This is going to sound like a rant. And it is. But, it is an educated one. One more disclaimer; I did not use any articles or other blogs as sources for this subject because it seems as though all of them either have a bias because they are also real estate professionals or they are general economics publications and do not know the intricacies of this topic.
This is for anyone out there that frequents Zillow or Trulia.I am unsure if you have heard about this, but Zillow has recently acquired Trulia. In my opinion, this monopoly is second only to Comcast/Time Warner. Due to this, ListHub (owned by NewsCorp) has refused to supply Trulia or Zillow with any of their MLS data. ListHub is known to collect and distribute superior data than that of Zillow/Trulia. NewsCorp also owns Realtor.com®, which is the official website of NAR (National Association of Realtors). NAR has been trying to break into the online real estate listings market. They have been striving to do this not only because there is obviously a lot of money to be made there, but also because they are an organization that is directly funded by Realtors® (we pay an annual fee to be a member of NAR) and operate on behalf of their constituency.
Zillow and Trulia are certainly a great resource if you are a consumer looking to see what is available for sale in the real estate market. However, their "Zestimates" and "historical data" are incredibly problematic for real estate agents. I have written about this before. Their comparable sales statistics (which is the approach that real estate agents and appraisers use to value a home) is inaccurate far more often than not. Granted, most of the frequenters of these sites are window shopping, but eventually they will be ready to buy or sell! When they do reach that point, they will begin doing their own research (as intelligent consumers do) and they will see that data and take it as fact.
Zillow and Trulia have to rely on organizations and individuals in EACH MLS area with MLS access to feed their data into Truilia and Zillow. What a lot of people don't know is that the MLS is a service provided by their respective association of Realtors®, which is a professional organization for those real estate agents that want to be held to a higher ethical standard and volunteer to both pay to be a Realtor® and must prove their knowledge of the real estate industry to become a Realtor®. It is no surprise that the data on Realtor.com® is going to be far more accurate when the organization that operates that site is also the organization that provides the MLS nationwide.
Something else that most folks probably don't know is that the MLS is a service provided by NAR that was designed to make it easier for YOUR agent to view as many properties as possible to find the one that is the best for their client. Access to the MLS is not something that is provided simply because you are an agent. We have to pay for that access, which also funds it's operability. Essentially, Trulia and Zillow are just filtering an inadequate percentage of listing information away from the MLS by associate brokers and then causing those same brokers (and all others) difficulties by how inaccurately the data is presented. It is true that Zillow and Trulia make the process of browsing new houses from your home a lot easier, but it does not and should not replace the need to employ a real estate expert when buying your home. Buying a residence is the single largest financial decision that most people will ever make. You should NOT trust the algorithms of a website that makes their money from advertising and not the transactions themselves. Not to mention that advertising on Zillow or Trulia as a real estate professional costs a small fortune and doesn't guarantee that your information even shows consistently on their sites. If you don't believe me, just Google "Zillow Premier Agent Review." Realtor.com® is also guilty of the same membership conundrums as Zillow and Trulia, but they do host many more beneficial FREE services for us. At the very least, Realtor.com® is operated by the organization that is composed of Realtors® and lobbies on behalf of those members.
This is an incredibly complex and litigious subject. The merger was just completed on the 20th of February. That same day, ListHub promised to cease their agreement to feed Trulia and Zillow listing information AND Trulia submitted a restraining order from letting them do so. I certainly have my opinions about these service providers and I should! It is my profession. It is also important to the homebuyer because they may be led astray by the information provided by sites like Zillow and Trulia. They may decide not to employ the aid of a real estate agent whose job it is to protect them and act on behalf of their best interests. Don't get me wrong... I think these sites provide a fantastic product in terms of seeing what is available. Unfortunately, their means of providing comparable homes and estimated home values is incredibly poor and lacking. In theory it is great. In practice it is not.
Finally, I don't feel that monopolizing any industry is ever a good thing. I am pro-business. I own a real estate investment business. Being a Realtor® is being self-employed. However, I am also a consumer and a tax payer. Monopolies are harmful to everyone other than their included parties. If you are in the the process of buying or selling a home, please empliy a real estate professional (preferably me!). When a real estate transaction is not navigated correctly, it WILL cost you much more than a 3-6% commission.