Zeroing in on Zillow
Had a short chat yesterday with Spencer Rascoff, CFO of the new home-appraisal site Zillow.com, about a new feature that launches today (April 13). The new goodie is an upgraded satellite mapping feature that lets you zero in much more closely on a house you want to know more about. As Spencer says, "it's the difference between seeing a picture of someone's roof (on most satellite mapping sites) and seeing a picture of their house." Zillow says the new feature covers markets that have about 25% of the U.S. population, including San Francisco, Seattle and Manhattan. See how it works, using this sample shot of a Zillow staffer's Seattle home. http://www.zillow.com/aerial/DualMapPage.z?zpid=49086984
This feature's kind of cool -- but it's just icing. The cake at Zillow is whether its software is sophisticated enough to give you an accurate valuation, either of your own house or a house you may want to buy. The site is still in beta after opening to the public this winter, and it has taken a lot of well-deserved grief over many of its estimates not being very accurate. Peter Coy has blogged here http://www.businessweek.com/the_thread/hotproperty/archives/2006/02/zillow_goes_liv.html that Zillow didn't come close to the valuation of his own house. But in New Jersey, where Peter and I live, that's not a surprise: It's a market where Zillow relies on very limited information from property-tax records since it doesn't have the latest comparables and market data available from easily automated public sources. (Zillow values my house at what I paid for it in 2000, which is about half of what comparable homes are now commanding).
My bigger concern is very inaccurate valuations I saw when I compared Zillow's valuations of homes in Dallas, where information is supposed to be a little better, with the prices those same homes are listed for sale at right now. It's not yet a pretty picture -- and it underscores how difficult a task automating home appraisals still is. Compare this http://www.zillow.com/search/Search.z?addrstrthood=5008+Victor&citystatezip=Dallas%2C+TX&mode=search to this. http://www.ebby.com/details/268017.html
Rascoff says Zillow has expanded the number of homes for which it offers estimated values by 5-10% since its launch, and is trying to make the estimates more accurate as well. I have noticed some anecdotal improvement in Zillow's accuracy in Dallas, a market I know pretty well, in the last few weeks. But Rascoff says Zillow has not yet done the testing to know whether there's been any improvement in this key stat: When they launched, Zillow believed its technology could get the value of 62% of homes tested accurate within 10%. "We're definitely working on it," spokeswoman Amy Bohutinsky says. As well they should. Beta is beta, and fair is fair, but the data has to get quite a bit more accurate before Zillow is more of a home trader's tool than a very interesting toy. No matter how low they can get a plane to fly over a house to take a picture.