If you missed the article in the Wall Street Journal, you need to read it. The reporter demonstrated how he went dumpster diving and resold the items on Amazon. This is not a new concept and appears to be happening quite frequently to unsuspecting buyers. The same thing is happening in the real estate market where you are getting “trash” from Zillow, Trulia, etc.. How? What does this mean for real estate sites?
What was in the Amazon article?
If you haven’t read the article, it is a must read. Journalist demonstrated how they could pull items from the dumpster (including expired food items) and resell on Amazon as new to unsuspecting buyers. I always wondered about this as I once ordered a toothbrush on Amazon, not thinking too much about it, when it arrived it looked like the package had been taped back together, I immediately returned the item. This has happened multiple times on various products and as the journalists demonstrated it is surprisingly easy to resell items straight out of a dumpster as new on the Amazon site.
The article was an eye opener in Amazon’s response: “Amazon exerts limited control over its third-party marketplace, which connects buyers with millions of merchants around the world. The company has said it isn’t liable for what these merchants sell, saying in court cases Amazon itself isn’t the one selling the products listed by third parties.”
“We had an internal saying: Unless the product’s on fire when we receive it, we would accept anything,” said James Thomson, who helped oversee the Fulfillment By Amazon program—under which Amazon handles logistics for third-party sellers—before leaving in 2013. He is now a consultant to brands with Amazon accounts. In his view, he said, “Ultimately consumers are the police of the platform.”
What is the impact on real estate?
Amazon has fought and won in court that they are merely a “conduit” for 3rd parties to sell their products. Essentially, they are stating buyer beware that they are not liable for information/items listed by third parties.
The same is true for real estate sites. For example, Zillow, Trulia, Redfin, etc… are merely a “conduit” for information from various third parties in the form of real estate information/listings. Just as in the case of Amazon, these companies are not liable for the information on their sites as they don’t actually generate the information nor do they “validate” the information they are receiving.
Don’t believe me, look at the disclaimer Zillow puts on their site regarding school information:
Disclaimer: School attendance zone boundaries are provided by a third party and subject to change. Check with the applicable school district prior to making a decision based on these boundaries. In addition, school data is obtained from a third-party vendor and not guaranteed to be accurate, up to date or complete.
The disclaimer doesn’t give me the warm and fuzzy feeling about the accuracy of the data on their site.
The article in the Wall Street Journal is an eye opener for the risks in using third party sites/platforms. In the case of real estate, you will not get a bad toothbrush from Zillow, but you likely will get inaccurate information that could cause you to lose substantial money if you aren’t careful. The best example of this “bad” information on real estate sites is square footage of properties. The square footage is input by the owner or realtor on a property and often includes below grade space which leads to improper “zestimates” and improper valuation of a property.
I have evaluated thousands of properties and rarely is the information on real estate sites totally accurate from number of bathrooms, remodel year, style of home, etc… There are many errors in the data that could have a material impact on the property value. Just as in the case of dumpster items being sold on Amazon, the same is true for real estate information sites, buyer beware as you don’t truly know what you are getting!
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Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
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