For Buyers

Anarticle in Fortune Magazine (2/7/07 edition) talked about the explosive growth in the use of Zillow.com by both buyers and sellers of real estate to estimate the market value of homes in their community

The problem is that Zillow.com completely ignores the fact that you simply can not estimate a property’s market value given the limited public information available, such as the age of the home, location, number of bedrooms or bathrooms, or square footage. Many factors such as whether it has been remodeled, the desirability of the floor plan, proximity to schools, street appeal, etc. have a huge impact on market value. Only an experienced real estate agent or appraiser, taking all factors into consideration, can provide a property owner with an accurate estimate of a property’s value. I have seen many instances where Zillow.com’s valuations are 50% or more inaccurate, with many of their valuations appearing to be almost random. Zillow.com has not ever set foot in any of the property’s they are providing an estimate of value, so how can they possibly represent that they have any idea what the property is worth?

For instance, Zillow.com values the home across the street from me at a price approx. 40% higher than my home, although it has approx. 22% less square footage, one less bedroom, a less desirable floor plan, a smaller yard, and no ocean view, which my home has, and although recently remodeled, my home has also been remodeled with a much larger new kitchen.  Zillow.com also has another home across the street from mine at a valuation at least 40% lower than its true market value, because zillow.com completely ignores the fact that it was recently completely remodeled inside and enlarged.

The business model of zillow.com simply can not provide accurate market value information, as the public information which it uses tends to lag the market, and most importantly, they are completely ignorant as to the unique qualities and details of each home that it appraises. Has it been remodeled?  Does the floorplan work well? Are the bedrooms too small? Are the bathrooms and kitchen well designed? How large is the backyard and is it nicely landscaped? Does the house enjoy good curb appeal and attractive and well maintained landscaping? How well maintained is the home, and does it have any issues such as mold, old roof, or other deferred maintenance?  All of these factors are important to evaluate in determining a property’s market value, and zillow.com simply can not do so. Only an experience real estate agent or appraiser, taking into consideration all of a property’s unique characteristics can help a client estimate a property’s true market value.

Homes are not the same kind of commodities as stocks, and the founders of Zillow are overestimating their abilities and misleading consumers in the process.

Zillow is no threat to Realtors  – good information in the hands of consumers is a positive thing. But to think Zillow will be changing the entire paradigm of Real Estate is just dead wrong. Zillow will not do for Real Estate what Expedia.com did for the travel industry, not a chance.

Keep in mind that much of what we do as experienced Realtors is to help manage the emotions of sellers and buyers, especially AFTER the home is sold and going through the escrow process, home inspections, and financing of the buyer.