Since News Corp. bought Move Inc., Realtor.com's operator last fall, the ad campaign for rebranding has been a lot of fun for Realtors to watch. From a change in the logo, to their funny commercials with the theme "real estate in real time," the emphasis is on accurate information. As a Realtor, I couldn't agree more with the importance of accuracy.
Check out the latest video ad with a very funny Elizabeth Banks:
Why Accuracy Matters
To most of us, it's obvious that the target of these ads is the Zillow-Trulia conglomerate, now named the Zillow Group. Their online estimations of home values, called Zestimates, have been the band of a real estate agent's existence. Many of us in the real estate blogosphere have opined about the evils of the Zestimate. I have joined the chorus with my article: Why Zestimates are Zillow's Weak Spot.
The most detrimental effect of these online estimations, in my opinion, are that they create false expectations in the minds of home buyers and home sellers. The Realtor they end up working with has to counteract not only the wrong valuation, but the ideas that the buyers and sellers have already gotten cemented in their minds.
Consider the Buyer
When a seller contacts an agent to list their home for sale, the agent conducts a CMA, or Comparable Market Analysis, to get a close estimate of what the home will likely sell for. This estimated range is based on comparable home sales, local trends and a careful market analysis. Experienced Realtors who have local knowledge have been active in their neighborhoods, and they have probably even seen firsthand many of the comparable homes in their market as they’ve worked with buyers and sellers throughout the years.
So imagine this scenario: the agent presents the CMA, full of their hard-earned knowledge about the home’s value, only to hear from the seller: “But Zillow says my house is worth $25,000 more?!” That seller is already set up for failure because they are influenced by that Zestimate, sometimes a gross inaccuracy. First of all, it puts doubt in their mind about the Realtor, Secondly, if they disregard the agent’s advice and they overprice their home, they will decrease their chances of actually selling the home for the highest amount in the shortest time. We consider that very damaging.
Consider the Seller
It’s easy to see that the expectations of the buyer can also be damaging when they see an inaccurate Zestimate. Right below the list price you can see the Zestimate, so at the very outset of seeing the home, a buyer will have it in their mind that the seller is asking too much, or too little.
If the list price is lower than the Zestimate, imagine the buyer’s disappointment when they get to the home and realize it’s not the bargain they thought it was. This can result in a lot of wasted time.
If they believe the list price is high, it will be hard for them to take the Realtor’s advice about what price to offer. We’ve seen our share of lowball offers from buyers who just didn’t take their buyer’s agent’s advice. We’ve seen just as many offended sellers rejecting those lowball offers!
Agents Must Be Accurate
A recent study by one of the brokerages in Maryland showed that Zestimates were off by 10% more than half the time. On the Eastern Shore of Maryland, Zestimates were 40% off when compared with the eventual sales price!
If a real estate agent was innacurate that much of the time, they wouldn't be in business very long. They might even be facing lawsuits from unhappy buyers and sellers who felt that they had been victims of incompetency!
To real estate professionals, accuracy not only matters, it's an integral part of our fiduciary responsibility. We are bound by our Realtor Code of Ethics to provide the highest level of care for our clients, including the best advice regarding the values of homes in our market. Yes, we think accuracy matters and are happy to get behind Realtor.com's new ad campaign.
And, we're enjoying the fun!