Zillow vs. “average” agent

When I wrote my “Baby Takes a Bow” piece which took about 30 seconds, I knew I was opening Pandora’s Box, and would have to back up my one liners with some extensive writing on each topic outlined therein.

My definition of Pandora’s Box is the one one that attributes “the box” to a “woman’s womb” from which new life springs forth. While I do not necessarily agree with Inman’s new three part series on negating the mls offering started yesterday, or all of David Barry’s undertakings around the country, clearly I am not the only one trying to pry open Pandora’s Box. The box WILL be opened! Whether the DOJ or David Barry choose in the end to take the ultimate credit, truth is, it is just simply time for the box to be broken open by everyone at once.

If we all take out our respective crowbars, the box will open. Who takes credit for having opened it, and clearly David Eraker and those who came before him will deserve some of that credit as well, who takes the ultimate credit is irrelevant. In fact the DOJ is my best hope for getting the credit, so that the “new life that springs forth” will be on a national scale as only the DOJ can do best.

In this quote from my most recent beginnings of a very long explanation, you will quickly see just WHO Zillow can replace, which by current accounts and statistics may be up to 90% of the industry as it exists today.

“If you stand up from the computer with the value in your hand before you go to the house, and you stand by that value after you arrive at the house, because the computer “SET” the value…you are giving the seller the equivalent of a Zillow produced valuation…which is FREE. Any agent who thinks a computer spits out a home “value” via a CMA Program, is easily replaced by Zillow.”

To some extent, those who wrote those great CMA programs, like IRIS/Lightning and Top Producer and way back to Coldwell Banker’s very first CMA software which predated them all, are responsible for agents believing that a computer can value a home.

To a greater extent large brokers, and local mls classes, that mislead new agents into thinking they can “value a home” on day ONE after they receive their license, by using these programs, are even more responsible for this thinking.

When the Pareto Principal changes from an 80/20 rule to a 90/10 rule, as was told to me in Real Estate Broker Classes, with only 10% of agents being competent, then it is time. It is time for Pandora’s Box to be opened. It is time to stop that snowball from rolling down the hill, it is time to stop that train that doesn’t seem to have brakes. It is time to roll back the clock and begin again.

Contrary to Inman’s new series, we do not have to roll the clock back 35 years to the beginnings of the mls. We only have to back up to the day that buyers were supposed to become “1st class citizens”, and begin anew from that point. Because an agent who cannot value a home for a seller, cannot with any sense of credibility, value one for a buyer either.

How cool is our home search? Ice Cold!

In case you haven’t dropped by our home search tool recently, we’ve made some improvementsicecube. Changes include…

Market Analysis Tool Improvements
We thought it would be helpful, if you could get a second opinion when you get an estimate. So, we’ve made arrangements with Zillow to use their Zestimate web services on our Market Analysis page. That way, when you type in a property address, we’ll give you our estimate, get your property’s Zestimate (and the link to it’s page on Zillow), and save you some typing.

Radius Search
Want to find the all houses, within 2 miles of your house or office? Now you can here! And yes, the search results pages are Bookmark-able, RSS-able, and Google Earth-able. (I wouldn’t have it any other way).

Improved Location Search
The list boxes on the location search page are multi-selectable. Big whoop, I hear you say? Well, ours doesn’t refresh the entire page when you change the city or download a big city / community list when you first navigate to the page. Yes, you are seeing AJAX in action. It’s not something most people are going notice, until they wonder “Gee how come your page is so much faster than all the other ones”?

As always, the results from the improved location search are Bookmark-able, RSS-able, and Google Earth-able.

What’s next
Well, it’s a given that at some point I’m going have to have Virtual Earth or Google Maps integration, instead of static Yahoo Maps. If I’m going to compete with the big boys of real estate search, I gotta do maps. I’m probably going to have to create profiles, so you can save your searches, favorite properties, favorite places and other stuff that requires server side persistence.

What features would consumers and realtors like to see next? I’m more interested in hearing what realtors would like to see next because they are the ones who’ll be writing the check, when I eventually decide to release this. I have a billion ideas for what I’m going to do, but I’d get to some more feedback to find out what features I should implement next. Otherwise, I’ll continue to make it up as I go along…



Got my first “issue” of ZILLOW BUZZ this morning. Or actually an email announcing that ZILLOW BUZZ is coming.

ZILLOW really is exciting news…I’m not being sarcastic when I say that. We need a “shot in the arm” in this business.

That being said, I would like to say something about how real agents really value property. I read the “about us” notation on the ZILLOW BUZZ email and it showed how one of the partners had used spreadsheets to value his property. I just saw an elaborate spreadheet done by an owner at “The Newmark” in a downtown Seattle condo. Boy was it elaborate, and boy was it wrong. No way that condo is worth what that excel spreadsheet says it is worth.

