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The Zillow.com shake-down: The piling on begins — and Spencer Tracy is nowhere to be found . . .

By: Greg Swann, Phoenix Real Estate, Post Archive, RSS Feed
Posted: Wednesday, November 1st, 2006, 7:57 am MST
Category: Blogging, Disintermediation, Marketing, Real Estate, Zillow.com

Zillow news since the New York Times story broke:

These are all mainstream news sources, not weblogs, and I omitted the (many, many) duplicates. The Times article was picked up by Reuters and echoed far and wide. The AP article, shown here from the Seattle Post-Intelligencer will have run in hundreds of newspapers and will have been broadcast in abbreviated form on hundreds more television and radio stations.

Devotees of old black-and-white movies may be thinking that Zillow.com will prevail in court. I invite you to reread those headlines. None of this will ever get to a courtroom, and Zillow.com has already lost in the court of public opinion — the only court this “issue” was ever intended to reach.

Apparently, the company’s plan now is to have the meeting with NCRC “in two weeks.” Presumably, Zillow.com thinks it is going to prepare itself in that time for a honest, civilized debate. What will happen instead is that the NCRC will leak a few very damaging sound-bites every day, vilifying Zillow.com for a pervasive white-glove racism in its algorithms. It’s the death by a thousand cuts. By the time the meeting occurs — which I would expect to be quite a bit sooner than “in two weeks” — Zillow.com will be willing to pay anything to stop the loss of blood.

Entrepreneurs can afford to fight this kind of battle — even to the edge of doom. Any business with third-party investors will eventually cave to the will of those investors. Zillow.com might still win this if it comes out hard on the attack, demonstrating by a preponderance of widely-publicized evidence that NCRC is nothing but a shake-down outfit. I would love to see that happen, but I don’t expect it.

Instead, Zillow.com will dither, as it is doing now, thinking that delay will buy it time, when, in fact, delay will serve to cost it more and more of its hard-won reputation. Eventually, the cost NCRC can exact in the court of public opinion will become unbearable, and, at that point, Zillow.com will strike a deal. A “settlement” was never cheaper than it was last week, and the price will go up dramatically every day until they cave.

And now you know the difference between modern America and an old black-and-white movie…

Our story so far:

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    • 12 comments

    12 Comments so far

    1. Real Central VA - Tracking the Charlottesville and Central VA real estate market and more » Links for 11-01-2006 November 1st, 2006 9:19 am

      [...] With all the talk about Zillow, why no fuss about ditech.com’s implementation of “eAppraisals”? They are trying to entice folks to refinance based in part on their “eAppraisals,” versus Zillow’s (current) ad-based revenue stream. [...]

    2. Ubertor Real Estate Blog » The War on Zillow November 1st, 2006 9:35 am

      [...] Over the last few week or so, Zillow has been getting hammered in the media with regard to their “Zestimates”. Joel Burslem and Greg Swann have been covering the story, but I figured I would post some of the links to the major news sources that are writing about Zillow. [...]

    3. Joel Burslem November 1st, 2006 9:55 am

      You called it right on Greg. Zillow needs to come out hard on this issue but, aside from commenting on a few blogs, it has been virtually silent on the issue. If they’re not careful the NCRC will pull the rug right out from under them and a cash settlement will be all that’s left as a recourse. They need to be far more vocal about the spurious nature of this accusation and fight it hard in the court of public opinion.

    4. Your mortgage complaint — delivered … on a platter, with ribbons at Three Oceans Real Estate — Insights from a Wired Bay Area Realtor November 1st, 2006 11:52 am

      [...] Somebody hasn’t been listening! [...]

    5. Kevin November 1st, 2006 12:05 pm

      This is turning into an interesting case study of corporate crisis management a la old media vs. new media. NCRC has been silent in the new media (except, of course, for the online versions of old media) whereas Zillow has been silent in the old media.

      What makes that particularly relevant is that in this case there are really two courts of public opinion:

      1) The online one — that would be us; I would argue Zillow is winning here.
      2) The offline one — broadly speaking, this is where many of the alleged victims would be, since Internet access and use is still quite correlated with income levels; here, though NCRC is clearly winning, I have to ask how well-known Zillow even is! The complaint alleges that Zillow’s estimates are worst in low-income areas — precisely the areas that are less likely to even be aware of Zillow.

      Wondering if this may be a case, much like David Barry’s real estate lawsuits here in California, that fails to produce a real live victim.

    6. Greg Swann November 1st, 2006 1:52 pm

      > 1) The online one — that would be us; I would argue Zillow is winning here.

      You should read the non-RE blogs on this point. Maybe a toss-up right now, but the leftist weblogs haven’t discovered the “issue” yet.

