so, but it may not. Maybe it just isn\u2019t time for change, or Zillow for some unknown reason isn\u2019t the right catalyst. Perhaps someone else will find the right combination of data and service that will lead to change. In the meantime, though, Zillow provides an opportunity for widespread and long-needed improvement.<\/p>\n

Do buyers need to tour a home before they buy it? Duh. Of course. Do buyers benefit from having an agent represent them? Again. Duh. Of course. Do agents need to be compensated for this service? Yep, there is a pattern here….<\/p>\n

The question is, who should pay the buyer\u2019s agent? The seller-paid commission creates a classic conflict of interest. It is a significant flaw in the traditional model that undermines the modern expectation of representation.<\/p>\n

Regardless of Zillow\u2019s income stream, it provides an opportunity for sellers to pay the listing agent, and buyers to pay the buyer\u2019s agent. The terms \u201cselling agent\u201d and \u201cselling commission\u201d can be relegated to where they belong, the dustbin of history. Zillow is a very good thing.<\/p>\n","protected":false},"excerpt":{"rendered":"

Anyone who has read this site for any length of time knows that I am not exactly Zillow’s biggest fan (to put it lightly). However<\/strong>, I like to keep an open mind, and I don’t want Seattle Bubble to become an echo chamber.<\/p>\n

Therefore, I’m happy to present a point-counterpoint on the topic of Zillow’s value in the real estate marketplace. Rather than participating myself, I’ve invited two long-time Seattle Bubble regulars and local real estate professionals to debate the subject for us all.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"On the blog: Point-Counterpoint: Is Zillow a Valuable Tool?","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[199],"tags":[1147,1108,1118,1148,80],"coauthors":[1158,1154,1157],"class_list":["post-103809","post","type-post","status-publish","format-standard","hentry","category-opinion","tag-craig-blackmon","tag-kary-krismer","tag-opinion","tag-point-counterpoint","tag-zillow"],"yoast_head":"\nPoint-Counterpoint: Is Zillow a Valuable Tool? \u2022 Seattle Bubble<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/seattlebubble.com\/blog\/2016\/05\/12\/point-counterpoint-zillow-valuable-tool\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Point-Counterpoint: Is Zillow a Valuable Tool? \u2022 Seattle Bubble\" \/>\n<meta name=\"twitter:description\" content=\"Anyone who has read this site for any length of time knows that I am not exactly Zillow's biggest fan (to put it lightly). 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