4realz Roundtable: The Value of Home Values

I’ve got something special planned for this week’s 4realz Roundtable. In honor of Realtor.com’s release of the home valuation tool, we’re going to cover the value of online home values!

Join us on Thursday at 4pm (PST) to take part in the conversation!

Of course, the discussion is what makes the 4realz Roundtable work, and so far, I’ve confirmed three great guests for the conversation:

And, of course, YOU are always invited to join the conversation. For the past two week’s we’ve had an active chat conversation going on during the call, which has been just as interesting and entertaining as what gets recorded! ;)

(By the way, I reached out to the realtor.com team, but received no bites in terms of people who were willing to sit at the 4realz Roundtable…)

Here’s a general outline of things I hope to cover:

  • Discussion on the background on online AVMs
  • How have perceptions of online AVMs changed over the past two+ years… Both within the industry and among consumers
  • What are some of the interesting legal issues surrounding AVMs in terms of privacy issue
  • Is there a reason to think that AVMs will get better in the future?

If you have other topics you’d like us to cover, please let us know in the comments and/or join us on the call and ask the question yourself! I’m going to do my best this time to make sure we reach out to some more of the people who call in to make sure we hear from you during the call!

UPDATE:

I’ve confirmed a few more guests for today’s show:

UPDATE 2:

What a great conversation!  Things definitely got a bit rough with David G on the hot seat for a bit, but overall, I had some great insights from the conversations and hopefully you will to!   If you haven’t listened to the conversation on the value of online home values, then listen here:

[podcast]http://recordings.talkshoe.com/TC-20339/TS-122563.mp3[/podcast]

28 thoughts on “4realz Roundtable: The Value of Home Values

  1. The AVM thingy’s were like a great thing for Zillow–created bunches of press, but really didn’t become relevant.

    The only thing people care about on real estate Web sites are listings!

    As Marc Davison says: “show me the listings.”

    It’s like going into a new car showroom and expecting people to be interested in READING the “blue book.” They want the eye candy, the real estate porn.

    If you give the consumer that—they’ll come to your site. That is why sites like Zillow and Trulia introduce all these “tools” because on some level they don’t have enough of what the consumer REALLY wants.

    side note: Have you seen those heinous CB commercials where C & B are talking about their incredible online tools. Hilarious.

  2. You make some great points Kevin… but Zillow driving a tremendous amount of traffic… and my guess is that the majority of their traffic comes to look at home values not for sale listings.

  3. What’s the end result of that and who benefits from the “AVM people.”

    If you say buyers—buyers are the most knowledgeable people, usually, in the real estate transaction. They are out there looking, comparing, watching the real market.

    I’m an info freak. More and more I meet people who know almost as much as me about recent activity in the area of their interest. That info comes from “on the ground” -type info–not from sites like Zillow or Trulia.

    Those tools could be fun but no one in Miami would even remember the word “zestimate.”

    Am I off?

  4. Kevin,

    My thought is that you’re underestimating two things…

    1) There’s obviously a huge demand for people to get home value information in an anonymous way without contacting a professional
    2) For a home owner, they are invested (literally) in the value of my home, so of course they are interested in a publicly viewable service that has placed a value on their home. Whether the service is “right” or “wrong” is an interesting conversation topic, but somewhat besides the larger point once the AVM site has captured their attention.

  5. Following on Kevin’s point of the well-informed buyer – this is an email I received from one of my buyer-clients a while ago -

    “(this MLS #) has been on the market forever and has been reduced recently from about $314,000, I believe. The owners live in — PA. They bought it in 8/2004 for $271,000 from — Builders. You can tell me if you know anything, else but I have heard from only one person that (they are) a decent builder. It is assessed at $329,000.

    The issue, no doubt is that it is right on 240 and probably does not have much of a backyard. We have driven past it but would like to see it from the inside and especially take a look at the back yard. Another major concern with this home is that its driveway appears to creep onto the adjoining property, at least according to the tax map.”

    The AVM info they found online isn’t relevant (yet).

    Buyers are still looking for guidance, advice and representation – AVM tools and the like aren’t (yet) a threat to Realtors who are confident in their abilities.

    RDC providing home valuations is so unoriginal and “me-too” that it’s embarrassing – and it would be even if they’d done it well.

  6. Yes, it should be a great discussion. I’ll save my comments for the call.

    Kevin’s opinion carries great weight with me (for his market) because he’s on the ground doing business– who could argue with his experience? Is it the same for others in their markets? Maybe Ardell can offer some “in the trenches” observations from the Seattle area, Z’s home base.

    As Jim implies, until AVMs are relied upon, like say a Kelley Blue Book value, professionals have little to worry about. But the key word is “yet”. Remember Z’s mantra– we want to be the KBB of real estate.

  7. Jim
    Yup! That’s what I get too (and I LOVE those types of clients).

    The REAL value is the info that is not YET published–that’s where a sharp agent really brings value to the table.

    I have nothing against all that kinda stuff, but I think that there are WAY more productive ideas that could be adopted.

    I just don’t see the actual, real demand for that “tool.” I think it is more of a case that the companies “think” that there is more of a “need” for these AVM’s than there actually is.

    That’s probably the scary thing that lurks in the back of their heads that they would NEVER verbalize.

  8. Rhonda: I’m so glad we got you in there! I always enjoy your perspective! and definitely look forward to having you on future roundtables! ;)

  9. Great Roundtable Dustin. Keep ‘em coming.
    Thanks for inviting me. And thanks to all the guests, especially David G, whom I admire for coming to the table.

