Dated Data? Zillow Responds

The Fool is exploring Seattle. Today, CEO Spencer Rascoff introduces us to Zillow (NASDAQ: Z  ) , telling us how the online home and real estate marketplace works, what he considers its greatest strengths, and what investors should know about it.

Spencer is unconcerned by a rival's report criticizing the quality of Zillow's listings. He points out a series of strengths that the report doesn't take into account, as well as the company's database of 110 million homes.

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Austin Smith: There was a recent Redfin report that came out, I believe, that targeted you and Trulia for somewhat dated data. It's been a knock against the Zillow part for a while. I'm wondering if you have a reaction to that.

Spencer Rascoff: The way I look at it is, when you talk about listings accuracy or listings information, you have to see the whole picture.

Three percent of all the homes in the U.S. are for sale by agent in the MLS at any point in time. Those are commoditized listings. They're readily available on Zillow and pretty much every other major real estate website.

We put a lot of importance on making sure that those listings are accurate and timely and fresh, and we've improved quite a bit over the last year or so. But those are commoditized listings. At Zillow we also have over a million other listings, which are not going to be on any other sites, like the ones that you mention; foreclosure listings, Make Me Move listings, new construction listings, rental listings, and for sale by owner listings.

Those typically aren't available on sites other than Zillow, and then of course Zillow has information on every home in the country, 110 million homes, with seven years of user-generated content around a third of all those homes that have been edited or improved upon by their owners.

When you look at listings quality, I think sometimes competitors focus much more narrowly on listings information than Zillow's perspective, which is to look at the entire housing stock rather than a small portion of the housing stock.

Austin: Based on your answer then I'm sure I can guess your reaction to this question. Would it, at some point, make sense for you guys to get a brokerage license, if nothing else, to get that MLS-direct plugin?

Spencer: We are not a brokerage. We sell ads, not houses. We don't intend to compete with brokerages. Brokerages do a great job, doing a completely different thing than what we do.

We've always said to agents, brokers, and MLSs, "If you want your listings on Zillow, fantastic, but we're not going to use the rules that you set up to our advantage by being a paper brokerage, being a fake brokerage, and getting listings that way." That seems very competitive to the broker business model to me, and that's not a path that we've pursued.


Read/Post Comments (5) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On July 15, 2013, at 11:55 AM, bearsnsox wrote:

    jeez how much did zillow pay you to run 10 stories, when havent had a story on them in months because no one cares about them

  • Report this Comment On July 15, 2013, at 12:16 PM, DiverMike wrote:

    Zillow is USELESS as a value indicator for anything 5% or more out of the median price window. Even then it is not accurate enough to be relied on. Having a database with 110 million datasets in it is meaningless when you do not screen out non market transactions, refinances, REO sales, non-disclosed distress sales, short sales and or 'creatively financed sales. Read their disclosures for 'Z-estimates'. Appraiser with over 30 years experience here. How can Zillow tell someone abut something they have NO KNOWLEDGE of? They may know how statistics are presumed to work, but they don't know squat about real estate markets.

  • Report this Comment On July 15, 2013, at 12:42 PM, lmmd wrote:

    zillow's numbers are so off that is should not ever be used as even a comparison tool Trulia is much more in the ballpark. I wrote zillow asking them why their values in my neighborhood were so low and rec'd back a gobbly gook reply. Zillow simply isn't current in terms of real estate values.

  • Report this Comment On July 15, 2013, at 5:54 PM, jtmg59 wrote:

    Diver Mike....so what happens when an appraiser makes a mistake or is just flat out negligent? What happens when an appraiser is so arrogant about their mistake they refuse to revisit....Sites like Zillow & Trulia are there to give a round about estimate....that's all. I'm in the middle of suing an appraiser for gross negligence and not doing the job I paid them to do. I found Zillows numbers to be close...within 3-5% of the area. Now the appraiser said my house was worth 35% less than Zillow & Trulia...Appraiser spent less than 12 minutes on my property and didn't even get the year it was built correct...off by 30 years....I can explain further if you want to discuss offline using you as an expert, but you get the picture.

  • Report this Comment On July 17, 2013, at 11:09 AM, bearsnsox wrote:

    can you please let us know why the CEO has sold 2.2 million worth of shares in the past 2 months? including 318k two days ago???? thought he sees a lot of potential

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