Happy House Hacking Podcast EP 49: Zillow is a Tech Company, Not a Real Estate Company

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Zillow is a Tech Company, Not a Real Estate Company

The path to happy home ownership for so many people begins with a search on Zillow. As a platform, Zillow has become a household name, synonymous with browsing homes, and it’s a starting point for so many on their real estate journey. However, it's really important to distinguish that Zillow is not a real estate company. It's a tech company. Zillow's business model is built on selling data and leads, not on providing comprehensive, strategic real estate services. 

At The Schwaegerle Team, we believe that success in real estate sales and real estate investing comes from a strategic partnership, not an algorithm. So, on a recent episode of our Happy House Hacking podcast, we discussed how Zillow works and what happens when buyers use it to find their next home. Learn what Zillow is really selling and why a local listing agent is your best bet for happy home ownership.

The Zillow Premier Agent Program and its Pitfalls

When Camille Schwaegerle became interested in real estate, she went on Zillow. That was the place to go. She started looking at listings, looking at homes, and then eventually reached out to a realtor on the platform for more information. To her surprise, the person she was connected with wasn't even the listing agent. This is where the issues with Zillow begin. 

The Lead Generation Reroute

On her Zillow search, Camille ended up getting passed to two or three different agents. Soon, they were all calling her asking tons of questions. Then she was in their follow-up systems, and getting all these emails from people who weren't even the listing agent and didn't know about the house she was inquiring about.

Now, being on the other side, we know that a bunch of real estate agents—not us, but a bunch of them—pay to be featured on that website to get leads. Those are the people consumers connect with. We've seen these leads cost agents anywhere from $10 to $15 per lead, and even more than that now. The key here is that the accuracy and relevance of the information for the consumer isn't always there. Consumers don't really know what they're going to get. Zillow is simply an online marketplace for leads.

Your Data is Zillow’s Product

Another major downside to Zillow is the fact that consumers' data is getting sold. The minute a user puts in their email address and phone number, it's getting sold to quite a few other people, and they will contact the user. Zillow is taking that data and farming that out to agents, lenders, and other people that are buying lists of leads. As Owen Schwaegerle said, “If it's free, you're the product.” 

In contrast, when consumers go through a local real estate agent's website, like our own, we're not selling that data. That's private, confidential information that is just here for us to help serve users. This distinction is vital for anyone serious about home ownership.

Zillow vs. the MLS

While Zillow can be a good place to start your search and get a feel for the market, there are some real risks of using it on your home ownership journey. The unfortunate reality is Zillow is not nearly as up-to-date as your real estate agent is. You might spend time chasing listings on Zillow that might have already sold, and the data just wasn't updated in time. Or maybe the data was incorrect regarding the showing availability.

We have had people call us and say, “Hey, I see this house on Zillow. I really like it. Can I check it out?” Then we will go look it up and say, “I'm sorry, that house closed two months ago,” as Camille said. If you want more accurate information, you have to go directly to the source, which is the Multiple Listing Service (MLS). Zillow is simply a third-party syndicator where they get the data from the MLS, which means there are lag times and inaccuracies. This is a huge issue for both real estate sales and real estate investing, as you can't rely on outdated information to make such an important decision.

Another issue is the lack of transparency about the listing agent. On Zillow, they're not featuring who the agent is as clearly as they're featuring the agents who pay to be listed on the website. So you might not be getting information right away and you could miss that window of opportunity where maybe they are negotiating offers or having showings available. This is usually because you’ll get rerouted to a Zillow premier agent who's paying a lot of money to be listed on their website instead of being connected to the listing team. 

Why a Local Real Estate Agent Offers a Better Solution

While Zillow can show you listings, it can't provide the comprehensive strategy needed for successful real estate sales or investing. A local realtor brings crucial expertise and professionalism. Realtors are required to have an explicit agency relationship with a client before showing them property. As realtors, we meet with prospective clients to understand their needs and have them sign an agency agreement. This ensures a safe, professional experience and protects everyone involved. In fact, our local association imposes a $2,500 fine if a real estate agent shows a property to someone without a signed agreement.

If an agent you contact on Zillow is willing to show you a house without a prior agreement, it's a huge red flag. They might not be informed about industry standards or taking safety seriously. A call with urgency from a Zillow lead often turns out to be unproductive. As Owen stated, "Most of the time it turns out to be a complete waste of time. They weren't actually qualified, they didn't have the financial power or they didn't know what their budget was and they raced into a situation." 

This is why a consultative approach, rather than a rushed showing, is in the buyer's best interest. Our motivation is our client's success. We take the time to sit down with you to understand your goals, dreams, and financial foundation. This allows us to create a strategic plan tailored to your needs. As Owen shared, "You need to be with a strategic team to help get a good understanding of your whole entire picture…in order to advise you properly." 

The Power of Local Expertise

Zillow is an excellent tool for browsing and getting a feel for the market, but it should never be your sole resource for serious real estate sales or investing. The information is often lagged from the MLS, your data is sold for lead generation, and you miss out on the crucial market information local real estate agents provide. If you're ready to take the next step, get off the apps and into a real partnership with a professional real estate agent. 

At The Schwaegerle Team, we believe the most valuable asset in real estate isn't online data, but accurate, real-time insight delivered by a local expert. Listen to the rest of our Happy House Hacking podcast to learn more on why local profession