    Despite the issues I have with Zillow vis-a-vis homeowners, the company is willing to expose themselves to criticism. I only hope they take the criticism to improve their offering to the person, without whose asset there is no business model — the homeowner.

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  11. Joe, relax! Perhaps the DOJ said the seller can control the listing of their home but Zillow is not listing their home? Zillow is simply taking public information and making an estimate of value of the home. Zillow even publishes the margin of error, although they should really highlight the margin of error better.

  12. I enjoyed the discussion and appreciate the opportunity to participate. I think Joe and David did an admirable job of stating their positions. I understand some of Joe’s sentiment, however, I think that it’s a pipe dream to think a seller would be able to ask anyone to remove data from the web that they feel may hamper their effort. I certainly would have no luck asking the appraisal district to remove my public tax valuation if I thought it might conflict with the asking price of my sale.

    I think tools like Zillow and many others offer a real estate professional an opportunity to showcase their skills in deciphering and making sense of data on behalf of their selling and buying clients.

    In the end, I think discussions like this go a long way toward helping companies in the RE.net develop and deliver a better product.

    Cheers,
    MP

  13. @John Wake. I would love to discuss the listing point but since the subject was AVM, I’ll just address that.

    The DOJ/NAR settlement said if a seller requests disabling an AVM or comments about their home online, that request will be honored and they will be disabled.
    Would you honor such a seller request?
    My position: I would honor it. (I think Z will have to honor it if they display property with that request on it.)

    Not knowing an area, how does a general margin of error help you determine if a specific house is within the margin or not?

    Here’s a hypothetical: Let’s say you’re trying to sell a home for a client for $400K (a fair asking price) and a fellow appears at your Open House and stands out on the sidewalk with a sign & hands out flyers that say “Zillow is taking public information (including comps and tax assessor data) and estimates the value of this home at $329,000 and the margin of error for this area is only 7%” And let’s assume some prospective buyers are “buying it” (a possibility, no?).
    That’s how I see inaccurate zestimates getting in the way of marketing a home and I would honor a seller’s request to have it removed from the display of their house on the internet.

    Now, you can disagree & tell the seller “Don’t worry, let the sign stay. I can explain to folks why Zillow is off.” But isn’t it up to the seller to decide and if he or she says “Heck, that sign is interfering & some folks might believe it & pass my house by. Tell that guy to hit the road and take his crummy sign with him.” (online, you can’t see the buyers passing your listing by because of an inaccurate zestimate.)
    I support the seller’s right to have the Zillow sign removed from their virtual lawn.

    @Mike Price

    “I think that it’s a pipe dream to think a seller would be able to ask anyone to remove data from the web that they feel may hamper their effort.”

    What about inaccurate or misleading data? I think that does hamper efforts. Question: Are you saying a zestimate can never be misleading?

    I think the removal of misleading information (inacccurate public data, way off zestimates) is a service to the consumer and my duty as a professional to ask a site to remove it. I think it would be a Kafkaesque nightmare if a site were allowed to keep inaccurate or misleading data displayed simply because a computer generated it .

    If there is inaccurate data or a zestimate is way off, it ought to be removed. I understand if you disagree — leave it up and let an agent explain it away. But a buyer seeing it may just pass over the property and an agent won’t get the opportunity to explain anything.

    “I certainly would have no luck asking the appraisal district to remove my public tax valuation if I thought it might conflict with the asking price of my sale.”

    Nor should you.

    3 points of distinction:

    1. A zestimate is NOT public data. It is a proprietary creation of zillow.com which uses public data (or lack of it).

    2. You can challenge your public tax valuation without having to “claim” your home (& be subject to a website’s TOU)– and if you win, the old tax valuation comes down and the new one goes up.

    3. you know your tax valuation (heck, you get the bill) but not everyone knows a zestimate is attached to their home to challenge it (Zillow never sent me a zestimate letter)

    In any case, this is just my opinion and I respect your right to disagree. God Bless America.

    Sorry for the long comment but this isn’t even enough to explain it all. For those interested, they can visit the blog and read more on zillow, including how correcting house data on Z can lead to a higher tax bill:

    http://blog.sellsiusrealestate.com/category/zillow/

  14. This was a great discussion! Very live and spirited. This is an issue that a lot of people feel passionate about… the use of avms.

    I tend to lean towards Joe’s argument that avms do have an affect on a consumer’s rationale about the value of a property. Especially if the consumer isn’t that knowledgable in real estate. Before I started understanding the industry, I once was that consumer. To me, zesitmate equaled value. If you take Rhonda’s comment that a client came into her office with a zestimate. I’m willing to bet if an appraisal varied from the zestimate her client would want a new appraisal from a different company.

    I think consumers have to be educated about AVMs, their advantages and disadvantages.

  15. @Brian I remember that game. I recall David saying the vast majority of folks wanted zestimates and only a few lost souls wanted an opt out. If that were true, Zillow would have no fear in making the gesture to that small minority– yes, dear seller, we will remove the zestimate. IMO Zillow fears that offering an opt out would result in more than a few takers. They can’t risk it.

    But there is a workaround, of sorts–

    Curiously, you can list a home on zillow without a zestimate attaching by simply leaving off the street addresss or house number. Zillow will create a separate page for you w/o a zestimate (no address= no public data= no zestimate)– so you get 2 distinct home detail pages– one with your listing info and one with Zillow’s. It is happening now as brokers submit feeds w/o addresses.

    Read more about it here:

    http://tinyurl.com/6cxh63

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