2/28/2012 3:39 PM ET|
The backlash against Zillow & Co.
Real-estate agencies are taking a harder look at national aggregators. They say the websites can be inaccurate, frustrating potential buyers.
It used to be a given for anyone selling a house that a real-estate agent would put the listing on national real-estate aggregator websites like Zillow, Trulia and Realtor.com to maximize exposure and sell the home quickly. But that could be changing fast as aggregators and agents face off.
Since 2005 or so, real-estate agents have shared data about homes they have for sale with those national sites, which have millions of visitors (Zillow, for example, had 32 million last month). But even though the sites have grown, sales haven't in the distressed housing market, and some agents believe the sites may not be helping. They accuse the sites of engaging in practices that give buyers inaccurate information that may hurt sales.
Among their complaints are that the sites allow any agent, for a fee, to have his or her name and photo appear prominently beside the homes listed for sale in a given region, even if the person in picture isn't the agent representing the seller. In reality, the agent in the photo may know little about the property or the neighborhood where the house is located, frustrating customers' efforts to get accurate answers, according to a report last year by real-estate consulting firm Clareity.
Some agents also claim that many listings on the largest sites are inaccurate. "The wrong photos often appeared with our listings," says San Diego Realtor Jim Abbott, whose firm no longer shares data with the national sites. He also says that the sites kept up listings that were no longer on the market. Clareity CEO Gregg Larson says Zillow and Trulia get information about the same property from multiple sources, such as the listing agent, the local multiple listing service and syndication services. "The duplicates sneak through, and then you have (the same) listing with different prices, listed by different brokers."
One Massachusetts agent, Jack Attridge, notes in a letter to Inman News that because homes he's listed appear on national sites, he's often contacted by agents and customers well outside his area who have questions about those properties. Most of the time, they have incorrect information, and Attridge wrote that none of those calls has resulted in a sale.
These and other problems hurt agents' reputations and do nothing to sell houses, they say. Abbott argues that inaccurate Web listings, combined with side-by-side links to agents who know little about the property, frustrate potential buyers and may actually drive them to look elsewhere.
Abbott studied three years of his agency's sales data and compared listings that the company didn't share with national sites to those it did. "Time after time, the listings that we did syndicate compared with the listings that we didn't had no better outcomes," he says. "In fact, the ones we didn't syndicate often sold faster" and closer to the asking price.
Zillow CEO Spencer Rascoff has fired back, asserting that an internal company study shows that homes in the top 10% of page views on Zillow sell more than a month faster than their counterparts in the bottom 10% of views and achieve sale prices closer to their asking price. He also says Zillow "invests massive resources in making our listings as accurate as possible."
Nevertheless, Abbott and a few others have opted out. Edina Realty in Minnesota fired the first shot in November by announcing it would no longer list its data on aggregator sites like Trulia and Realtor.com. Abbott pulled out on Jan. 27 with a hard-hitting Web video announcing his company's plans. Then on Feb. 6, a bigger player weighed in: Metrolist, a Denver multiple-listing service (a member cooperative that agents jointly buy into that advertises properties locally), announced it would no longer allow a Zillow subsidiary to use its data.
Some agents in larger metropolitan areas say they have better local listing service options. "It would only take a few good-sized brokers in every community before these sites either drastically changed how they do business or went away altogether," says Abbott.
But other industry insiders worry that agents will lose business by pulling out of the aggregator sites. "All it takes is (brokers who don't share data) losing a few listings and having a couple of their top-selling agents complain," Larson says, and "they'll cave."
Jay Thompson, the owner of Thompson Realty in Phoenix, has chosen to continue listing with the sites. "Good luck explaining your decision to not market a listing on high traffic sites," he writes on his blog. "I can assure you that if a Phoenix area brokerage chooses to do that, then we will use their decision to our advantage."
Abbott argues the opposite could happen. Since he posted his video, he's had 12 people who were interviewing for an agent to sell their home ask him about his company's new policy. "We got all 12 of those listings," he says. Calls to the company, he adds, have "gone through the roof."
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People in the housing industry don't like these sites because they provide easy access to many listings for price comparisons. They prefer to keep clients in their own microcosms of listings so they can manipulate the "fair market value" of homes and to hide the amount of times the property was flipped.
They also dislike the easy access to government records these sites provide. In many cases you can see the title / deed transfer history. This includes the sale price(s), previous owner(s), and a timeline of the transactions.
They don't want you as a buyer to have this information because it will plainly show that between the late 1990s (around 1999) through beginning of 2008 that homes were appreciating at a ridiculous rate. Loose lending standards mandated by the government, greedy realtors, greedy land developers, and greedy mortgage bankers conspired during this time to run up the price of housing to outrageous levels.
Real estate historically appreciated 3%-5% per year for last 120+ years. See for yourself:
Anyone that bought a house between 1999-2008 was a real sucker and people buying today are still suckers in most areas. Prices need to fall another 20%-30% to get them back in line with historical appreciation rates.
Here is a little statistical data to put this in perspective. In 1970, the average price of a home was $26,500 (about 3 times the median income at the time which was $8730 / year.) By 2006 the median home price was $305,900 (about 6 times the average household income which was $48,201 / year.)
Housing increased by 1050% while income only increased by 452%. That extra 600% inflation on the home prices due to greed in the real estate and mortgage banking industry pushed home ownership of average income earners out of reach (at least with traditional 30 year fixed rate mortgages.) This led lenders to institute "creative financing" with 0% down loans, undocumented income loans, explosion in 3 & 5 year ARMs, and interest only loans.
The greeady realtors and bankers convincing uneducated buyers (or should I say suckers) to play the "finance your house with exotic financing then refinance in a few years to a fixed rate loan because the house will appreciate 10%, 20%, 30% per year and on paper you will have paid off at least 20% of the value. Then you can drop the PMI and roll into a low 30 year fixed payment..." or for existing homeowners..."spend money on stuff youf don't need by taking out a 2nd mortgage / refinancing / HELOC loan because again...the house will appreciate so much on paper, you could just sell it and get your refinace paid for by the next sucker to buy your house."
Be an informed buyer and wait a bit longer for the market to bottom out. Utilize these online resources to stay informed about prices and to monitor deliquency rates (foreclosures) in your area. Look at the title / deed transfer history. Make sure you are not the poor sucker that buys an overpriced house. The idiot that is selling it is trying to pass off his / her poor financial judgement to you because he / she bought at the wrong time.
Why is a realtor's fee based on a percentage of the sales price? That makes absolutely no sense.
In addition, I agree with everyone else; the prices they have listed are way below market value. Further, my neighbor's house has one less bedroom, no pool, no water feature (a waterfall), no RV accomidations, ... and lists on Zillow for more than my house. Why? Maybe because we have lived in our house for 21 years and their house has sold 4 times in the last 5 years.
These sites are doing a dis-service to all home owners.
People more and more apathetic towards why they need a realtor when they basically do all the research themselves via open source sources like Zillow. Even if Zillow etc. is slightly dated this could easily be fixed if the Realtors opened the MLS to the public. So lots of hypocrisy here. Keep up the good work Zillow etc!
Many realtors are becoming real estate investors due to low broker priced opinions (appraisal they do for big banks for minimal money). They often use worst comps to get a lower list price so it will sell fast remember they get paid when it closes, not listed. another tactic is give false info to websites to burden other buyers from getting a good deal.Then they buy and flip for 2x profit plus they get commisiions also at closing.
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