Imagine… I developed a concept, got a few coders together and soon a new software is born. From Beta, I take the product around the country to VCs showing off the new software, but explain to the VCs that they aren’t investing in the software, it’s more of an idea- software as the bait. We use the software as bait to potential real estate consumers, offer a guide online that agents can add to and develop for us, and make friends with Realtors all across the country by offering very inexpensive advertising. We let the Realtors, agents and hell, we’ll even let the customers build the software’s database for us by adding their home or listing for free!
It’s pure Genius. Why? Because Mr. VC, once the software’s back.end is complete or close enough, we now have built the country’s first all inclusive national listing service. We’ll make BILLIONS! We’ll even advertise our software’s statistics as fact so that we could possibly control the perception of markets! It really is UBERGENIUS! Except for one tiny flaw– When and if that ever happened, the entire real estate world would rise up against me. They would cry foul and dismiss any credibility my company had. The country as a whole would never trust a single thing I said, and you, Mr. VC could lose millions- but… I still think you should invest in me because we’ll simply change the name, the branding and, bam!- we now have the largest private consumer driven listing service… add in the option to buy and sell homes online without an agent and those pesky Realtors will never know what hit’em. Imagine…
Old hack don’t make it unimaginable:
Sellsius said…
“Is the result that Zillow is moving toward a National MLS? – With owners cajoled into entering the listing data and doing the work for zillow? Brilliant plan?“
Real Estate 2.x said…
An online client built by a tech, and developed by agents and consumers… Seems harmless, right?
***Thanks David (w/Zillow) for Engaging the conversation…
David G from Zillow.com
May 23, 2007 at 6:00 pm
Hi, it’s David from Zillow.
Advertising is our model.
To get where this is all headed, think through the analogy of how your blog relates to google. Yes, by blogging and adding content to the web you give google more search results to show their users and they do get stronger … but that’s obviously not a good reason to stop blogging. Quite the opposite … google adds value to your blog by sending people to it. Likewise, participating in Zillow is a win-win game that will deliver clients to your real estate business. It’s that simple.
B. R.
May 23, 2007 at 6:10 pm
But is your model in the end a national consumer driven listing service? We could put all this hocus pocus mumbo jumbo to bed if you can say no.
jf.sellsius
May 23, 2007 at 7:39 pm
Consider also Zillow’s initial mantra– to become the “Kelley Blue Book” for homes. This mantra reveals their notion that homes can be commoditized and valued like cars. Forget that cars are depreciating assets and homes are generally appreciating assets. If the perception becomes the reality, brokers become dispensible—just tuck your “public endorsed” Zillow Blue Book under your arm and go home shopping.
Zillow has since backed off this mantra, realizing, I think, that real estate agents won’t advertise on a site that has this philosophy. But the fact that they use zestimates to create housing trends reports and graph zestimates tells me they still believe the mantra.
David G from Zillow.com
May 24, 2007 at 11:54 am
BR –
The answer is no, other than “national”, that is not an accurate description of Zillow at all.
Zillow is a media company, so the best analogy to a legacy player would be to compare Zillow to the real estate section of a national newspaper … or to a real estate focused TV channel. That’s actually an analogy we use internally and so my boss, Spencer, will often refer to Zestimate values as our first “hit show”.
Let me try to better explain what we’re doing …
First, and since you asked about it, Zillow is obviously national. We do have international ambitions and I look forward to the day that we have the development resources available to work on that expansion. For now though, there’s still lots to be done in the US.
Zillow gives listing agents and sellers the ability to post a home for sale on the site — it is free. This feature is analogous to newspaper classifieds where many agents and sellers advertise their listings today – except on Zillow, it’s free. In that sense, craigslist might be a better comp.
Zillow is a consumer-centric real estate website. We are convinced that by putting the real estate consumer first, we will best serve our industry clients who advertise on Zillow. This was a bold bet but it seems it was the right decision at the right time.
Zillow is “driven” however by the members who participate in the site. According to our user surveys, that group includes about 600K real estate professionals who visit the site monthly (out of more than 4M users). On Zillow, you will notice that those professionals are in the driving seat of most of the deals being discussed. Zillow reflects what is happening in the real estate industry — most houses are sold by Realtors and most buyers have representation. The conversations on Zillow reflect this reality.
Further, while free postings are a major feature, you’re missing a big part of the Zillow picture if you are only thinking about listings. Zillow is a living database of all homes. All homes, not just those for sale. Some have Make Me Move prices, others are actually for sale. Most homes have Zestimate values and some owners have even published their own estimates. Many owners have uploaded gorgeous pictures of their house – even though many of those homes are not for sale.
