The DARK SIDE of Zillow

Last week I received a five-word text from my sister, Linda, in Ohio, “I hate Zillow. Call me.”  I did. She was livid. 

Bank Declines Loan Because of Inaccurate Zestimate

Linda said her bank wouldn’t renew a line of credit secured by her home because its value on Zillow had declined. I hear variations of this story constantly. Realtors and appraisers know Zillow’s “Zestimates” are routinely inaccurate. But the public doesn't. This misinformation hurts homeowners every day. It caused my sister a problem with her bank. 

Zillow CEO Misled by Zestimate

Even Zillow’s CEO, Spencer Rascoff, sold his own Seattle home a whopping 40% below his company’s Zestimate. ($1.05M sale price vs. its $1.75M Zestimate.) This was widely publicized. An embarrassing moment to say the least. 

Zestimates Unfairly Discredit Realtors

When Realtors suggest a value lower than a Zestimate, homeowners may not believe it because of Zillow's huge brand (thanks to Realtors' listings and advertising). This makes Realtors look bad and often forces them to take overpriced listings because clients insist on trying the Zestimate price.

The Last Straw

While Zestimates have been a constant irritant, now Zillow has done something so egregiously wrong that every Realtor in the nation should fight back until Zillow backs off. 

The Broken Promise

Many years ago when Realtors agreed to upload their listings to Zillow (before Zillow was a big name) Zillow executives clearly proclaimed that their foundational purpose was to help Realtors sell homes, not compete with them by trying to divert business away. This is stated on Zillow's own website. In my latest Huffington Post article I explain in detail how Zillow broke that promise with its new Instant Offers program: Realtors Fight Back Against Zillow

Extracting Homeowner Equity Into Pockets of Greedy Investors

In a nutshell, Instant Offers is a program being tested by Zillow in Orlando and Las Vegas. Zillow lined up 15 institutional investors (like OfferPad) whose business model is to buy homes low and sell them high. Through Instant Offers Zillow induces homeowners to bypass real estate agents and sell direct to profit-driven investors handpicked by Zillow. To add insult to injury, sellers pay an 8-9% service fee extracted from the sale price, significantly more than the typical real estate commission.

I believe Zillow’s new program is an equity grab from unrepresented homeowners and a stab in the back to the real estate industry that made Zillow possible with its listings and its advertising.

I read that over 75% of Zillow's revenue comes from agent advertising. Now it launches a program in competition with the people who trusted and empowered it! Wrong, wrong wrong!! Zillow promised it would not bite the hand that feeds it, yet it has done just that with Instant Offers.

IS ZILLOW CONDUCTING BROKERAGE WITHOUT A LICENSE?

Let's see. Zillow rounds up 15 profit motivated buyers. Zillow tries to find and persuade homeowners who sell to them. Isn't that what real estate agents do? They find buyers for sellers and sellers for buyers. This fits the precise definition of real estate brokerage except most states don't require a real estate license if the service is performed for free.

So Zillow argues it's not conducting real estate brokerage because it's not charging a commission on the transaction. Give me a break! Zillow monetizes the Instant Offers program by generating increased website traffic and more lead generation, allowing it to charge higher fees to its agents who pay for leads.

ZILLOW'S HIDDEN AGENDA

Make no mistake, Zillow wants to be the Amazon of real estate.

INSTANT OFFERS is a disguised lead generation program that funnels home sellers who don’t accept investors’ low-ball offers into the hands of Zillow’s pay to play agents.

Zillow is already the first stop for most homebuyers. If Zillow becomes the first stop for home sellers, it will own real estate…. determining where the listings go. If Zillow captures the home sellers like it has captured the homebuyers, real estate agents are toast.

This will not only be bad for agents, it will be bad for home sellers and home buyers. Consumers will end up working with agents who pay for their business, not agents who are most qualified.

Because Zillow will be perceived as a trusted brand, home sellers will presume that Zillow ordained agents are better agents. Zillow will do everything it can to persuade sellers to deal with Zillow recommended agents by extolling that these agents get the lion's share of buyer leads from Zillow's website. Do you see the game plan?

THE AMAZON OF REAL ESTATE

ZILLOW wants to become the Amazon of real estate with real estate agents as its product. Zillow's goal is to become the #1 website where everyone buying or selling a home goes first. This will position Zillow to influence who home sellers list with and buyers buy through, doing everything it can to persuade them to do business with agents who pay Zillow for leads.

This will not only be bad for real estate agents, it will be harmful to consumers. They will trust that Zillow is referring them to the best agent when Zillow is really sending them to the agent who pays the highest price for the lead. Bad, bad, bad!

Zillow might eventually start a Zillow Realty. Or it might charge more and more for leads. Either way, entrepreneurism in real estate will be dead if Zillow controls who buyers and sellers do business with.

Listings have always been the power in real estate. If the real estate industry allows Zillow to control the listings, Zillow will control the real estate industry.

STOP ZILLOW PETITION

If you agree, sign the STOP ZILLOW petition at www.stopzillow.com. It accumulated over 25,000 signatures its first 20 days. Stop Zillow started as an objection to Instant Offers. It has become a call to action to establish a Realtor-owned, Realtor-managed, national MLS with a brand that displaces Zillow.

Do you believe in miracles? Venture capitalists are intensely interested because they see the meteoric growth in petition signatures. And they know we still control the listings, which makes Zillow vulnerable to us.

Sign the petition. You'll receive weekly Stop Zillow progress reports.

This Is A Fight For The Future Of Real Estate

Whether you're in real estate, own a home, or simply care about making big companies act responsibly, sign the Stop Zillow petition and SHARE, SHARE, SHARE, encouraging your Facebook friends to do the same.

Don't let entrepreneurism become a footnote in the history of real estate.

Sign the petition!

Greg Hague, The Real Estate Maverick

Learn more in the Huffington Post: Realtors Fight Back Against Zillow