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What you need to know about third-party for-profit real estate search sites

     Let me be clear about the purpose of this article.  The purpose is to encourage buyers or sellers to interview agents, mortgage lenders, and other real estate service providers themselves rather than be referred to someone that is paying for the referral.   Zillow, Trulia, Redfin, Opendoor, Redfin, and other sites all compete for you to search for homes through their sites AND FOR YOU TO BE REFERRED TO REAL ESTATE AGENTS, MORTGAGE LENDERS AND OTHER PARTIES PROVIDING THEM INCOME.  If you are considering the purchase of a home in the Houston metropolitan market then we suggest using the Houston Association of Realtors (har.com) which is the site where Realtors list Houston area properties and where the other sites get their property information.  Be aware that most sites where you search for properties (other than Har.com) generate referral income from Realtors, mortgage lenders etc. so their primary motive is NOT to connect you with the best available third-party.  Their business model goal is to generate maximum referral income by providing your information for a referral fee.  There are also issues of information accuracy with some for-profit search sites.  Below are some recent examples that are intended to be updated approximately every 60 days to post only the most current reviews that are NOT on the above sites. 

Zillow Information and Reviews

     Zillow charges Realtors a monthly fee for advertising within a geographic area such as a zip code based upon their most recent effort to sign me up with them.  The more agents within a zip code the more money Zillow makes.  Consumers pick from among the real estate agents who have paid to be listed in that area.  The more reviews that a real estate agent has received through Zillow the more likely a consumer will select them.  However, if you pay additionally to be a “Premier Agent” then being featured as one of several “Premier” agents on the top of the screen showing properties then the greater the likelihood of being noticed and selected.  The same process allows Zillow to have multiple lenders who pay to advertize in a particular zip code.  What’s wrong with that picture?  Nothing as far as Zillow is concerned.  Generally speaking, as a Realtor the better the reviews the better the business. Certainly there are excellent agents who work with Zillow and deserve the high reviews that are shown on the Zillow site. But do not trust everything you read on the internet.  There are a number of negative reviews from consumers at consumeraffairs.com and they are not being published here until I can confirm that they are not “hate” reviews.  Without using reviews that we are unable to verify, in an interview with Houston Buyer Agents I can share several personal instances that I do know to be true which should discourage consumers from going to third-party sites instead of HAR.com

     In order to understand just how profit oriented (and not consumer benefit oriented) many third-party sites are, go to [ www.investopedia.com/articles/personal-finance/110615/why-zillow-free-and-how-it-makes-money.asp ] or click the link below, which gives a good explanation of the profit model for Zillow.  In the past several years as an additional profit center, Zillow, Opendoor, Redfin, started buying properties from sellers and remarket them through multiple listing services such as the Houston Association of Realtors.  Whether you are relying on third-party estimates to sell a property or to determine a fair market value to purchase a property, read the July 2019 article by John Wake at forbes.com about how Zillow’s valuation estimates are often low [ www.forbes.com/sites/johnwake/2019/06/30/new-zillow-zestimate-accuracy/#400c00df28a0 ].  It makes perfect sense if Zillow is buying properties to flip them.  The July 2019 article is an update from research that John Wake did in 2016. 

Bottom Line:  Please use HAR.com to search for properties.