I'm flabbergated. Zillow.com, which launched today, told me a lot I did not know about my local real estate market.
Zillow just obsoleted the local realtor as a necessary category of professional, leaving home owners in a much better position to pick and judge the performance of a realtor. I used to have to count on a realtor for information about the cost of homes or just an idea about whether my house is still a good investment.A clever and useful mash-up of mapping, satellite imagery, public records and information traditionally hidden from home buyers and sellers. It will certainly scare the bejeezus out of real estate professionals and privacy hawks, because with a few keystrokes and a little mousing, you can find out the price and history of about two-thirds of the single-family home in the United States.
First, the review of the interface: Phenomenal. A clever and useful mash-up of mapping, satellite imagery, public records and other information that has traditionally been hidden from the view of home buyers and sellers. Enter an address (Here's a house I sold last year) and Zillow returns an image of the neighborhood where the home is located, along with an estimated current value (my current home was appraised last year and Zillow's estimate is a bit low, but on the old house, it is both very high and does not reflect that we sold it last year for $95,000 less than the Zillow estimate), the number of bedrooms, bathrooms, and square footage.
But what's that around the house you searched for? The prices of nearby homes are displayed. Click on any of them and you get the same information and the ability to drill deeper. Want to find out if I have a fireplace, or if the neighbor does? It's there, along with the property taxes paid.
Also available are comparable home prices, the history of the home itself—when it was built, updated, and much more—along with the same details for other homes in the neighborhood in the same price range.
It's an astonishing tool for quickly assessing the value of a home, whether you are buying it or selling it. I can't imagine getting involved in a real estate transaction ever again without using this tool, because it takes formerly difficult to find and understand information and creates context that is completely illustrated with facts.
Before you panic about your privacy, this data is all available from your local assessor's public records. Here, for example, is the public record of the same home as linked to above, which reflects that we did sell it last year. And, as I said, the Zillow estimate on the value of the home is so far off from the actual sale price that it makes me question the methodology and the system's capacity for "real-time" pricing. But there is nothing new here that I was hiding before.
Am I frightened that people will use Zillow to intrude on my privacy? No. They could do it before, though it took more work. And I am comfortable that, when I do decide to sell my home the buyer will be equipped with information to offer me a fair, rather than an outrageously high or low, price. Welcome to the no-haggle era of housing pricing.
This is an incredible step forward in market transparency. Just being able to look at comparable costs without first getting hooked up with a realtor is something revolutionary.
Yet, it is also a form of data porn that can create irrational pricing pressure in the market, exaggerating the market cycle. For example, I can see this driving the housing bubble further and faster, because the home details interface of Zillow displays a one-week change in value for a home. According to Zillow, that house I sold last year is worth $3,424 more than last week. It tells me that my current home is worth $5,849 more than a week ago. If I were to actually use this tool to calculate my worth, it would be deeply misleading.
It's clear that home equity mortgages will be one of the first prominently advertised offerings on Zillow. We should avoid compulsively checking our home equity value like it was a stock.
Lest we get carried away about the values of our homes any more than we already are, Zillow's also a tool for checking our financial expectations, if we choose to use it that way, as well as keeping tabs on the Jones' property value. From now on, the kind of house we live in will be easily accessible rather than hidden in public records, which is why we'll want to have a Zillow on the pillow when thinking about the market.
What we really need now is a Zillow for commerical and rental properties, so that renters and small business have better insight into the profits landlords take out of their hide. That'd be some market disrupter, too.