I hope that gives you a better idea of what we’re about. If not, try the site out to get a better feel for it … if you do, I’d love to hear your feedback. If you ever need my feedback in future, feel free to email me (at the email address I provided with my comment).
B. R.
May 24, 2007 at 12:57 pm
David, I certainly appreciate your reply to the question. I hear your call to look at the bigger picture, but I think a lot of people are. The bigger picture as it relates to positioning ourselves in this new and inventive age. Realtors as you know are not always large Brokerage houses, they are every day average hard working folks trying to compete with 8 Million dollar budgets (Trulia).
The bigger picture question has been, today it is friendly commerce, but is tomorrow something totally different? We have to be able to trust innovators that they are not innovating to exclude, but to include. When bloggers do research your site, which many of us have, we see things such as disclaimers hidden under links. The so-called breach of privacy allows strangers to Zestimate your home or allows agents to add a listing unknowingly to expose a lower Zestimate than the agent should sell the home for. A tool to the buyer yes, but harmful to the seller as I am sure Rich found out when he exposed a lower value on his own home. So here are the bottom line questions we’ve all had:
1. Why not make it absolutely clear when creating a zestimate that it cannot be removed?
2. Why not allow an owner to have his Zestimate removed if he so disagrees with it?
3. Why not make the novelty of a Zestimate known (in no uncertain terms) upfront?
Transparency is key as you techies always say- so help me clear the air once in for all on these three questions with three concise answers…
BR
jf.sellsius
May 24, 2007 at 4:00 pm
Number 2 recognizes that home owners should be free to market THEIR ASSET as they see fit. If, as Zillow admits, the zestimate is only a “first step” why would they leave a first step sitting right next to the last step—the pricing of the home for sale. We have lobbied for this opt-out right (we even ran a poll on it—unscientific of course) & I think if owners were heard they would want this right.
David G from Zillow.com
May 24, 2007 at 4:28 pm
BR –
It’s a pleasure. I strongly recommend you use the google/blogging analogy above as a framework to better understand your opportunities online and to reevaluate who your competition is. You are probably passing on some business opportunities based on your current understanding of the real estate web sites.
To answer your follow-up questions:
1) Users don’t create Zestimates, our software does. The only estimate a user can “create” on Zillow is an “owners’ estimate”. Owners’ estimates can be removed or made private whenever the owner chooses.
2) Owners can not remove Zestimates because the Zestimate is not published for the owner’s exclusive benefit. Remember that we decided to be the consumer-centric player in real estate. That strategy, for better or worse, implies treating all visitors to our site equally. So naturally all visitors have equal access to all Zestimate values. Transparency is something we don’t just give lip-service to.
3) Because that’s not true. As you know, the system that produces Zestimate values is an AVM. AVM’s are very clearly not “novelties”. The reality is that AVM’s play many important roles in the real estate industry and that they are now also useful to consumers while researching their next transaction. Zestimate values do not however compete with or replace the need for a Realtor’s CMA or an appraisal and that fact IS very clearly communicated on our website.
A Zestimate value can not hurt a seller’s deal. A seller or listing agent may hear a low Zestimate value quoted in negotiations but that’s all those conversations are; they’re negotiations. As you know, negotiations are nothing new to this industry. If it’s not a Zestimate value, buyers will use an odd comp or tax assessors value to argue for a low-ball offer. A competent Realtor will never loose a negotiation to a buyer who is quoting a Zestimate.
Please spend some time on our website and form your opinions of Zillow based on first-hand experience of what we do. I think you’ll be pleasantly surprised.
jf.sellsius
May 24, 2007 at 11:13 pm
Re 2)
That’s the problem. The zestimate is not published to benefit the seller (it’s for the buyers’ benefit). Finally some truth about Zillow’s unconcern for homeowners/sellers. (That’s progress)
Zillow is not consumer centric. it is buyer centric—remember how Z came to be–B&F were BUYERS. If zillow considered sellers, it would give them the opt out right to remove CLEARLY WAY OFF zestimates (look up Steve Olshan in the Zillow blog archives). And it’s the owner/seller whose home is used as bait to attract visitors and ad dollars to Zillow. If you’re using my home to attract your ad $, you should give me, the owner some rights, don’t cha think?
David G from Zillow.com
May 25, 2007 at 9:26 am
JF. Come on. I said it’s not for the sellers _”exclusive”_ benefit. There’s a significant difference. If you’re going to quote me, get it right.
