4realz Exclusive: Realtor.com unleashes the Zillow killer and you…

…didn’t even notice:

new home values tool on Realtor.com

Apparently, Realtor.com launched their answer to Zillow recently without much fanfare!

The first thing to note is that the new tool mixes estimates for home values along side listings from the Realtor.com database. This would have been unthinkable just a few years ago, but even with an announcement from NAR, the blog world has been silent. (And I’m told by someone-in-the-know that it has been live with a link from Realtor.com for a few weeks already!)

The part that seems to be missing is accuracy of the listings.

For example, the VERY first comparable I tried shows a home value estimate that is clearly way off base… The home at 26227 Adamor Road in Calabasas, CA which recently sold for $575K is listed on Realtor.com with an estimated value of $925,399 and Zillow with a zestimate of $564,000.

Recently sold home on Realtor.com

OUCH! If I was a REALTOR trying to sell a home on Adamor Road, I sure would be pissed if REALTOR.com was estimating homes were selling in the million dollar range, but actual sales were closer to the $600K range! A “beta” label only goes so far!

The second example I tried (by simply typing in Seattle, WA and then zooming in randomly until I could see a listing) was the home at 7352 26th Ave in Seattle, WA showed a recently sold price of $880K, the Realtor.com home value is $690,000, while the zestimate is $900,500.

For the third example, I decided to head further east to Chicago (no real reason other than NAR is located in that area). I randomly landed at 1729 N Melvina Ave in Chicago, IL which recently sold for $225K. the Realtor.com home value is $218,183, while the zestimate is $247K.

Results:

Two horrible estimates and one decent estimate out of three tries. It makes sense that the realtor.com team has not made a PR push around this feature yet! 🙂

On a related note: Things get even more interesting when you think that NAR took on a similar project (was called “Gateway”, now called “Real Estate Channel”) to aggregate home information across the country. These types of projects are not cheap… so why create duplicate efforts?

Published by

Dustin Luther

Current lead up the team managing Brand and Influencer Engagement programs for Dun & Bradstreet. You can find me on Twitter (@tyr) or LinkedIn (DustinLuther)

34 thoughts on “4realz Exclusive: Realtor.com unleashes the Zillow killer and you…”

  1. Dustin, this does not surprise me at all. I had a seller once use Zillow to tell me how much he wanted to list his home for. When I refused he went on to another salesperson. His home just sold. It had been on the market for a year and a half:) The other salesperson advertised in the paper every week and I am sure most of what commission he got went to that budget. Oh btw the house sold for juast under what I wanted to list it for and the difference was 75K.
    Chris

  2. Dustin, interesting… I didn’t notice the value estimator and I was just playing with Realtor.com. All we need is another untested value tool. Ouch is right! Now everyone listen up, let’s leave the home value analysis to the professionals!

  3. Chris: It’s an interesting observation you made… and I can’t say I’m surprised. Compared to a few years ago when buyers were a dime a dozen and everyone wanted sellers, nowadays sellers with unrealistic expectations are way too common… and well qualified buyers are in high demand!

  4. Irina: I think it will be really interesting to see how this product plays out. You can assume that 1000s of engineering hours and countless executive conversations went into this product, so at some point, the realtor.com team is likely to try to make a splash with it… accurate valuations or not.

  5. RE: The Gateway/Channel/Thing – It is not intended (nor can it be due to the Realtor.com/NAR contract) to be a public-facing site – it’s purely for the Realtors’ use.

    And – RDC has a lot of work yet to do on their valuations. One would hope they’d try to do it right the first time …

  6. Jim: You’re totally right that the Gateway project was not meant to be public facing (although it does have a potential audience of over 1M realtors… so it’s not exactly a private site either!). Nonetheless, you can imagine that a lot of the work that went into aggregating parcel information, building the mapping technology, organizing the (sizeable) contracts with vendors… and all of this work (and costs) could have been shared between Move and NAR if the will was there.

  7. I wouldn’t use Zillow as the gold standard for accuracy here. One of my first encounters with it was when it picked a 3 bedroom 2 bath 1600 square foot single family home as a comp for a 2 bedroom 1 bath 800 square foot condo, and priced the condo accordingly. Later trials didn’t fare much better.

    What galls me is that you don’t need thousands of engineering hours, at least not for the algorithm. It’s not hard like an operating system or a search engine — it’s really just extremely simple application level coding once you specify it correctly.

  8. We already have to argue with buyers and sellers about property values thanks to Zillow and other AVMs. Now we have to argue even more thanks to Realtor.com?

    Why does the very organization that is supposed to further our best interests that we pay dues to as Realtors create something that even further impedes our ability to do our jobs?

  9. The underlying lesson for all of us, possibly, is Realtor.com not being able to generate at least a semi-reliable number. Think from a big picture lens. If they can’t do something so fundamental to the business, what else aren’t they doing?

