Real Estate Science: Zillow Listing Labels Demystisfied

So, this is a post I originally posted over at All Around KTown (remember those days?), but now that the Spring Selling Season is swingin' on in, I think it's definitely worth a repost. 

As a lot of you might know, I do the real estate. And in doing the real estate, I get a lot of leads, calls, emails and what not from Zillow (as well as other sites). I also know that my clients LOVE to look for houses on the Zillow. Like love, love it. And for the most part, it's a good site and a great place to search for homes. Sure, the Zestimates are totally cray, but hey, I get it. They're fun and they drive traffic.

However, in the last several months, Zillow has started labeling certain properties in a way that is (to put it mildly) confusing and misleading for consumers and (to put it bluntly) absolutely maddening for real estate professionals.  So, in order to keep from having to explain these different categories of Zillow properties to consumers and clients over and over (and over) again, I'm going to demystify them here for you, right here, right now.

"Pre-Foreclosure"

 

So, this is one of my favorites, the Pre-Foreclosure, or Pre-Foreclosure Auction. If you read carefully in their serach section, you will see that this category (along with the next one I will discuss) is considered "Pre-Market," meaning not on the market.

 

Zillow explains this label like this (bolding is mine):

This property is scheduled to be sold at a foreclosure auction. The lender initiated foreclosure proceedings on this property because the owner(s) were in default on their loan obligations. This property is not found on a multiple listing service (MLS).

That part in bold is key. Pre-foreclosures are not currently on the market.  That's key. They also have a link to a page that has some fairly horrible advice about how to go about contacting a seller to buy a pre-foreclosure. I'm not even going to link to it here, because unless you are a seasoned investor/body builder DON'T DO THAT.  Now here's the part where I vent a little.

First, houses that are to be sold at foreclosure auction are listed publicly a few weeks before they are actually auctioned off at the courthouse, yet this listing is 42 days old. So how is Zillow getting this information? No idea. And why (other than, of course, traffic), are they advertising that your neighbor is about to lose their house to foreclosure? Wish I knew.

Second, look at that "Foreclosure Est" or "Estimate" above the Zestimate. A lot of consumers are looking at that number and assume that's what it's going to go back on the market for or what they could potentionally buy it for. That is not correct. The Foreclosure Estimate is the amount, based on current tax records showings the mortgage(s), that Zillow believes the bank will wind up buying the house back for if it doesn't sell at auction (which most around Knoxville don't. Your city's milage may vary).

Yes, I bold a lot when I'm upset.

So, to summarize Zillow's Pre-Foreclosures:

1. If you call me about them,  I cannot help you buy them. They are not on the market. 
2. The only way I can show these homes is through unlawful breaking and entering.
3. Unless you buy them at the courthouse auction, you will most likely never buy them for anywhere near that "Foreclosure Estimate." 

"Foreclosed"

 

The second of Zillow's "pre-market" property categories is a lot trickier and misleading than the previous one. In Zillow terminology, "Foreclosed" means this (again, bolding is mine):

This property is owned by a bank or a lender who took ownership through foreclosure proceedings. It may soon be listed for sale. This property is not found on a multiple listing service (MLS).

 

Again, just like "Pre-Foreclosures," "Forclosed" homes on Zillow are NOT ON THE MARKET. Does the bank own them? Yes. Are they available to buy? No. Not even if you know someone who knows someone who works at Wells Fargo? No. Not even if you join a secret society that all Realtors must surely be hiding from you that you desperately want into? No (note: this secret society does not exist). Not even if you ask me 12 million times? No.

These properties currently exist in a limbo state. They will not be available for sale until the bank does all of their due diligence on them (appraisals, inspections, trash outs, etc.) and they are listed by an actual real estate agent in the MLS.

Again, Zillow gives you a "Foreclosure Est" or estimate right above their "Zestimate." And again, there is NO WAY YOU ARE EVER GOING TO BUY THE HOUSE FOR THAT "FORECLOSURE ESTIMATE" PRICE. 

I guess I also use all caps a lot when I get upset.

So, to summarize Zillow's "Foreclosed" properties:

1. If you call me about them,  I cannot help you buy them. They are not on the market.
2. The only way I can show them to you is with a crow bar (which again, is unlawful breaking and entering) .
3. There is almost no chance you will ever buy them for that "Foreclosure Estimate" amount.

"Foreclosures" 


Finally, a label that doesn't make me want to scream. These are the real deal: on the market, bank owned properties that are ready for you to buy (and where I get all these pictures from). Hot dog!

And yeah, sometimes, at least according to Zillow's "Zestimate," these are great deals ($66,000 list price vs. $111,000 Zestimate). However, always keep in mind that the condition of each foreclosure is different and some may need a lot more work than others (new HVAC, roof, appliances, plumbing, exorcism, etc). Some, on the other hand, will look pretty much like any other house. Those are going to be listed closer to market value. The bottom line is, unless you get really lucky you get what you pay for. 

So, to summarize Zillow's "Foreclosure" properties:

1. If you call me about them,  I can totally help you buy them.
2. I can show them to you by setting up an appointment and using an MLS key or combo code to get in.
3. You may get a good deal, but you also may have to do a good bit of sweat equity. And no, banks don't like to do much downward negotiating in the first 30 days of the listing. 

And that's about the size of it. Please note that I don't work for Zillow, I'm not out to get Zillow, and I'm not an expert on anything (except maybe Instagramming cats and scary dolls).  I just feel that this information may help to avoid a lot of confusion for homebuyers looking on Zillow's site.

If you have any further comments, questions or harangues, feel free to leave them in the comments or send them my way. And please, use Zillow to do your house search. Just use me to buy your house :)