Well, it's been over 10 years since I did a blog article on why it's not good to use Zillow when you're looking for real estate here in Hawaii. My name is David Buck. I'm a full-time real estate broker. I've been practicing here since 2001 and born & raised in Hawaii. What Zillow doesn't know is what's actually going on on the ground.
Recap: Reasons Not to Use Zillow in 2014
Back then, we covered the three reasons why not to use Zillow, Realtor.com and Trulia. I'm going to do another segment later on why not to use Realtor.com. Since then, Zillow has bought Trulia and they're basically one and the same. But for purposes of this today we're going to talk about three additional reasons why not to use Zillow when searching for real estate here in Hawaii. If you want to stick around to the very end, I'm going to have some great recommendations for you on what to do going forward and why not to continue to use Zillow.
Okay first I'd like to recap the original three reasons I wrote about why not to use Zillow. The first of which is Zillow and Realtor.com and Trulia at the time were set up for advertising purposes. Zillow has gotten a lot better at that. Their business model has other revenue streams that I'm going to get into in a little bit.
The second reason why is you cannot filter between fee simple and leasehold ownership and to this day you still cannot do that on Zillow which is a huge failure on their behalf in my opinion because I get calls all the time from people that see something on Zillow and normally when it looks too good to be true it's because it's leasehold where you don't know the land interest underneath the building where it lies on. Some examples are down here on the Gold Coast here at Diamond Head or there's a bunch of them in Waikiki. However, yeah if you see something that looks too good to be true on Zillow you can't filter out all that leasehold stuff that you don't want to see. If you want to be able to do that you definitely want to use a local real estate broker. That's a little spoiler alert here.
The third reason why you didn't want to use Zillow back then was because you couldn't tell the difference between if something had an accepted offer on it or not. Now they have gotten a lot better with that. Yeah so in fairness to Zillow you can actually tell now the difference between whether or not something has an accepted offer on it. Forever I get calls from people saying hey I see this property but they didn't realize that they had an accepted offer. Zillow is now getting a direct feed from the Honolulu Board of Realtors so you can tell when it says active in theory. It should be available but not always guaranteed but if it says active under contract that means that they do have an accepted offer on it.
3 More Reasons Not to Use Zillow in Hawaii
Now, let's dive into the three additional reasons why you don't want to be using Zillow for your real estate search here in Hawaii.
1. Valuation
The first off is the obvious one which most people around the United States already know about is valuation. So first off I want to tell you about a first-hand story on our own property where Zillow basically sent us worth a million or two million more than it was worth. What Zillow failed to notice was although this is a beautiful view on the same street right around the corner you can have a view more like this that buyers are willing to pay one to two million dollars for. Something that Zillow won't know by being boots on the ground here in Hawaii.
I've been practicing real estate here for 24 years and I have never overvalued something by a million or two million dollars or undervalued it by a million or two million dollars. That is way off the mark. To further compound on this hypothesis that Zillow has no clue what they're doing when it comes to valuation their CEO Spencer Radcliffe years back sold this home for like 40% less than what his estimate was worth and that made all the headlines and all the news and he was the first to come forward and said that your best to use a local real estate broker to find out what the value of your property is.
Next off during COVID I'm not sure if you remember but Zillow started getting into the eye buying business model where they're buying houses to flip quote unquote. I knew this is a bad idea going to it at a family member that invested in Zillow because of you know they're huge on the stock exchange. Once again they have no clue how to value a property so they end up taking a bath of nearly a billion dollars with their Zillow offers program. In one quarter alone they lost 300 million dollars in overpaying for property so they you know after bleeding through a billion dollars they shortly thereafter harpoon that program and they're no longer getting into the business of buying homes.
2. No Merit on Realtor Experience
Now, the second reason you don't want to use Zillow when searching for real estate here in Hawaii is for most people it's the most valuable asset that they're going to be buying or selling. There's really no merit as to who you get paired with so what happens for many many years once they got out of advertising Zillow started basically (I fell prey to this victimhood, I no longer give them money) it's just a matter of who spends the most amount of money with Zillow is the person that they'll hand off to on the other end of the line. That's what started happening and on top of that they're selling that to multiple realtors all over Oahu so like say if you're a consumer you went to Zillow like I have got interest in that property and you click I want more information you're at one point getting bombarded by three or four different realtors it's probably driving you crazy and to compound that there was no sense of merit to that it's basically whoever spent the most amount of money I know some people first hand they're spending 10, 20 or 30 thousand dollars a month. There's agents with no experience in selling real estate. I would think if your investing your money in your biggest asset, you would want someone with experience that really knows what they're doing. Like I said, I've been in the business 24 years and I don't think you want to just click on and work with a Realtor who has the biggest advertising budget versus someone that actually knows what the heck they're doing.
3. Zillow is the Antithesis of "Buying Local"
Okay, now the third reason you don't want to be using Zillow today is Zillow is literally the antithesis of buying local and the reason I say that is Zillow rolled out a program several years back called their flex program. Basically, what they're starting to do now (which everyone in the real estate community had a sixth sense that they were going to be doing years back) is they're entering the real estate game. So, with this Zillow flex program they're parting with a real estate broker and what they're doing is they're charging anywhere between 30 to 50 percent of a commission goes back to Zillow so what does that mean that means just like number two there's no guarantee on who you're going to get and how experienced they are and if they're skilled at their job. Then, up to half of that money is going to go to Wall Street so it's going to go to Zillow.
To compound that us as brokers, we have to take out errors and admissions insurance in case something ever goes wrong in a transaction. Ie -in case we get sued. Zillow has no liability in this game so they're taking half of the money outside of the state of Hawaii and it's going to pad the pockets of Wall Street. It's not going to go back into the community here in Hawaii. That's going to be the third reason why you don't want to be using Zillow today.
To summarize things in the current environment - who are the winners and who are the losers? Well, the winners are going to be Wall Street and Zillow and the losers are going to be local real estate brokers here in Hawaii that aren't giving half of their money away to Zillow and the consumer like I said at the end of the day, the consumer loses because they are not getting the best broker to be paired with number one and number two money is getting shipped outside of Hawaii and not getting invested back in the community.
The Solution
Now, to cover that final solution that I talked about in the beginning (you may have connected the dots and figured out by now), but rather than starting your real estate search with Zillow you want to pair with a good real estate broker that's licensed and experienced here in Hawaii. Not just the first person that shows up and that pays Zillow the most amount in advertising or is willing to compromise their morals and give half of their hard earned money to Wall Street into Zillow.
I do recommend working with a local real estate broker and if you want to work with me, I'd be honored. Our local website HawaiiHomeListings.com has the ability to filter out all that leasehold stuff so you're not looking at stuff that looks too good to be true. You'll know what the actual status is of a listing and you're going to get good data. Even though Zillow has a direct feed from the board of realtors, here's a first-hand experience I experienced yesterday:
I have a client looking in Waipio Gentry, I type that in the search bar on Zillow and guess what comes up? I get a property in Upcountry Maui? I'm not looking for Upcountry Maui. I'm looking here on Oahu but Zillow doesn't know that. It's best to partner with a broker here that knows what the heck they're doing. Then, on my website we've got every neighborhood broken down by the Honolulu Board of Realtors and every condo complex on the island. If you want additional information or how to set those searches feel free to reach out and give me a call at 808-371-3509. Mahalo and have a great day.











