Inman News
http://inman.com Published: Thursday, February 16, 2006Inman News: Zillow: Does it really reduce inefficiency?
Dear Editor:
Congratulations to Zillow on its beta launch. As an experienced real estate broker and founder/CEO of a successful online real estate tool, I believe that any service that makes the real estate transaction more efficient is a good thing.
Like most people who checked out Zillow, I immediately entered the address of my own home. Conservatively, Zillow's valuation was off by about 40 percent from what the property would sell for if listed. Other properties I compared ranged from "spot-on" to nearly the same discrepancy as that of my own residence. These included homes that are currently in escrow and for which I am aware of the actual (not yet reported) sales price.
In fairness, all the homes I "Zillowed" were in Northern California where huge variations in style, condition, views and location make it difficult for even experienced Realtors to appraise in advance of an actual sale. Nevertheless, Zillow is fun to play with. A key question for Zillow is why would the homeowner need the site again once they have gotten their own Zillow value? It appears that Zillow's business model revolves around advertising revenue largely from real estate agents trying to capture early home seller leads. Heck, who in sales doesn't need a lead?
Apparently, Zillow's ultimate mission is to lower the real estate transaction costs. On their Web site they state, "Why not help consumers by giving them access to the same kinds of information and tools agents use?" What is missed is that, except for identical tract homes, residential property valuation is at least half art, not science. Relying solely on a computer tool to appraise a house would be like giving someone access to court cases in order to lower legal fees. Many of us wish it were that easy.
My guess is that the agent will often have to spend extra time "detaching" the home seller from their Zillow estimate in order to convince them to realistically price their home for sale. Ironically, this will create even more inefficiency in the home-selling process. Who knows, this "de-Zillowfying" of homeowners could create a whole new business model!
David Faudman
CEO
CleanOffer
San Francisco
Inman News
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Published: Thursday, February 16, 2006