I just spent the last hour playing with the latest real estate web tool, Zillow.com. The brainchild of Robert Barton of Expedia.com fame, Zillow has the potential to effect the real estate world in many of the same ways Expedia effected the travel industry. Basically, Zillow pools data from 60 million homes across the US and places a valuation on them based on prior sales, comps, and property details. Barton calls it a “Kelly Blue Book” for homes. With a reported historical margin of error of 7.2%, Zillow is not perfect, but neither are humans. I’ll leave it to real estate sites like Rain City to contemplate how Zillow will impact Realtors. Instead, I imagined a few ways that mortgage industry professionals can harness this new tool.
Underwriters
As accuracy improves, Zillow may spell the end of appraisal fraud. A quick Zillow search of a suspect appraisal will easily shine the light on a padded value. Even with the current margin of error, underwriters can use this tool to identify other comps in the area, and see the overall estimated value of the neighborhood as a whole.
Loan Originators
First off, the tool allows you to advise your clients as to their probable value at the time of application with a great degree of confidence. In addition, Zillow represents a great opportunity for prospecting. An LO can use these tools, cross-referenced against mortgagee information from your local title company to identify margins between values and loan balances for every property in a neighborhood. Imagine how much more effective a letter from your company could be if it spelled out how with specific information about wether they qualify to drop their PMI, should switch out of an FHA, or consolidate credit into their equity. That’s just the beginning…
Property Investors
Zillow’s Zindex and comp tools can tell an help an investor make quick decisions on the validity of a new purchase. Making money on investment properties happens with more success when the investor can act quickly. With Zillow, they never have to wait for a Realtor or appraiser’s input before making summery judgments on prospective properties.
Zillow’s reach has the potential to do much more. Value is based perception. As Zillow gains traction, it’s readers will base their perceptions more on this data then the opinion of a Realtor, or their own emotions. many Realtors may find their control over the market to be diminished in many of the same ways a travel agent was effected by Expedia. It will be interesting to see how the whole situation pans out.
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{ 7 comments… read them below or add one }
Am I missing something. Isn’t this an AVM for consumers? It’s cool, but, if it isn’t relaible, which it won’t be since AVMs which are far more sophisticated are notoriously flawed, then consumers will quickly resent the innacurate info.
Maybe I’m off base, but I think it’s a nice idea but a few years ahead of the models to support the functionality.
Yes, it’s an AVM for consumers. A free one at that. This is definately not a replacement for a full appraisel, but it’s still full of potential. Remember, it’s still in Beta, we haven’t seen the best from them yet.
Hey Todd,
It’s a great tool and yes there are values that seem off. We tested a few to get an idea and took a random sample of current MLS listings that sold in the last week and the current Zillow estimate and charted all of it. The results were surprising… with a sample of 25 properties, Zillow averaged a 2% margin… but some where as margins where high as 27%. We posted the results of the test at: http://www.forsalebyownercenter.com/blog/
I’m tired of paying huge $ fees to the monopoly of local realtor unions, MLS, just to find property sale information only to find out the data is filled with human error because realtors can’t deduct the huge sales concessions from the phony sale price. Hey greedy realtors, you shot yourself in your own foot. I welcome Zillow to only get better and available to all, not just those with a license paying union dues.
It’s completely reckless and irresponsible. AVM’s are notoriously inaccurate and this doesn’t even come close to the technical sophistication of an AVM. Fun little tool to play with but you had better not rely on it to accurately value your real estate. It under valued my home by at least 20%-30%.
Check this out, Mariah:
http://newlondon.craigslist.org/rfs/404281280.html
Hey Todd,
It's a great tool and yes there are values that seem off. We tested a few to get an idea and took a random sample of current MLS listings that sold in the last week and the current Zillow estimate and charted all of it. The results were surprising… with a sample of 25 properties, Zillow averaged a 2% margin… but some where as margins where high as 27%. We posted the results of the test at: http://www.forsalebyownercenter.com/blog/</br>