It’s interesting you think Zillow is buyer-centric when many industry commentators say the opposite. The truth, as is well illustrated by that disagreement, is that Zillow strikes a great balance as a neutral destination where buyers, sellers and their agents are on an equal footing.
jf.sellsius
May 25, 2007 at 10:54 am
David,
Forget industry commentators. Ask owners and sellers and listing agents if they would want the right to exclude a “grossly inaccurate zestimate”? Afraid they might say YES?
Run a poll if you really want to know how owners, sellers and listing agents feel about this & whether they think zillow’s refusal to allow it is to their benefit? We did.
https://tinyurl.com/22a73a
You say you’re for transparency. Zillow should put its money where its zestimate is?
I’ll wager the results will show it is not to a home seller’s benefit to have an inaccurate zestimate anywhere near their home. Do you really think this is a benefit?
jf.sellsius
May 25, 2007 at 11:16 am
PS to David
I was not quoting you (see, no quote marks). I was making the point that sellers do not get ANY benefit from a grossly inaccurate zestimate. Period. When you say zillow will not allow owners to remove any zestimate– that is NOT a benefit to the seller, in any way shape or form, if the zestimate they want to remove is totally bogus.
If I was quoting you I would have said you said,
“A zestimate value can not hurt a seller’s deal” and ask, “does an inaccurate zestimate help the seller?” or “has zillow never received a complaint that the inaccurate zestimate DID hurt a seller?
Sock Puppet
May 26, 2007 at 12:05 am
Isn’t it just too hot in Texas to own a balaclava for anything other than bank robberies?
-Athol
B. R.
May 26, 2007 at 6:27 am
HA yeah, you would pretty much pass out right after “stick-em-up” from heat stroke.
louis cammarosano
May 26, 2007 at 7:51 am
As I see it Zillow is consumer centric so that it can create a consumer to consumer real estate portal and eventually collect a transaction fee for matching consumers to consumers who sell houses to each other.
The make me move feature is nothing more than FSBO under another name-FSBILLO or FSBOLLOW if you like.
Does Zillow spend millions developing features for consumers all just to sell banner ads to its limited 3-4 million visitor a month person audience?
Since there is no money in advertising to consumers Zillow takes realtor ad money – they have to show their VC’s some revenue.
Since they need listings for consumer interest they take realtor listings.
The Kelly’s blue book shine is off Zillow as Yahoo’s recent selection of a relatively unknown company whose core business is not even real estate (Reply) and a start up (eppraisal)to provide side by side instant homevaluations with Zillow highlights that what Zillow is doing is nothing special.
That Reply, yes, the automotive lead generation company, can also run public data through an algorithm and spit out a valution highlights that what Zillow is doing is nothing special and not worthy of the hype they have created simply by taking last millenium’s technology and wrapping it in a big “Z”. “Zestimates” E-“Z” ads etc.
Now the next big hype from Zillow is the (non) creation of a national listing Zite -all for the benefit of the consumer just so they can sell banner ads? How many decades would it take selling banner ads to recoup just the first $53 million they raised from investors?
I don’t believe that Zillow would raise $53 million just to do that. I believe they want to change the real estate industry, take a cut of the action (just like they did with Expedia) and make Zillions.
Does Zillow seriously want us to believe they can provide cool consumer features and make money selling banner ads? Sounds like every other “Web 2.0” company with a money losing “business model”.
Zillow is much Zmarter than that, perhaps they are just not Zaying Zo.
Jeff Brown
May 26, 2007 at 3:44 pm
Anyone who doesn’t see through the ineffectual mask of Z-holdup going on, isn’t paying attention.
Zillow is the guy in high school telling the Realtors, the girl next door, “No, really honey, I do love you. Let’s go back to my house, nobody’s home.”
It’s amazing there’s even a debate about this. But, like the girl next door, Realtors REALLY want to believe. 🙂
David G from Zillow.com
May 29, 2007 at 1:55 pm
All –
Zillow is a media business and we have no plans to change that model. Media companies have always played an important role in real estate; consider that most newspapers have an entire section devoted to homes. Many of the media products used by today’s real estate consumer are online. If you’re still advertising in your local paper or sending out flyers – but your listing or your ad is not on Zillow – you should reevaluate your marketing plan.
Louis –
“there is no money in advertising to consumers”
You could not be more wrong. Advertising to consumers is a 200 billion dollar industry in the US alone. Someone is making a lot of money (GOOG, YHOO, NYT etc.)
Jeff –
Honestly, I’m surprised. Do you believe the work you do for your clients can be replicated by a website? I don’t buy that.
