Why? Because it is all about real estate; better yet it is all about real estate values.
The only subject more tantalizing than sex in the view of more or less mature
Americans is apparently the value of their homes and those of their friends,
neighbors, co-workers, or anybody who might have named them in a will.
Zillow has wrapped up in a single location data on 60 million homes, 40 million with Zestimates (just wait a minute), throughout the country, making it simple to search homes by address and get a physical description, recent sales information if any, and data on the assessed value of the property.
According to CNETnews.com, one blogger on a real estate site went so far as to say "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." This is mild compared to some other reviews we have found.
Zillow's basic information has been available on line for some time but in awkward and scattered ways. It has been accessible on assessors websites from individual towns or counties or by slogging through real estate sales sites, many of which do not provide a lot of information on individual houses or provide addresses of properties. Searching these would make what we have done in short order on Zillow a long and arduous process, first finding the websites then searching by address, map and page, or a tax identification number. Information from real estate sites are, of course, limited to current sales offerings.
The other alternative has been information on a few commercial sites such as HouseValues.com. These, however, require visitors to register with personal information which may then sold to real estate agents as sales leads. Not needing any more salespersons in our life, we have not registered on any of them but, according to news accounts they usually take several days before information is emailed to the inquirer.
Zillow is free to anyone who wishes to check out the possible price of their own home or that of others. No representative will call, and there is no limit on the search.
Sounds like a wonderful idea? Can't wait to get on-line? Not so fast bucko.
First of all, Zillow is brand new and the site is pretty upfront regarding its limitations, something that the media has not always reported. It clearly identifies itself as a beta site (a test operation using visitors' input to check out its efficacy.) Zillow freely admits that there are a lot of holes in its real estate database, many homes that are not covered and information missing on lots of homes it does cover; and it became clear as we played with it, that these are probably because certain areas - towns, neighborhoods or counties, are not yet on line with the data that Zillow needs to work its magic or don't collect the information themselves.
Secondly, Zillow is attempting to move beyond the assessors' data or that from MLS powered sites. Apparently in love with the letter Z, the creators, at least one of whom was among the brains behind the development of the hugely successful travel site Expedia, have developed several words that describe the added value that Zillow plans to bring to your search.
The most important is the "Zestimate." According to Zillow's own website, they have taken "zillions" of data points from public information and entered them into a formula to create a "proprietary algorithm" or "secret formula." This Zestimate is now online for 40 million houses with more to come as Zestimates can be computed.
This "secret formula" takes into account how homes in certain areas are similar in terms of square footage, numbers of rooms, bedrooms, and a lot of other details. It then looked at the relationship between similar homes (and while it isn't directly stated, assessed value) and available home sales data. This pattern is plugged into the formula to develop a market value for individual homes. Various home characteristics are weighted according to geography and the data's place in time. In other words we would assume that a swimming pool or central air would carry a different weight in Florida than in Minnesota and that the algorithm would more heavily weight hardwood floors today than would have been the case in shag-carpet-happy 1979.
Historic Zestimates have also been computed over time to allow the visitor to see how a home or an area has appreciated (or not) in value over the years.
Zillow also provides a value range that shows how much real information they have about a home. The larger the range, the fewer data points were used to construct the value and the less certain it is. To its credit, Zillow provides a measure of its own accuracy by way of stars, one to four. Some counties or towns provide ample data, others are lacking key information such as a breakdown of rooms and four stars will tell you that Zillow has a high confidence in its Zestimate. If the value is based solely on a tax value there will be only one star. Zillow also provides information on individual market areas, assessing the percentage of homes where Zestimates fall within 10 percent of the actual selling price and on the sufficiency of the data available in each of the relevant SMSAs.
The other Z word is "Zindex".
Zillow could have said "median" since this word is one most people understand. Nonetheless, Zindex is described as Zillow's Housing Index and is the median Zestimate for a given geographic area on a given day. To quote the Z site, exactly half the Zestimates for a region are below the number and half are above it.
Is everyone getting sick of the Z words?
An interesting feature of Zillow is that it allows you to upgrade the value of a home based on its unique features - the new kitchen, the gourmet kitchen, the new bath. This is easy to use and allows users to break away and customize the information available from public data bases.
We found, however, some real shortcomings. Hopefully these will be corrected as the site moves out of beta status and reaches its full potential. This can be a great addition to the growing arsenal of aids to the home buyer and home seller. At present, however, there are some caveats beyond those that are confessed by Zillow itself. We will talk about where we went and what we found in a later article.