At a party recently, I had the chance to meet Richard Barton, the founder of Zillow and he mentioned he was starting up a real estate site. He was a nice, very low key guy who happen to be one of the founders of Expedia.com, which turned the travel industry on its ear. His new site, [Zillow](http://www.zillow.com/) got everyone’s attention and no one knew what it was – until yesterday. Inman spent a lot of effort peaking our curiousity and I got a lot of calls from people in the industry asking what the heck it does.
Wednesday was launch day. I read four articles this morning about the site and got excited to check it out for myself when I got into work. The NY Observer article was especially good. In fact I read it on my Treo as I commuted in to work.
[Manhattan Swept Up In Zillow’s Midnight Ride [New York Observer]](http://www.observer.com/20060213/20060213_Michael_Calderone_finance_newsstory1.asp)
[A New Web Site For Real-Estate Voyeurs [WSJ]](http://online.wsj.com/article/SB113935396648967688-search.html?KEYWORDS=zillow&COLLECTION=wsjie/6month)
[How much is your house worth? Zillow knows [NYT]](http://www.nytimes.com/cnet/CNET_2100-1038_3-6036441.html)
[What’s your home worth? Get a ‘Zestimate’ [CNN]](http://money.cnn.com/2006/02/08/real_estate/money_zillow/?cnn=yes)
As far as the media coverage goes, I find it interesting that technical tools like this are often painted as spelling the end of full service brokerage services. I find this point hard to accept. I think that tools like Zillow and others are a natural evolution of technology and special services like this offer something that full service brokers cannot provide and really aren’t in business to provide. I think its kind of like the iPod. Apple builds them but third parties build all the add-on accessories.
The result of these tools is a more efficient market because of the additional flow of information. Its also raises the bar for full service brokers to have staff that are more fully informed about the market. There is opportunity to interpret information. Over this next year or so, the number of transactions is likely to drop and many brokers who have relied on being order takers will now have to actually market. Those that always marketed in boom times, should have nothing to worry about.
Since the Zillow involves valuation, and I am an appraiser, I was especially curious because its such a daunting effort to automate valuation on such a large scale. In fact, for the most part, the lending industry has been trying to do this for the past 5 years with limited success (If you base success on accuracy rather than simply pushing paper for the files to keep the regulators happy). A few months ago, a national lender told me that out of the 10 major automated valuation services (AVM’s), 8 were totally unreliable, 1 was marginal and 1 was pretty good. This lays the groundwork for my initial skepticism about Zillow, but I am open minded. I think it will evolve and will have more strength in certain markets than others depending on the data they are fed.
Well, apparently, the public relations juggernaut the emerged over the past few weeks with the build up, overwhelmed the site early in the day and as of 11:51pm tonight they are still of the air. I found their [ZillowBlog](http://www.zillowblog.com) which explained the problem and put a human spin on it. They should definitely link the blog to their home page to keep a dialog of their technical progress.
For those who were lucky enough to get access, the reviews were pretty good but basically mixed (after all this is a beta and there is a lot more data for them to tap into.) Of course the “red light theory” seems to apply here. Users will likely only remember the valuations that were not accurate and not those that were.
I anxiously await my turn. I am sure this is going to be fun. More to come.
_As seen from their web site_
Tags: Zillow, New York Observer, Zestimate
I did get into Zillow.com yesterday, took it for a test drive and was left a little confused and disappointed. Before I go any further, let me disclose that I am both a certified appraiser and a licensed salesperson. That being said, I have extensive knowledge of my local market and like to think of myself as open minded and one who fully embraces technology. Let me also say that I believe technology is the future and there is tremendous demand for services like this.
All that said I figured the best test would be to see what my house is worth. Especially since we were recently thinking of buying another house in the neighborhood, and I had taken the time to research nearby sales. I even asked one of the top producing agents in my sales office for his opinion of value and our estimates were within $10,000 of each other. All that said, I looked up my house on Zillow.com and ran it through My Zestimator. The first Zestimate came in at $523,593, but in all fairness it had very little property data (room count, square footage, etc.) to go on. So I entered the correct square footage and it recalculated the Zestimate down to $420,646. Granted my house is smaller than average, which gives some logic to the drastically lower Zestimate. But when I took it a step further and entered in all fields (number rooms, bedrooms, bathrooms, square footage, stories and year built), it recalculated My Zestimate at $197,757!
Now from my research and experience, plus that of a top local agent, I can tell you that one of these figures was about 5% below the average of our estimates, which isn’t bad. But for someone who lacks access to an extensive database like the local MLS, or the experience to interpret the data, how would they know?
Like I said, it left me confused and disappointed. Confused because the more data I gave the program, the less valid the Zestimates became. Disappointed because it looks like Zilliow.com isn’t putting me out of work anytime soon, so I have to stop writing and get back to work.
I looked at it. It was useful, but I would have to supplement it with information from the county recorders web site (which I assumed Zillow downloaded). My nextdoor neighbor’s house is very similar to ours in size, age and condition, and the lots are almost identical. The valuation was 25% off between the 2 houses. Probably because theirs has been sold twice in the last decade and we have lived in ours for almost 20 years.
[…] In only its early stages, this company has the opportunity to create more transparency in the real estate market and disrupt the way business is done. Real estate agents will have to change their marketing techniques and become more innovative in their approaches to acquire new clients. Jonathan Miller puts it well: “The result of these tools is a more efficient market because of the additional flow of information. Its also raises the bar for full service brokers to have staff that are more fully informed about the market. There is opportunity to interpret information. Over this next year or so, the number of transactions is likely to drop and many brokers who have relied on being order takers will now have to actually market. Those that always marketed in boom times, should have nothing to worry about.” […]
[…] How many new real estate blogs just popped up this week? First we had ZillowBlog from Zillow chairman Rich Barton, now we have Glenn Kelman’s from Redfin. Glenn made an interesting comment, that Redfin may even consider advertising on Zillow. It’s all getting so, uh, ….. incestuous. Zillow’s reading Curbed, Matrix,Freakonomics and Rain City Guide, Redfin’s referencing Zillow, the New York Times blog is referencing both, and there’s a slew of lesser-known real estate and business blogs blathering on about all of them. Oh, and that includes me too, I guess……. […]
Zillow is really fun and funny. Put in your address. Go to where you can adjust your “zestimate” and change the date your house was built to 2000 or 2005. My house, if I had rebuilt it (which I essentially did in 2000) would be worth 250,000 LESS than the 1956 rancher it used to be. Who new “midcentury modern” was so valuable? It did the same thing to my parents townhouse, our beach house and every house I tried it with.
The valuations for our block are so out of touch the exact same house (sq footage, lot, location) right next door to each other has a variance of 300,000 bucks – almost 40%.
A fun site, but as accurate as Enron’s books.