There are lots of real estate stakeholders who love Zillow, and maybe some not so much. Several Realtors I know well have built tremendous businesses using leads they received from paid subscriptions to Zillow. Zillow is probably a good stock buy currently, trading close to its 52-week low. On 1/25/28, they closed at $49.59. Their 52- week high was $208.11, so there has to be lots of investors who aren’t happy with Zillow right now. Zillow dropped that much in part due to a failed business venture of purchasing properties directly from way more property owners than they had the capacity to handle. Zillow failed big, but they are a still a solid company and will bounce back. They’ll learn from their mistakes and become stronger. As far as an investment is concerned, I believe they are positioned well in the real estate industry and will likely have a great future.
My belief in Zillow’s ability to grow their business is rooted in their loyal base of Realtors, buyers and homeowners. I’ve met plenty of homeowners who use Zillow to gauge their property values. Zillow is good for getting a general idea of values, however, they are often quite wrong. This past week, I looked at an Eichler in Terra Linda that Zillow valued under $1.5 million. Taking into account only truly comparable remodeled Eichler properties, I think it’s worth more like $1.9 - $2.1 million, which is a huge discrepancy. The problem, in this case, is their algorithm doesn’t take into account specific builders like Joseph Eichler whose homes are white-hot. It would be impossible to quantify differences in builders, a value which is prone to fluctuate with fads over time.
Buyers love Zillow. It’s a great way for them to access properties that are on the market. However, Zillow can also be intentionally misleading. When I subscribed to Zillow, I got calls from buyers who asked to speak to the listing agents of properties, but those leads are given to whomever is paying Zillow, based on how much they are paying. I felt it was a deceptive business practice, and this is something they still do. There are scripts and training for how to handle those calls, but I never felt good about trying to ‘convert’ those buyers who were often disappointed to get me and not the listing agent.
Zillow is misleading their users in other ways. I don’t currently pay for Zillow, but my account is still active, as are all my reviews. So, I still get a few calls from people on Zillow, and some of them have been potential buyers looking for distressed properties. The buyers think that based on what they are seeing on Zillow, the distressed homes are available for sale, which they aren’t. In reality there are people still in those homes, many times in desperate straights struggling to keep their homes and fend off all manner of circling sharks. Zillow only feeds what often becomes a frenzy.
It’s not just foreclosures that people think are on the market and available. There are plenty of homes that have been sold that still look like they are available in Zillow. Sometimes the sales are recent, other times they are years old. It’s a little frustrating for everyone when buyers want to see properties that aren’t available. That’s where being a talented salesperson comes into play, because every call a Realtor gets is a potential lead that could turn into a sale. Paid advertising on Zillow gets the phone ringing.
To be a successful Zillow buyer’s agent, you’ve got to be tenacious. You have to call everyone on a regular basis, and I know one successful Zillow agent who makes 30 calls a day, every day. That’s not uncommon in the real estate business. That’s what you need to do to be effective with internet leads in general, and that’s not how I like to spend my time. I prefer to call when I have something interesting or informative to say, I don’t want to call just to stay in front of people. That feels disingenuous to me, but I know it’s an effective sales technique.
Zillow is an established brand in the real estate industry has something for everyone: buyers, sellers and Realtors. It’s not perfect, but it is an effective sales vehicle for Realtors who want to drive the process. I’ve got a free account with Zillow now, which I guess puts me in the backseat, and makes this blog entry a bit of backseat driving.