Louis Cammarosano
May 29, 2007 at 2:12 pm
Hi Jeff
Thanks for your comments. I think that in order to gain significant advertising dollars from banner ads the audience must be of significant size.
Currently, Zillow’s traffic ranks behind Realtor.com, HomeGain.com, MSN Real Estate, Remax and other real estate sites.
The problem with the real estate consumer is they generally buy homes infrequently so the audience at any given time never reaches the tens of millions.
Google and Yahoo make money selling ads because they reach hundreds of millions of consumers.
The Zillow approach of getting consumers interested in visiting Zillow, not just when they are selling or buying a home, should increase visits and page views so you can sell ads.
Certainly an online company can make money with advertising. It seems to me that the scale required is not attainable by one real estate web site.
Given that instant Home Valuations are a commodity-a point highlighted by Yahoo’s inclusion of Reply (whose core business is not even real estate)and start up, eppraisals.com to provide instant home valuations side by side with Zillow-Zillow’s hopes for cornering the consumer market for Homevaluations is diminished and the limited audience of consumers interested in homevaluations becomes splintered.
abc realestate and cyberhomes also provide instant homevalutions.
HomeGain also has a instant homevalation tool-brought back from the last century’s tour of duty 1999-2001.
Good luck making money selling ads around instant home valuations.
Louis
Jeff Brown
May 29, 2007 at 5:15 pm
David – Honestly, I’m surprised. Do you believe the work you do for your clients can be replicated by a website? I don’t buy that.
Not my meaning at all. I was only commenting on what I think Zillow’s zup to. 🙂
I think your ultimate goal is not anything short of putting buyers and sellers together for a fee.
A website can’t begin to do what I do.
jf.sellsius
May 29, 2007 at 6:43 pm
David,
What if my buyers are reading the classified section of my newspaper (you know, that “entire section” you said is “devoted to homes”)—shouldn’t I continue to advertise there?
PS When can we expect that zillow poll on the right to exclude inaccurate zestimates from homesellers’ homes?
Agent Scoreboard
June 8, 2007 at 11:55 pm
WOW!!!
Lots of venom at Zillow. Really I don’t see what the problems is? Who cares if zillow has a Zestimate on 123 Zikes Street. How does that affect your business? If they create a national MLS so what? Good! Its good for competition and if NAR wasn’t so busy protecting the status quo they should have created that years ago. The aggregation of listing data and traffic creates economies of scale that lowers the cost of property marketing for all involved.
I remember when Rich was back being secret about Zillow, I actually was in a group of people that had a conversation with him at Inman. He said, how would the real estate industry be impacted by price transparency? Consumers and real estate professionals could see the gaps in the market between selling prices and asking pricings in a closer to real time manner, allowing people to quickly identify trends and make better investments in property and housing. I almost hugged him!
I’m not sure why people care about Zillow’s valuations, as a broker https://www2.dre.ca.gov/PublicASP/pplinfo.asp?License_id=01379165 whose actually closed more than a few deals, in a few states. My biggest valuation problem was, “That house down the street just sold for $600,000, My house is worth that too, right?” Well that “house down the street” is 5 years newer and 350 sqft larger, and didn’t sell for 600k, but that what is was listed for.” There is a data vacuum that the realtors have held the keys to for far too long. I say give consumers all the data they want… let them pick the model that works best for them, and we can work with them.
I don’t believe Zillow can successfully make a transition to “brokerage” maybe a cool FSBO site that includes some risk mitigation tools like transaction management and legal review. So… great! Do you think its going to take the place of agents? I doubt it. The appearance of McDonald’s didn’t kill the restaurant business, it just a filled a need of a time strapped society. Zillow is one company’s response to a societal need. Its not the first and wont be the last.
You should thank Rich and Dave… I do, they have kept the dialog going and its great…consumers are talking and so are we, that’s how we’ll make things better..
jf.sellsius
June 9, 2007 at 9:56 am
Good points Scoreboard. As an agent, inaccurate zestimates just create the same problem as the neighbor down the block. SO agreed. But I am looking at them from a different perspective—the refusal to recognize ANY rights of a homeowner/seller/listing agent to market their asset with outside interference. If I stood in front of your open house, nicely dressed, with a sign that said this house is only worth (pick a number that would annoy you). That to me is intereference, especially if that number is dead wrong. There is a BIG difference between publishing public data, solds (good) and creating an inaccurate value that is then attached to my home without my consent. As a homeowner it just rubs me wrong.
Oh yeah, did you hear the latest zillow plan —display how much money is in the owner’s bank account so buyers know if they need to sell & can negotiate a better price. (joking folks)