      > 2) The offline one

      The well to be poisoned consists of the middle-class. They’re the people who use Zillow.com, and they’re the target audience for the stock if there is to be an IPO.

      > Wondering if this may be a case, much like David Barry’s real estate lawsuits here in California, that fails to produce a real live victim.

      My bet is that not one single secondary mortgage market loan has been written from a Zestimate. NCRC will trot out “victims,” eventually, though. “Victims” make for good TV.

    7. David Losh November 1st, 2006 5:04 pm

      Sorry, but I don’t get it. The internet is entertainment. I don’t go to the internet with any expectation of getting anything of value unless I pay for it. Honestly the things I am paying for, such as plane tickets, feel like a rip off to me.
      Given the premise of Zillow it would seem Zestimates prove it’s the fact that after decades of racial sensitivity there is black and white disparity.
      Zillow is a computer program. The program is not skewing the data as an appraiser might. The program is based on what the Real Estate internet business model is aiming for; statistics based on data.

    8. Kevin November 1st, 2006 5:27 pm

      You could be right. Daily Kos et. al are kind of busy now, and will be till at least a week after the mid-term election, regardless of the result. That gives Zillow about two more weeks.

    9. David G November 1st, 2006 6:17 pm

      Hi Guys, it’s David from Zillow.com. Thanks for your ongoing coverage and discussion of this topic. We are reading it.

      Regarding Joel’s and Greg’s advice –

      Yes, we’re not having much fun right now and yeah, we understand the court of public opinion. Unfortunately, the NCRC’s opinions make for great headlines and so they’ve been well covered. Our PR folks are however very active in this – I don’t envy them – at least (most) blogs have comments, whereas you cannot make a journalist to quote you. Ours is simply not the juicy end of this story. That said, we’ve had generally fair treatment in the MSM, with our statement that the claims are groundless making it into most every story, as well as quotes from Lloyd’s blog post addressing our transparency into accuracy.

      Something I’ve learnt from the “naked service” I do on blogs is that arguing against perceptions is a losing battle for a corporation under criticism. I actually think Greg helped to teach me that. It’s not our style or good business to “fight back” — and I’ve learnt that it’s only productive to weigh in on discussions where I can correct inaccurate assumptions or add new and relevant information — merely kicking in a contrary opinion does no good. Since we know little more than the NCRC’s opinion of Zillow, there’s little to contribute.

      So, we are on the record (with the MSM and elsewhere) regarding that we think the claims made thus far against Zillow are groundless. Should we hear of new claims, we will directly address those but further than that, we’re only focused on starting a productive discussion with our critics. We plan to meet face-to-face with the NCRC next week but have already spoken with them and plan to continue that dialog tomorrow.

      What is newsworthy, IMO, is the strong support we’re seeing – particularly from bloggers. An objective 3rd party opinion has phenomenal credibility — and I’m hopeful that these voices are being heard by our critics and the FTC.

    10. Greg Swann November 1st, 2006 6:43 pm

      > Something I’ve learnt from the “naked service” I do on blogs is that arguing against perceptions is a losing battle for a corporation under criticism. I actually think Greg helped to teach me that.

      I do have to salute you for your phlegamatic tenacity. They hired the right guy for your job.

      > What is newsworthy, IMO, is the strong support we’re seeing – particularly from bloggers. An objective 3rd party opinion has phenomenal credibility — and I’m hopeful that these voices are being heard by our critics and the FTC.

      I’ll do something with this. The differences I have with y’all are nothing compared to these ludicrous charges.

    11. CJ, Broker in L A, CA November 2nd, 2006 4:19 am

      >I’ll do something with this
      I’d add my voice, too. Greg, when you work out your plan – “open letter” to FTC or whatever – please post it so I can sign on. Thanks!

    12. Seattle’s Rain City Real Estate Guide » Zestimates & Seasons Change November 5th, 2006 3:42 pm

      [...] Zillow makes the big time You know you’ve made it when somebody complains to the government about you or otherwise starts a legal action against you. Greg on the BloodhoundBlog and Joel on the Future of Real Estate Marketing has all the gory details and the play by play action on the NCRC complaint to the FTC regarding Zillow. Frankly, I prefer it when Zestimates are too low. It’s keeps downward pressure on the county assessor’s desire to collect all the property taxes he thinks he’s entitled to. I only want a high Zestimate when I sell the house, when I’m living in it (which the typical case), I want it to be low! Hopefully this will blow over like a winter storm. Besides, nobody complains when the local weather report is 10% off (which has a bigger day to day impact on me than an inaccurate zestimate does). Speaking of which, has anybody else started building their ark yet? [...]