What did Zillow NOT know about this Bothell Westhill home? Plenty, until recently. More on that a bit later.
What Zillow Does.
Zillow is the most visited real estate destination on the internet. Many people think Zillow is a real estate brokerage. It is not. Some people think Zillow buys homes. It does, but the company hires licensed real estate agents to do so. A few people think Zillow sells homes. It does, but it hires licensed real estate agents to do so. So is Zillow in the home-flipping business? Yes, that’s a new business for Zillow. And, for now, a money-losing business.
So, how does Zillow make money? The company charges fees to real estate agents who have signed on as “Premier Agents.” In exchange, Zillow provides marketing services to these agents. Zillow provides business leads to these agents. Some turn into business for these paying Zillow customers, some do not. Many agents dislike Zillow but they keep paying the fees because they have given up on doing their own marketing. I am not a Zillow customer. If you want to know, here is why.
What Zillow Knows.
The main reason consumers visit the Zillow website is to find out what their home is worth. The so-called “Zestimate” has been controversial from the beginning. Not long ago, Zillow conducted a competition for artificial intelligence wizards to improve the algorithm used to arrive at these estimated home values. They are known in the real estate industry as AVM which stands for Automated Value Model.
Zillow knows what the data tells them. This data includes recent sales, comparable sales in the same neighborhood, canceled listings, tax records, price trends, foreclosures, and how long it takes for homes to sell.
What Zillow does not know is what it has not seen. For example, Zillow does not know that you have added a new bedroom. The company does not know that you have installed air conditioning. They do not know that you have converted part of your home for Airbnb guests.
What the company does not know is that you have completely renovated your home and added over 1,000 square feet of living space and added a second story for a new master suite. They do not know that your home, built originally in 1953, is now effectively one year old.
Zillow’s data about this home was out-of-date until it was listed for sale. The day before this home came on the market Zillow’s AVM was $972,000. The day after it was listed the Zestimate was $2.8 million. How did Zillow find out? Once the home was listed on the Northwest Multiple Listing Service, Zillow received new data about the home. Adding its own magic sauce, the Zestimate was slightly above the home’s listing price.
I listed this home and told Zillow. Now Zillow knows.
