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The Power of Print: Perception as Truth

Published by Joseph Ferrara (2) May 2nd, 2007 in Sellsius Real Estate Blog and zillow. Comments

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Don’t believe everything you read, and only half of what you see.

I found the piece below in today’s OC Register, Marketplace /Building and Growth section. The small subheading reads: From the Blog Files. Jonathan Lanser is the OC Register blogmeister so it may fall under his jurisdiction. This little piece of pseudo-journalism sits next to a large headline at the top of the page, which reads “Economist’s take on housing market’s spiral” (an interview).

Briefly

Home values off
5.3% from peak,
Zillow shows

O.C. home values—or “Zestimates”–are down for the third straight quarter, according to online price tracker Zillow.
In 2007’s first quarter, Zillow said the typical home here was worth $651,255, down 0.5 percent from the previous quarter and down 0.4 percent from the year-ago quarter.
Unlike other price measures, Zillow’s median encompasses the estimated value of all the homes in O.C., not just homes that were sold in a given period.
This index of Zestimates is off 5.3% from the cyclical high of $687,479 hit in 2006’s second quarter.

Emphasis is mine (see “buzz word spin”). Because this little tidbit appears in a newspaper, it has enormous power to influence consumer perception of Zilllow as an authority on the real estate market by virtue of it zestimates. Its publication in print is a sanctification in the inky waters of the journalistic font we call News. And by its association with other articles it is swaddled in a robe of truth.

Buzz Word Spin

Notice how the writer has cleverly sprinkled buzz words throughtout the piece to give it the air of respectability and credibility:

  • “Home values or Zestimates”. Seems like one and the same doesn’t it? A “first step” zestimate is not a home value, dear writer. Are you from Arizona?
  • “Price tracker”. Sounds formidable. The author would have you believe Zillow zestimates are “prices”. They are not prices, sir. They are computer generated “guesses” from unverified data.
  • “Unlike other measures”. A time worn marketing word play to imply that the Zillow median zestimate Zindex (containing ONLY zestimates) is better than those “others” which use actual sales.
  • “Index”. Another powerful buzz word. It is a economic credibility term, of enormous power when discussing real estate health. In reality, Zillow’s little collection of guesses is called a Zindex. Check the site.

What disturbs me most, I guess, is that no reader who “knows better” can dispute this piece of journal-babble on the newspaper’s home turf. (online you can). This “report” resides behind the iron gates and stone walls of the newspaper castle, safe from assault. You would think a blogger under Mr. Jonathan Lansner’s watch would “know better.” The writer of this piece should be tied to a post and whipped with a Pennysaver, immediately, if not sooner.

Note to Athol: Yes, we’ve all worked over Zillow enough to get what it is and is not. But have the masses?

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  • So, I asked my dog about the Austin market. He panted and laid down, indicating the market is okay and relaxes him.

    Then, I asked my psychic how this summer would pan out, and she said the cards read a strong buyer's market.

    Oh, and I asked my nine year old what market indicators she was using to come to the conclusion that the market is up, and she said that she likes the color pink and wants some gatorade, so the market must be doing well.

    And, I ran the retrospective Zestimate for my neighborhood (which doesn't even reflect my 2 year old home as an existing address- what a useful tool) and it is saying that prices have decresed (which is actually very false).

    THEN, I wrote an "article" about the various market indicators and referred to my "sources" (remember, a dog, a psychic, a nine year old, and a tinker-toy-website), as "newsworthy" sources of fact.

    No wait... then I woke up and realized that it was all a stupid stupid stupid stupid dream! I can't believe ANYONE would use Zillow as a factually based source for an article OR even an opinion- WOW!
  • Make sure Jonathan Lansner doesn't get a hold of your "indexes" or he might publish them.

    I can't believe that zillow piece was written by an OC Register journalist---I'd wager it was straight from a zillow press release and a cut and paste job.

    WOW is right.
  • The Zindex is the only housing market index in the US that takes account of the change in value of ALL houses.The legacy approach of using "recent sales" data to report house value trends has been questioned.Zillow is also one of the most referenced sources of housing information. And lastly, the housing market has seen significant changes over the past few years and consumer interest in the value of real estate has boomed. So why is it that you're surprised to see the Zindex data in print?

    Considering the language used in this post and Sellsius' financial incentive to criticize Zillow, it is clearly disingenuous to pick on this reporter. "respectability and credibility" indeed.

    The accuracy of Zestimate values can differ from one home to the next. That's not contested and we clearly point that out on Zillow.com but it also has absolutely no bearing on the accuracy of the aggregate Zindex data. I've explained this before; the Zindex is the median Zestimate; it excludes outliers and both internal and independent studies have shown that inaccurate Zestimates fall evenly on either side of the median value.
  • "Note to Athol: Yes, we’ve all worked over Zillow enough to get what it is and is not. But have the masses?"