The way we value property is on a comparison basis. The more we see the better we can value. That is why we go to Broker’s Opens (at least those of us who aren’t just looking for a free lunch 🙂

We have a mental running calculation in our brains. It goes like this. John’s listing last month sold for $700,000 and it was on the best view corner of the building, remodeled and up on the 21st floor. Better window configuration. Crappy cabinets, but otherwise a great remodel. The wall was knocked out around the kitchen. Penelope’s listing down stairs on the 9th floor had the best unobstructable view, but was 600 square feet smaller. Poor presentation. Owner left his clothes all over the place and it smelled like sweat. Original condition, no remodel and had a “handicapped” bathroom that gave it that “hospital” feel. That one sold for $400,000, but it was a pre-foreclosure with the owner under the gun. So I can list this one at $550,000. It is between the 9th and 21st floors. It is remodeled as to aesthetics, but no walls knocked out. It’s really worth $500,000, but I think I can squeeze an extra $25,000 out of it because it’s “the only game in town” at the moment.

I don’t think a computer can do that. Robbie, can you do a Vulcan Mind Meld? LOL.

Dear Mr. Barton,

As you may or may not know, I emailed you guys a couple of weeks before you unveiled your product to suggest that you consult at least one real estate expert, before going public. I further suggested that since I have sold real estate in five states from coast to coast, that I might be able to help you tweak your product before its unveiling. I feel very badly that some are poking fun at your great real estate adventure, by coining the phrase “You’ve been ZILLOWED!”

Here are a couple of tips for you, (or for Dustin and Galen and Robbie) If you modify your application of data according to these guidelines, you will likely increase the reliability of your online Zestimate by as much as 50%.

Seattle area: Yes, you can value property fairly accurately using the tax data in the Seattle area. But the first step is to determine the appropriate factor. Many will value out at between 1.2 and 1.4 times the assessed value. Hot areas, like downtown Kirkland or parts of Queen Anne, etc will value at 1.5 to 1.6 times assessed value. Don’t take the comps out too far, keep your radius small. Stay as close to the subject property as possible and STOP when you have 5-8 comps after throwing out the High and the Low. DON’T average the sale price of the comps one to another to determine the value of the subject property. DON’T use price per square foot as a guide. Take each sale price and divide by THAT SAME PROPERTY’S assessed value to come up with the factor. If all of the properties in that neighborhood sold at 1.44 times assessed value, then your ZESTIMATE should be 1.44 times the assessed value of the subject property. You can average the factor, but not the price. Then use a range. Chuck the high and the low, the way I learned in grade school from the good Catholic sisters who taught me well.

Example: Data equals 1.8, 1.4, 1.42, 1.43, 1.44, 1.44, 1.45, 1.47, 1.1

Throw out 1.8 and 1.1. as the high is a massive remodel and the low is a fixer. Factor becomes 1.4357142. Assessed value of subject property is $313,000. Zestimate is $449,378.54 or between $438,200 and $460,110.

When inputting tax data, do not overlook the “effective year built”. Currently your program is not noticing that very important date, and reverting to the original year built, throwing the numbers way off on 80% remodels. You can use the 1.8 and 1.1 in the sample above by saying “Your home is valued at between $438,200 and $460,110. If you have just remodeled the interior, the price might be as high as $563,400 (1.8 X $313,000). If it is a fixer it may be as low as $344,300 (1.1 X $313,000).

For Seattle area, always use the assessed value of the subject property against the neighborhood factor.

Briefly, for Los Angeles beach areas: DO use price per square foot, as by and large that area does not have underground basements and the tax assessment increases to sale price every time a property sells (unlike Seattle and many other areas)

Florida: Do use price per square foot and keep the comps apples to apples. Watch the lakes. Price properties on lakes against other property on the lake and interior against interior. You are already OK in FL for the most part, so you can leave that alone.

PA, NJ and most of the Northeast of the country, keep the radius short and use price per square foot. Then find and apply the neighborhood factor and average the two answers.

Hope that helps you, Mr. Barton. Or maybe it will help Robbie and Galen come up with their own “Better than Zillow!”

Have a great sunny day in Seattle!

Zats really cool…

Zillow has launched!

I just got an email from Zillow’s Director of Communications and she passed along the fact that not only is their blog live, but a beta version of their site is live as well… Rich and David flipped the switch!

So, what does Zillow do?

In two minutes of of a Skype conversation with my mom, we were able to find the “Zestimated” value of my home in Seattle, my mom’s home in Sacramento, and my grandmother’s home in Las Vegas… Very cool indeed, especially since my home value is zestimated to be worth $140K more than we paid for it two-and-half years ago!

From what I can tell, they’ve found a way to estimate the value of thousands upon thousands of homes (60,000,000+ homes by their count). For my neighborhood, they have lots of background information on each home… Not only does it tell you the size, square feet, lot size, etc. but it also gives information like a list of recently sold comparable homes. Very cool indeed.


The site is loaded with tables, graphs, and charts for each home.

Probably the strongest selling point so far is that creating a set of comparables is so easy. I’ve worked a fair amount with Anna to develop comparable market analysis, and I can tell you that agents may have access to slightly better data on each home, but Zillow’s system is SO much easier to use that I imagine many agents will turn to Zillow from now on…


Interesting, interesting stuff… It is interesting that the site has a complete lack of obtrusive ads and it will be really interesting to see how this plays out in the agent community. I’m not seeing a lot of negatives so far.

Here’s how Rich Barton explains their business model on the Zillow blog:

I’d like to make a comment on our business model, which I’ve found helps divine motives. Zillow.com will make revenues from advertisements on the site. We will always be crystal clear about what is content and what is advertising, just like any respectable content provider, and our advertising will not define our content. However, the beauty of “Web 2.0