A Las Vegas Realtor is taking on Seattle-based Zillow over information consumers use to determine their homes’ value.
Three weeks ago, Todd Miller, who co-owns Nevada Realty Solutions with his wife, Oana, launched a new feature, called Exactimate, that allows homeowners nationwide to get market prices from real estate agents. The feature is on its Homing In phone app.
The homeowner lists the address of the property, posts pictures of the interior and notes, and waits for opinions on the price.
Miller said he launched the feature because many homeowners seek the value of their home on Zillow, a national real estate database company, and use that as a starting price for selling their home.
“About four to five months ago, I got extremely frustrated with the Zillow Zestimate,” Miller said. “It’s highly inaccurate and causes problems for real estate agents. People are greatly misled by the value of their house, and it causes them to make poor decisions both before they decide to sell or when they’re trying to buy. I thought there was an easy way to solve this.”
Miller, who started his real estate firm 10 years ago, created Homing In two years ago, to allow potential homebuyers to reach out to real estate agents about showing them a property where they’re standing.
When the app’s new feature was launched, the first use was a home priced in San Jose, Calif., to which four agents responded, Miller said. Their values were $580,000, $575,000, $575,000 and $570,000 and the most recent sale of a similar condo in the building was noted for $570,000. Zillow estimated $503,000 despite the homeowner’s purchase a year ago for more money, with improvements including installation of wood flooring, Miller said. Zillow didn’t capture that and the rising home values in San Jose over the past year, he said.
“Zillow’s computer hasn’t seen the inside of his house or have these extra details and the Zestimate makes no sense at all for this property,” Miller said. “Since we use agents who don’t get to see each other’s values, the consumer gets a better idea of potential value. It arms them with information and empowers them more than this Zestimate, which is a made-up number. It should say for entertainment purposes only.”
ZILLOW ANSWERS BACK
Zillow spokeswoman Jill Simmons in a statement said Zillow computes Zestimates on 100 million homes, and nationwide its median error rate is 7.9 percent. In Las Vegas, half of homes are within 6 percent of the selling price, she said.
“We created the Zestimate nearly 10 years ago to give people a starting point for determining a home’s value, for free. It’s a computer-generated algorithm that incorporates millions of data points from both public records data and information provided by homeowners.
“Homeowners are able to update facts about their homes, like if they’ve added a bathroom or renovated a kitchen, to make their Zestimate more accurate. Homeowners use the Zestimate, alongside other data points like recently sold homes, in order to have a more informed conversation with a real estate professional.”
Miller said the price opinions of agents aren’t appraisals but real estate agents are qualified to give opinions on what properties are worth. Zillow uses a computer “to calculate every number it can possibly get and cranks a raw number,” Miller said.
“The agents will do a better job than a computer,” Miller said. “We developed this so people can get a more accurate value fast and not have to deal with agents harassing them and coming over to the house and paying for an appraisal.
“It’s not an appraisal. Just an agent’s opinion. Nothing more. The reason we give them … a range of value (is) if there are any outliers they can disregard those. If you have three agents who say your house is worth $325,000, it’s probably worth $325,000.”
Knowing the market
Dennis Smith, owner of Home Builders Research, whose firm tracks Las Vegas housing market data, said no one is closer to the market in terms of what’s for sale than Realtors. “I would suggest the Realtors would be more accurate in terms of (the) day-to-day basis of how the market changes so quickly,” Smith said. “They should know what people are offering out there. I like the idea of an app. I’m surprised it’s taken so long.”
At the same time, Smith said it’s hard to criticize Zillow because their numbers are based on county records. He said he doesn’t know if there’s proof that Zillow isn’t accurate. Instead, it could be older information.
Despite that, Smith said that doesn’t mean real estate agents are always accurate as well regarding their opinions. Some overstate values just to get listings from people and others are simply wrong, he said.
“Our house is up for sale right now, and I have Realtors that have said it’s priced too high, but I ask them, ‘Do you know what I do?’” Smith said. “I provide housing data to housing professionals and that includes appraisers and banks and so forth. I have a pretty good idea of what houses are worth.”
“Like throwing a dice”
Miller agreed that sometimes Zillow is accurate and sometimes it’s high and other times the price estimate is low. “It’s like throwing a dart,” he said, citing an example from six months ago in which a homeowner wanted to sell a home for $185,000, the price listed by Zillow. The subdivision had three similar homes sell for $165,000.
Miller said one homeowner was convinced his home was worth $275,000, and an agent was willing to list it for $279,000. He said he told the owner it was worth $325,000 and Zillow had it priced at $308,000. It closed at $315,000, he said.
“It’s easy to get five agents and a consumer can pick whoever they want whether it’s one of those agents or someone else,” Miller said. “They are making a better decision. The decision you make when you price your house can mean thousands of dollars in your pocket if you make a better decision.”
SEVERAL OPINIONS NEEDED
Miller said several opinions are needed because some agents act unscrupulously and agree to list a home at a price the homeowner wants even if it’s too low. There are cases where an investor will buy the home and flip it at a tidy profit with the knowledge of the agent and even though no improvements had been made to the home, he said.
Miller said the app will save agents time on a listing presentation when many homeowners only want the price. It can also help them land the listing as well, he said.
The app is free for the agent and consumer, but Miller said features will be added in which agents would pay a fee for marketing and premium features. He’s filed for federal patent protection on it.
Eventually, the app will rank agents to show which ones give prices more in line with others and agents who do that will tend to get more of the requests, he said.
“A lot of (agents) not comfortable giving values won’t be adopting the app,” Miller said. “The people who will be adopting the app … are confident at picking values. It’s mainly agents who work with listings. In Las Vegas, we have 13,000 Realtors and I don’t need 13,000 people signed up.”