    :-O
  • David,

    I questioned the factual accuracy of the article, as follows:

    1. a zestimate is not a home value, is it?
    2. Zillow is not a price tracker because zestimates are not prices--sales prices are prices, list prices are prices, but zestimates are not prices. correct?
    3. the Zindex is not an index.
    4. The exclusion of actual sales data does not make the zindex better than other indexes, does it?

    Zindex is no more than a starting point:

    If, as you have repeatedly said, a zestimate is only a starting point and not to be used by the serious buyer or seller, why would a Zindex of those same starting points be any more useful to the serious?

    Last question: Did zillow feed this report to the OC Register? It seems very similar to what zillow says. Is it a cut and paste job?
  • Let's review the Zillow plague ONCE MORE:
    "1. a zestimate is not a home value, is it?
    2. Zillow is not a price tracker because zestimates are not prices–sales prices are prices, list prices are prices, but zestimates are not prices. correct?
    3. the Zindex is not an index.
    4. The exclusion of actual sales data does not make the zindex better than other indexes, does it?"

    David, you said that current market data is questionable, however the data you use today (which your website claims to be current) becomes your "Zindex" down the road, so your "Zindex" is BEHIND reality and that is somehow a flaw with Realtors, NOT a detrimental issue for Zillow? Further, a Realtor is where you cannot be- on the ground, in the home; so until Zillow can physically view a house and know the difference between pergo and wenge wood flooring, your accuracy will ALWAYS be plagued. I would trust current sales data over that variable any day! Regardless of where "Zestimates fall" (detrimental to buyer OR seller), INACCURACY is INACCURACY is INACCURACY period- just ask Bernanke.

    And a good reporter ought to know that!
  • Sellsius-
    Yes, I did e-mail Jon this morning letting him know about the report. But NO, I did not tell him what to write -- all I did was point him to our blog post.

    I'll let David respond to the rest.
  • I'm counting on Sellsius to use their vast internet presence to set the record straight regarding Zestimates for consumers across the country! Can I count on Sellsius to take care of Lansner too? Or should I flee the OC in search of more stable housing stats?
  • Yes Kelly. Aside from their zestimate reports' unreliability to gauge real estate market health, IMO Zillow does not respect owners' rights with respect to their property. We will continue to point that out. The day is coming when an owner will assert their rights:
    1. not to have a knowingly inaccurate zestimate beside their home (an opt out)
    2. someone else's calling card on their listed home for sale (exclusive right to control advertising of their listing)
    3. Q&A; that they must police simply because some stranger decided to say their home is for sale.

    We know real estate agents have zillow's number. But many consumers do not. Zillow feeds the media its company line, which is fine, but I expect more from newspapers than virtual repetition of the company line. Maybe that's just me. But a cut and paste by newspapers too lazy to take a critical look at what they're posting as "news" is a dereliction of duty & unfair to the public they report to.
    Bottom line: The OC piece is a zillow infomercial. The fellow who was spoon fed the zillow pablum and regurgitated it on the OCR should have his home sold at it's zestimate and demoted to the comics section.

    Drew --I understand what you do and I have no problem with it. But news media ought to at least attribute the source of a basically verbatim reposting from zillow. At least the AP reports have the little (AP) symbol. Do you see my point?
  • Oh BTW David, that "legacy approach of using “recent sales” data" is the EXACT approach the tax assessor uses to value a house and tax it. Do you deny this?

    And the public tax assessor values are what Zillow uses when it cannot give a zestimate. True or false?
  • B.R.
    David.

    [...Considering the language used in this post and Sellsius’ financial incentive to criticize Zillow...]

    What financial incentive? Unless I am mistaken, your site suggestests to its visitors to contact a Realtor. I do not see you as a threat to my business. What I do see is a threat is that you believe you can control the home prices in and around the nation by perception, as if to say you have the end all be all of crystal balls. It simply is just not the case. Your site also claims your zestimate is within 10% some of the time(your stats you demonstrate on your site are frightening). I would say my problem with you is that financially my incentive to not approve of you is simple. The customer. To the consumer David, 10% is deadly to their wallets. 10% is the difference between being able to buy their next home, out of qualifying, or setting the wrong expectation on both sides of the transaction. Yes, David, until you can say you have an exact margin of error in all states and counties of less then 1-3% I will continue to say zillow is still zubjective.

    Agents beware: To place your clients home on zillow and not reach the true sales price of their home with a zestimate will put your clients (sellers) at a disadvantage. To advertise a price in an ad that is (10% more or less) to the contrary sales price of the home you're listing gives potential buyers an advantage over your sellers. The buyers/sellers are given no pop-up warning that this so-called tool is not a tool, and is dull and inaccurate thus creating a false expectation in negotiations leading to distrust of the seller who is simply selling in the CURRENT flow of their market and has every right to take advantage of the opportunity to cash out in his/her investment.

