In just a year, Zillow.com has rocked the real estate world. Anyone with an Internet connection now has easy, free access to data on more than 67 million homes throughout the U.S. Intriguing new features launched in December 2006 indicate that Zillow will continue to transform the market for some time to come. Zillow’s new for sale listing service and “Make Me Move” function have the potential to revolutionize the real estate industry and dramatically shift the relationship between real estate professionals and the public.
Zillow’s for sale listing service makes it simple for owners and agents alike to list homes for sale on Zillow for no cost. This puts owners and agents on a level playing field in their ability to sell properties through Zillow. The process of listing a house on Zillow is very easy even for homeowners with no experience in listing or marketing homes. An owner toying with the idea of moving can set a casual “Make Me Move” price, allowing potential buyers to make offers without ever officially listing the house on the market.
Although Zillow currently has less than 40,000 homes listed for sale and just over 20,000 with “Make Me Move” prices, these features could eventually cause a major shift in power from industry professionals to everyday people. Zillow says it has already become one of the top five most-visited real estate sites, with 3 to 4 million visitors per month. “Of these visitors, more than 85 percent are homeowners and more than half plan to buy or sell a home in the next 24 months,” Zillow states. If Zillow’s rapid growth trend continues, its for sale listings may soon overtake the existing plethora of “For Sale By Owner” websites, many of which are not free for users and which have lower-quality data and tools than Zillow.
Given that founders Rich Barton and Lloyd Frink came to Zillow fresh from their success in founding Expedia.com, real estate professionals have good cause for concern. Expedia revolutionized the travel industry by enabling average people to completely bypass the services of travel agents, and Zillow’s for sale listings and “Make Me Move” feature indicate that it may be following a similar evolutionary path.
In spite of Zillow’s repeated protests that it does not intend to alienate real estate professionals, whose advertising currently represents a key income source for Zillow, features like free for sale listings that facilitate for sale by owner transactions are a clear threat to industry professionals. Although the “Make Me Move” prices tend to be significantly higher than actual values and less helpful in locating good deals than for sale listings, this clever gimmick hints at an inclination toward bypassing traditional channels.
Agents and assessors have already seen a dramatic shift in the dynamic of their relationships with Zillow-savvy clients. Zillow has largely demystified the process of valuing a property in the eyes of ordinary people, giving users the confidence to question and challenge the evaluations of professionals—and even to question the value of a professional’s services.
To the consternation of many agents and assessors, buyers and sellers often fail to recognize that Zillow’s “Zestimates” of property values can be far from accurate. This can generate conflict between agents and clients when pricing homes for sale and deciding on reasonable offers. Zillow’s challenge with accuracy is a major factor allowing real estate professionals to retain their value.
Zillow is the first to admit that local real estate professionals still have an edge when it comes to accurately assessing the value of a property. They can take into account more information than Zillow can, such as the value of a view or canyon lot. Since Zillow’s information is based on sales and tax data, it is not always up-to-date in reflecting remodel projects or a changing market. The advanced Multiple Listing Service (MLS) database exclusively available to professionals includes vastly more current listings in an area and thus provides a better comparative market analysis.
The balance of power may still lie with industry professionals for now, but as Zillow’s accuracy increases and its new features develop, that may very well change. The edge provided by MLS database access may not last forever; as the number of current listings for sale on Zillow increases, Zillow will have better comparative market analysis data. “Zestimate” accuracy is also increasing as verified homeowners log into Zillow to correct and clarify information about their homes. This current information greatly improves Zillow’s analysis of the property’s value.
Buyers and sellers who perform much of the legwork on their own through Zillow are bound to start feeling that the standard 6 percent fee for agent representation seems extravagant. As Zillow gently nudges its way into the territory of industry professionals with features that empower ordinary people to perform much of the process on their own, real estate agents hoping to maintain a 6 percent commission may soon be challenged with finding new ways to provide value for their clients.
