Zillow doesn’t use its own Zestimate. Need proof? Zillow Offers (iBuyers) stopped buying houses suddenly this week, but their unproven and somewhat unchallenged Zestimate is still available for the general public to use.
Did you know that Zillow’s Zestimate relies on an agent’s listing and closing information to be posted on the Internet in order for them to use their Zestimate? Yes, they use public tax records and other sources (old data and possibly incorrect data) to power their Zestimate AVM. In some markets, Zillow may have access to MLS data, but their AVM is still flawed.
When a new listing hits the Internet, Zillow scrapes the Internet to find these new listings and updates their Zestimate to reflect a new Zestimate. After the property closes and the closing price is public knowledge, Zestimate deletes its previous history leaving no trace or history of its original Zestimate. Is that transparency? No.
Zillow recently announced that they plan to be licensed as a broker in all 50 states by the end of 2020. Up until last year, Zillow was a marketing company selling leads to hundreds of thousands of agents.
Enter Zillow Offers:
May 22, 2017: Zillow begins testing instant home sales, the predecessor to Zillow Offers, in Las Vegas and Orlando. Consumer demand is strong for an easier and more certain way to sell a home.
April 12, 2018: Zillow launches Zillow Offers and begins buying and selling homes directly in the Phoenix and Las Vegas markets.
Mar 13, 2020: The day everything changes in the US, the following Monday everyone finds out, and the markets’ crash begins. This is the day the models started to die (Is this somehow related to the Knights Templar?).
Mar 23, 2020: Zillow will temporarily stop buying homes through its Zillow Offers in the 24 US markets it was operational in.
Zillow has access to a lot of data. Legally or illegally, nobody has yet been able to prove either (Inman 2015 Zillow Whistleblower https://bit.ly/2WKpC90).
Our APC Residential Pricing & Analytics Tool™ (APC-R)™ has access to MLS data – legally. We are an internal solution for the MLS, broker, and agent to combat this two-timing (double-dipping) company, Zillow. We use APC-R™ whenever we do anything related to residential home pricing and we openly and proudly stand behind our pricing product.
What happens when there is a sudden shift in the market like the 2008-2009 financial crisis and today’s pandemic? There tends to be a shift or reset in the real estate market, which could have a profound effect on pricing. It’s akin to market corrections in the financial markets. Do you know how AVMs work? They are powered by predictive historical data. When there is a big economic swing, these AVM models are exposed. At this moment, these models are useless.
Opendoor, Offerpad, Zillow Offers, RedfinNow, and Realogy’s RealSure have all stopped using their AVMs in the past week. Did they all decide to shut down their iBuying efforts because there were no agents available or because they put agents at risk? No!
In today’s proptech, if you are building a company or developing a product that is human capital-centric (meaning more employees to scale) and your company or product doesn’t empower the client/customer (agents, brokers, MLS associations), it is going to be difficult to survive.
If you are a brokerage that thinks that providing your agents an AVM as an input to your products is a good idea, I understand. You are likely doing what your clients ask; you need to provide a price from somewhere and your agents and clients expect professionals to be able to price homes fast and accurately.
APC Data Analytics™ has a similar challenge. We have been asked to add off-market properties to our APC Residential Pricing Algorithm™, which is +/- 2.2% accurate – no matter the dataset (MLS). Demonstration after demonstration, our software continues to surprise non-believers (I love the look of shock on their faces during a Zoom demonstration).
Anytime an agent adds an off-market property to our pricing model, a disclaimer will be provided stating that the data has been manually manipulated – manual manipulation affects the true accuracy of our software. Agents have been known to add off-market properties to over-inflate a clients’ market value to “win a listing” which, as a salesman and businessman, I can see the need for, however, using it to validate an emotional driven pricing strategy would be flawed.
There is a big disconnect between proptech innovators and users of their products: agents, brokers, and MLS associations. It’s okay if you don’t know what you don’t know. What if you went to the “front lines” and actually listened to your end-users needs? Build an innovative product to help them succeed instead of telling them, “You need this product or else!”
At APC Data Analytics™ that is exactly what we did. We built an innovative product using 30+ top producing agents input and feedback. As we grew to more agents and added more MLSs in more states, we listened to them. We are still listening and innovating. It’s constant here. It’s in our DNA, not a response. We are ready for global scaling. We are the only solution TO PRICE in REAL-TIME using your MLS data.
Agents, Brokers, National Franchise Brokers, and MLS Associations: If I had a dollar for every time I heard, “NAR sold out with REALTOR.com and Zillow,” I’d be a wealthy man.
Take your industry back from NAR, the unsupportive vendors, and “disruptors” trying to replace you. Stand up and take a stance. Stop using and supporting these companies and their useless AVMs. Stop Garbage In, Garbage Out.
Average price per square foot and average days on market are irrelevant. It’s a perfect time to introduce a solution to fix what has been broken industry-wide for too long, pricing a home correctly: DOMx™
Welcome to a new day! You are in control. Just be in control.