    On the buyer side it is a great tool if the buyer has been instructed that they need to appreciate the value of the home if not all of zillows facts match the facts on the ground. But, zillow will not do that, will they.

    Sellers should not post their home on zillow simply because it does not give you 100% control to bring their estimate equal or above a zestimate. In fact, the setting your own estimate feature dictates only a few ways to improve your homes value. Simply put, they dictate the value of even the improvments.

    Until you (David) make the sell side of zillow 100% accurate, no intelligent Realtor will endorse you. However, I do believe in free markets, you should have a right to allow use of a flawed product so long as you do not attempt to control pricing, which I believe you are very very close to attempting.

    I would think about listening to all of us. MAKE IT CLEAR ON THE SIGNUP PAGE THAT YOU ARE FOR ENTERTAINMENT PURPOSES ONLY!

    Signed,
    Unimpressed
  • BR --

    You misunderstood me; I was referring to Sellsius. These guys have a financial incentive to criticize Zillow; they operate a competing real estate website. I should have been clearer about that.

    Sellsius --

    If you want to get semantic, yes, we do track sales prices. Sales prices are a primary input to Zestimates. I think you're splitting hairs here -- this reporter is not writing a legal brief.

    The Zindex is an index; "Z"estimate "index". What is your point?

    As I've pointed out many times before, what makes the Zindex interesting is not the exclusion of sales but rather the inclusion of all homes' values.

    You're making too much of this. The Zindex is simply an index of recent house value trends. We think it's pretty good and we make it available quarterly, for free. Check it out:
    http://www.zillow.com/quarterlies/QuarterlyRepo...

    Drew told you very clearly that this article was in no way a verbatim. Why do you insist on continuing to slander Mr Lanser?

    FWIW, this time you really seem to have gone too far. I can't believe you threatened and insulted Mr Lanser (to quote you: "the author should be tied to a post and whipped with a Pennysaver, immediately, if not sooner, for posing as a journalist.") Do you really feel that way? If not, why did you write it? If so, please consider taking a vacation.
  • David--

    Zillow's graphs track zestimates not sale prices. The incorporation of sales data in the stew of a zestimate is not sales price tracking, in any sense of the word, as commonly understood.

    Do Zindexs contain actual sales data? You said they ONLY contain zestimated homes.

    Semantics on Landsner: It could never be slander, since slander is verbal, not written. Was he the author? It looks like zillow wrote it and it was just pasted it up there.

    Pennysaver Threat--- I do not condone physical violence. The language you quote is a metaphor. It is figurative whipping (not literal) of a Pennysaver to make the point that this piece is NOT journalism IMO-- it is basically a Zillow supplied ad, cut and pasted, and belongs IMO in a publication akin to a Pennysaver. And yes, I could use a vacation :).
  • I can tell you what's wrong with just about every home-price index (or whatever you want to call 'em) ... so we publish them all! (And if you think I'm stupid to publish Zillow's -- or whatever one you think is dumb -- The Register's Web site allows you to comment on every newspaper story we post! So, I urge you to FIRE AWAY!

    Here's a tracking of many of the Orange County ones, by the way ...

    http://blogs.ocregister.com/lansner/archives/20...
  • So Zillow uses recent sales prices? But David, you said that "legacy" approach was questionable...
  • I commend your openness Jon. And I have fired away. But the point of the piece is that NO ONE can fire away at the printed piece.


    "Home values or zestimates" is not accurate is it?
  • Sellsius-
    This is getting somewhat tiresome. Why do you continue to question the fact that Jon used his own words?? To quote your last comment "Was he the author? It looks like zillow wrote it and it was just pasted it up there."

    We've already told you this is NOT true. Do you need me to send you the e-mail to prove it?
  • Hi Drew!

    We justed asked the question because it looked like a cut and paste job. If you say it's not, then fine. We take your word for it. I'm off to get a latte :)
  • My Sock Puppet muddies the waters further at http://tinyurl.com/2b8sya

    Don't take him seriously though.
  • Sir Sock makes it clear....."as an unmuddied lake...as clear an an azure sky of deepest summer". And so kind to the unlatinized masses for providing the translations :)
  • ....look, I WAS a journalist-more on that later (like anyone would care) but the fact is in this "now" we dealing with information meeting expectation.

    Vetting the accuracy of information is more important in any venue than what you DO with the information on the world wild web. Home Index, Zill-OW, blah blah blah...he said, she said.