    Yet another institutional embarrassment. Geez

  10. Drew,

    Well, fair enough, the comp was an output. The problem is, the numbers for the Zestimate for that condo were dead wrong, too. Whether the given comp displayed was an input to the Zestimate begs two questions: 1) whether a seller (or other interested party) should be shown comps that aren’t comps in a context when running comps is clearly their intent, and 2) if the comp that wasn’t a comp wasn’t used, what mechanism did Zillow use to come up with such a broken value?

    I don’t really see more than a hair’s breadth between whether the algorithm used the broken comps to come up with the broken value, or whether it found the broken value first then displayed a broken comp to support it. Either way it was completely wrong on a set of comps that a human being could have gotten right trivially.

  11. Good point, Jeff. My point is not to defend NAR or Realtor.com (though I do think most of the RE.net does a better job of bashing them than providing alternatives).

    My point is simply that in our haste to bash NAR* we shouldn’t neglect to swing our arms at other AVMs that need to be bashed, much as we might like Drew Meyers personally. 🙂

    ————————
    *because if we weren’t Realtors(r) we’d be bashing Realtors(r), but since we are, NAR is all we have left.

  12. I can imagine.

    Part of the problem is that the actual sold values you would use to test the comps are naturally distributed, while even if they’re done correctly, the comps are always an average. So if you run the comps on a given home and come up with an average, any given data point is going to be where it is, and may vary considerably. The average adult male may still be 5’10” (or whatever it is these days) — but any given basketball star / jockey are going to throw the whole thing to hell.

    My problem with the case that I cited was that there were several really good comparables in the same subdivision that would have given the correct answer, and to use the metaphor above, the wrong answer was something like fifteen feet seven inches. 🙂 It just didn’t make any sense. 6’4″ instead of 5′ 10″, ok, maybe, but not fifteen feet seven.

  13. None of the attempts to value homes online are anything new. The real value is attempting to determine if these methods are just good for hits (charge more for advertising) or generating leads and how much they are worth selling.

    I’ve never seen two homes exactly the same, with the exact same features on the exact same piece of land. Online valuations are dangerous — just ask the various lenders that relied on these during the boom where speed was more of a concern then accuracy as they rubber stamped loans.

    Let’s not even get into what creative minds can come up with…

    Hmmm… Mr and Mrs Potential Buyer, this well known service says my home is worth $925,399 but I’ll sell it to you for $575,000… Sign here.

  14. Dustin – Great comparison, but I think all of the AVMs are terrible. If an experienced real estate broker can be off doing a drive by Broker Price Opinion, then how can we pander to the public’s desire for a quick fix and support an inaccurate estimate of their largest asset?

  15. I think another important note is the value of a home and what a home will sell for is usually two different numbers… especially in a market like today.

  16. Bill,

    I agree that there is a bit of pandering going on… but that doesn’t take away from the fact that the demand is certainly there. If realtors don’t provide the service in an online anonymous fashion, then consumers will obviously seek it out elsewhere.

  17. Instead of whining about the estimates, use them to your advantage, accurate or not.

    No one expects to pay exactly what the Blue Book says a used car is worth. Its up to you to show buyers and sellers that their mileage may vary.

    On our IDX sites, we use the Zillow API to show Zestimates and when Agents complain about a bad Zestimate we ask them why they think its off.

    The answers range from bad comps as cited above to something like “Well, Zillow doesn’t know this place was remodeled with solid gold bathroom fixtures and their stupid software didn’t bother to ask. Those bastards!”

    The remedy is simple: We tell agents to address the disparity in the property description on our Web site. Pretending its not there on the page isn’t going to make it go away or prevent users from seeing it, so just say, “The asking is $40k over the Zestimate b/c Zillow doesn’t know about the remodel with solid gold bathroom fixtures.”

    Now the buyer knows that Zillow can be wrong AND you are DEMONSTRATING the value a real estate agent can bring by providing clarity.

  18. Hi Dustin:
    Just a thought: Instead of just copying everyone else, maybe REALTOR.COM (and by extension, NAR) could make some decisions based upon market realities. And the reality is that Zillow (and other similar tools) are really inaccurate because the “conditions” on the ground are always so fluid that “estimates” based upon “market data” which is always stale because of “time” are really bad education for consumers. REALTORS should know better. Many consumers buy homes “regardless” of their estimated market comparable – and many sellers are able to sell for higher (or can’t sell nearly the same as a computerized estimate) because of all sorts of NON estimated items – like poorly performing schools, local tax changes, crime, etc – NONE of which can be accurately reflected by a computer. Only by REALTORS who keep up with “the full marketplace” of issues that impact homes.

    How silly. Once again.,..

    – Matthew Ferrara
    http://www.matthewferrara.com

  19. Unfortunately all computer generated valuation models still have to work out all the kinks. I from the tests I ran on Realtor.com, they are way behind Zillow on valuations. It should be interesting to see how quickly they catch up or if they implement some other features.

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