ARDELL on 04 19, 2007
[photopress:zillow_banned_arizona.jpg,thumb,alignright]Josh Dorkin of Bigger Pockets emailed me the other day and asked me to comment on his article regarding Zillow’s troubles in Arizona.
I delayed my response for a couple of reasons. Mostly because I do not share Josh’s view that disclaimers, of any kind, will resolve the problem. And yes, I do believe it is a problem, and do side with Arizona on this one.
As with any action, you have to look for the underlying reasons for the action, and not simply the specific legal issue used to support the action. I do not like to write about the negative sides of Redfin and or Zillow. I do, and have, told them both in person how I feel about their negative sides, but hate to highlight the weak points. I’d rather write about their stronger points. But this is “newsworthy” and so I agreed to Josh’s request.
To me it’s real simple, and I have personally told the people at Zillow how I feel about it. The Zestimate should pop up a RANGE of value. PERIOD! It is THAT simple. None of this “house is worth $723,000″ and then scroll down, look this way, no look over here, down there and around the bend and THEN you see a “range of value”.
There should never be a SINGLE value attached to a property in the form of a Zestimate any more than an appraiser can guarantee a “TO THE DIME” value, or an Agent can say stoopid things like, “I will make sure you don’t pay a dime more than the house is worth!”. AS IF a property can be valued “to the dime”.
As for “of course people know that’s not the REAL and EXACT value”…NO, people do not KNOW that, and they never know exactly what a house is worth, and they are always looking for some basis for value. So I have to agree with the State of Arizona on this one. Zillow Zestimates should be a range of value and not a specific number.
I think it’s Ok to say this house is worth somewhere between $700,000 and $800,000…maybe. It’s not OK to say it is worth $723,000 and then add a bunch of disclaimers up and down and around the number. So Josh, no. I don’t think the answer is more disclaimers, to help counteract the damage done to the homeowner in the first place.
I’m going to do a “How’s Zillow Doing” post after we get a bit more into this season and real sold comps from high season. My guess is most sales will have fallen within the range. My hope is that not too many have fallen AT the Zestimate and BECAUSE OF the Zestimate.
In the meantime, if every State bans Zillow because homeowners are being damaged by people’s perception that the Zestimate is meaningful. If Zillow is banned because buyers are actually making offers at the Zestimate price (and they are). I say let the States protect their citizens as they deem appropriate. It’s one thing to not want the Realtor Organization to cast aspersions at new business models. It’s quite another to not expect State Laws to protect their citizens, from broad monetary damage, on their constituents’ most valuable asset.