If you're not living in a cave, you've surely heard of Zillow.com by now--it seems to be the talk of the world, and even got it's own Fortune cover a few weeks back. If you DO live in that cave, then get out more. Zillow would be that ever-addictive site that allows you to look up values of any house, more or less, in the US. Yes--you can look up your co-workers, your boss, your parents, your kids, and your neighbors. A whole new type of voyeurism.
Personally, I have enormously high hopes for Zillow. I think the combination of Zillow and Redfin (the real estate agency that rebates 2/3 of the buyer's agent commission to the buyer) could alter the course of the real estate industry, and my previous posts have certainly condoned that idea. Zillow, aside from feeding our voyeuristic tendencies, democratizes the previously closed world of real estate valuations. In our own searches, we've used Zillow as a benchmark every time, and it serves a definite value there. It's particularly useful for comps--those houses that have sold in the vicinity. And I am ever hopeful that Zillow will fully democratize real estate. A few weeks back, Zillow introduced the "Make Me Move" feature, which allows owners to market their home and name a price without putting the house on the market. Aside from being interesting, it has the potential to faciliate more sales and cut out the middlemen that have historically controlled the market.
For all my hopes, Zillow has some issues. We're looking at a particular house in the San Francisco area. Zillow still lists the house--which is 2 condos--as a single family house, though it wsa condo-ized in 2006. But--forseeing that they can't be omniscient at this stage--te creators wisely allow users to create their own estimates, so I can go in and change the specs. After changing housing type, square footage, beds, baths, etc, I can create a new "Zestimate," Zillow parlance for a value. And here's the problem today--the algorithm isn;t yet perfect. When I change this particular house from 1 bath to 2 baths, the price goes DOWN. Adding a 3rd bedroom does the same. There's no way to adjust for parking (a major value in SF) unless you know what that adjustment is worth (in which case you hard code it into the estimate), and their estimates of location value seem to be well off. I really hope that Zillow can continue to refine its algorithms--it'll be a great tool. Until then, by all means use, but don't treat as gospel.
4 comments:
Drew from Zillow here -
First of all, thanks for writing. We appreciate your effort to get more people out of their caves to visit our site.
We are aiming to give consumers as much real estate information as possible so as to enable them to make informed decisions during the buying and selling process. That said, we do not have any plans to be part of the real estate transaction -- we are a media company that makes money from advertising (unlike Redfin's model). With corporate ad dollars migrating toward online advertising in response to consumer media consumption shifting online, we feel very good about the future of our ad model.
Regarding your last paragraph -- In an effort to improve Zestimate accuracy, we are constantly looking at adding data sources and working at improving the actual algorithm behind the Zestimates on our site (also the "My Estimator" algorithm which you refer to).
Thanks again for being an advocate for what we are doing -- we appreciate it!
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