Why Zillow is Important

Zillow is the hot new real estate site brought to you by Richard Barton and David Beitel, the founders of Expedia (dot cooommmmm). The concept is to analyze real estate data to generate estimates of property value for any property. Real estate is a industry that has traditionally required expert knowledge and access to specialized resources. Steven Levitt calls this information asymmetry. Real estate brokers have valuation experience and access to private databases; home buyers do not.
Zillow will do for real estate what the major travel sites did for travel. As technology became accessible to the masses, the travel industry could no longer keep the information gateways closed. People got computer training and could punch some travel dates into a computer just as well as a travel agent could. The expertise and access gap between travel agents and everyone else is approaching zero, and it now feels ridiculously inefficient to talk to someone who is entering your information into a computer.
Real estate will undergo the same transition. The popularity of digital cameras and real estate listing sites like craigslist and FSBO sites (NYT Article) are together creating listing databases that contain just as much information as proprietary real estate databases. In Boston, it’s typical to hire a realtor just to rent an apartment. The renter walks into a little run down shop and a guy wearing a Goldshlager shirt runs a query: “let’s see, 3 bedroom apartment in the Fenway area for under $3000… I can show you some places.” That guy gets one month’s rent for hitting “search” and unlocking a couple doors.
In many cases, the buyer (or renter in the example above) will actually have more competence to analyze the potential transaction. For starters, the buyer is more interested than the “expert”. If the information and tools to execute these transactions can also accessed by the buyer, a market-driven system becomes more efficient. Zillow is an important step in the transition.
Zillow will be popular for other reasons. Most significantly, home ownership really is the dream of most US Americans. Those who rent wish they could afford to buy, and those who own want to upgrade (either by improvement or by buying something better). Why does “The Learning Channel” have so much home improvement programming? And why is the Travel Channel always showing shows about “amazing vacation homes”? This is what the public wants – we want to buy homes, improve homes, and obsess over the same. Zillow will help us do that.

One thought on “Why Zillow is Important”

  1. as far as i know zillow uses tax assessments to estimate the value of a home.
    I like to use http://www.HomePriceMaps.com because they show how much homes were SOLD for using the google mapping technology.
    also-if you don’t see HomePriceMaps for your area, simply email them your address and or zip and they’ll update the site within a day or two and send you a follow-up email.

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