I’m not surprised. This story was bound to get picked up by the big media. It’s timely and the issue of home valuations is an emotional one, especially right now when it’s announced Tuesday that the US house price fall was the steepest since 1970.
I have had a day to think about this a little bit more since the allegations first came out. And I believe my initial gut reaction was correct – this whole thing whiffs of opportunism.
The most telling part of CNN’s piece was Amy from Zillow’s comment:
She added, “We were never contacted by them before they filed the complaint.”
Unfortunately, this story could “have legs” and if it does Zillow could have a big mess to deal with.
The problem for Zillow is this sort of publicity calls into question the very accuracy of their Zestimates. Now they’ve maintained all along that Zestimates are only a “starting point” – but the implication with that statement is while they are not entirely accurate, there is some validity in their data. That’s their hook.
Zillow depends on John Q. Public believing there is a nugget of truth in the home valuations it presents on his house. That’s why they’ve enacting such a sophisticated marketing and PR campaign to get their spread their numbers far and wide. To get as many people to buy into the Zillow reality field.
The danger in this kind of allegations, and if they’re not answered aggressively enough, is that that the existence of that nugget could be called into question. And if enough doubt is sowed, Zillow’s entire business could be jeopardized. Without a nugget, what do they have?