On February 8, 2006, the real estate business changed a bit with the launch of Zillow (tm) (http://www.zillow.com). Zillow's goal is to simplify the process of finding the market value of a home. Zillow is the creation of Richard Barton and Lloyd Frink. You may have heard of Richard's last project, founding the internet travel site Expedia. In his launch press release, Barton says, "We believe you shouldn't need a computer science degree or a real estate license to find out what a home is worth. That's why we created Zestimate values, providing free and instant valuations for millions of homes in America. This beta is just the beginning... Zillow will continue adding tools and services to empower consumers to make smarter real estate decisions." With Zillow, 60 seconds is all is takes for anyone to find the current market value of any home in the Zillow database - whether or not it is on sale (currently they have data for about 60 million homes). Zillow computes its valuations based largely on publicly available data (tax records, etc.), which leads to some pretty interesting results. In some cases, Zillow's estimates seem to be accurate within the 10% margin of error they list on their site. Many of the tests we ran and have read about, however, show Zillow is regularly off the mark by as much as a few hundred thousand dollars. A lot of properties don't even show up, my house included. Regardless of the accuracy of the data (which we assume will improve the longer Zillow stays in business), the idea of Zillow is angering many real estate professionals who feel that publicly accessible information like this puts the success of their business in the cross hairs. Good technology is disruptive, meaning it interrupts the status quo and forces us to change (hopefully for the better) or get left behind. Whenever a new technology like Zillow comes along, you can view it in one of two ways: optimistically or pessimistically. Let's choose the former. So how can you use Zillow to your advantage? Start using their biggest asset (pricing information) to boost YOUR biggest asset (the VALUE you deliver to buyers and sellers). Zillow concentrates on price and makes that pricing information readily available to anyone. And while price is important, it is only one part of buying and selling real estate. Fortunately, your business is not built on information alone. What good is information without the knowledge required to interpret that information and turn it into action? I could go out and buy the entire curriculum used by the top medical school in the country, but having the information doesn't help me DO anything. Knowledge and experience are required to turn that information into real VALUE for me and others. It's kind of the same thing for Zillow. Your goal is to make sure your potential buyers and sellers understand that. So here's just one way to make Zillow work for you: If you study the Zillow results carefully for properties you know well, you will find that it is particularly poor in keeping up with major improvements made to properties that substantially increase their value. This is just ONE of the holes that exists right now. Next time you are heading to a listing presentation, take the Zillow results with you. Study the report and use it to your advantage to show the seller just how much value you bring to the table. Use the Zillow Zestimate (their word not mine) as a teaching tool with your seller. Show them why or why not the data is accurate and make it clear that your knowledge can either make them more money or save them from the frustration of trying to sell at an inflated price. Zillow can deliver price, but you can deliver value. And VALUE is what clients will pay for. In the end, basic business principles still apply. You get what you pay for. Be sure to communicate that to your clients in every possible way and you will never be threatened by the next new technology that comes along. |