    And Alexa, that bitch...she actually PAYS ATTENTION to what people say to Zillow - and copies of David Lereahs' tome are selling used for .98 cents on Amazon.

    Everybody take a deep breath and check your location, location location.

    As Ms. Boardman encouraged me in a recent email: "Heckle away..."
  • Steven,

    Truth is built on perceptions which are reinforced and validated. Newspapers have established themselves as credible sources (tho fading somewhat). They serve to validate public perceptions. If the OC Register publishes that zestimates are home values then that perception is reinforced and validated by "news" print media. This is precisely why Z sends this info to the newspapers. Now, I'm not a journalist, but as a real estate blogger I know, and Z has said, that zesitmates are not home values. Mr. Lansner, I would think, knows that to be true also. Yet he published that it was. That doesn't sit well with my sense of journalism. Just my opinion.

    What I'm not saying is that Mr. Lansner is wrong to write about Zestimates and Zindexes or Dr. Suess--- but a newspaper writer has a higher standard or obligation to check his "facts". A zestimate is not a home value. That's a fact. I would expect Mr. Lansner to make that correction---would you Jon?

    As to the spin, it's zillowist to the core & I guess I should get used to the fact that newspapers may have a "zlant" and are not the unbiased reporters I, on occasion, idealize them to be.
  • It is the responsibiity of the reporter - and if that slips, it is the responibility of the p-blog-lic (?) to call the journlaists out.

    I agree with you - there needs to be a differentiation between opinion and information - and both need to be reported accurately.

    So, who is gonna call the rag that put forth the dribble? The OC Register should be called out on this.

    ..God, I love the blogging life!~
  • I agree Steven. The problem with print news is you can't call them out--unless you write an Op Ed piece---and maybe your viewpoint gets print space---after the fact.

    But, fortunately, if you want to call them out, you can online in the comment section and --tell Jon (the author) to correct the statement that a zestimate is a home value. Let's see if you have any power.

    http://blogs.ocregister.com/lansner/
  • I think most people think the media is nothing more than a giant ball of hoopla nowdays. It seems like a quarter of a regular 30 minute evening news is devoted to advertising "whats coming up next in this half hour". The content is sliced up into 30 second sound bites that defy anything more than a passing impression of anything.

    Even actual "true" figures and stats are reduced to meaningless data sometimes.

    Take everything that David Lereah for example has said over the last few years. By all accounts everything he reported as stats is "true", or at least as far as I know, no one fought back with "your numbers are badly wrong, check the math or stop making this stuff up", but it gets spun and presented and massaged into almost anything. 30 seconds of coverage can never convey anything without some kind of distortion.

    Even without the spin... Knowing that US Housing is looking at a 2.1% gain in 2007 (or whatever it is) is meaningless to an individual consumer everywhere in the country. Real estate is just too local.

    Even a very local figure tells you nearly NOTHING. Example in my town we have 231 active single family listings, with a 5.65 month supply. Ooooh a balanced market everyone says. However break it down further and you discover the bottom third of the market has been selling like crazy and is now a sellers market, and the top third of the market has been very stagnant and is very much a buyers market.

    Any number reported in the media is pretty much BS in one form or another. I'm personally overwhelmed with all the data for every subject floating around out there. I only really specialize in my own area. Thats why when I get sick I call a doctor, why I call a lawyer for legal advice, a dentist for my teeth, a mechcanic for my car, and why you should call a realtor when you buy or sell a house.

    Representation is the publics protection.
  • Quite true Athol....but...perception has a way of influencing buyers and sellers to the point they don't get representation. If they believe/perceive that it's a market with prices/values heading down (not appreciating that real estate is local because they are in the field every day as you are), they will act accordingly and delay taking action. Thus, they will not get the representation that will enlighten them ----they have been detoured by their negative perception.
    If you think the water is cold, you dont jump in.

    http://www.mikeandjen.cc/images/shrinkage.jpg
  • observer
    sellsius

    jon has been wrong AND has misinformed people (purposefully in my opinion) so much on his blog that it has become a joke. don't expect jon to ever admit that you're correct about his misrepresentation of zillow. just look at his more recent entry about population figures for OC!!!

    look, jon has a very obvious agenda and damn if he'll stray from that agenda. realise that and then you'll be able to read his entries with a grain of salt.
  • Here's what I wrote to Jon :

    According to Zillow:

    "A Zestimate home valuation is Zillow's estimated market value. Use it as a starting point to determine a home's value."
    Thus your statement that "home values---or zestimates", ie. that zestimates are home values, is a misstatement of fact.
    I must be from the old school, but I thought if a newspaperman got his facts wrong, he would publish a correction. Wow, how times have changed.

    No reply (yet) from Mr. Lansner. Perhaps he is not a newspaperman and just a blogger, which I guess is like being in newsreporter beta.
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