That’s just the dynamic that Richard
Barton hopes to tap in the next months
with his new Internet site.
A decade ago, Barton launched
Expedia.com (NASDAQ: EXPE) and helped
transform the travel industry by handing
consumers the same tools to book reservations
that travel agents had long controlled.
Now, Barton is applying the same
approach to real estate — and is banking on
equally dramatic results.
He recently unveiled a beta-test version
of Zillow.com, the latest website to offer
property information that until recently was
beyond the reach of the average buyer or
seller who didn’t engage a real estate agent.
As Barton sees it, Zillow can be the real
estate equivalent of the auto world’s Kelley
Blue Book. By typing in an address, the user
gets an instant valuation of a single- or multifamily home, or all homes on a street or
neighborhood.
To get that information, Zillow pores
over county records and other government
data on 60 million homes nationwide. It
then uses proprietary computer analysis to
determine current values, which the company
calls “zestimates.”
The Seattle-based company’s objective is
to create as complete a record as possible on
individual properties. “Three-quarters if
Americans own real estate, while only 27
percent own stocks or mutual funds. So why
can consumers track stock with ease, but
you need a degree in computer science to
track the value of property? Providing a
home’s history, including all past sales transactions,tax assessments and other details,
should help put buyers and sellers on better
footing during a real estate transaction,”
Barton says.
By cracking open the real estate process,
“consumers will make better decisions and
become smarter,” Barton said.
Giving consumers access to more information
could lead them “to negotiate more
economically sound prices with real estate
agents,” he said. “Many people don’t know
values even in their own neighborhoods.”
“Zillow could even lead to lower commissions”
much like Expedia did with travel
fees,” Barton said.
But computer-based valuations can be as
much as 30% off the mark, industry experts
say, because the business of selling homes
tends to be more an art than science.
“Every property is an illiquid, unique
asset, and a computer program cannot accurately
predict the price it will fetch on the
market,” said Matthew Haines, founder of
PropertyShark.com, which boasts one of the
most expansive collections of real estate
data for the New York area and is a potential
rival to Zillow.
Barton said Zillow’s national margin of
error for home values was 7.2% because it
assessed more data than most online real
estate evaluators. Zillow touts an exclusive
tool that allows users to factor in particulars
about a property, such as whether it needs a
new roof, to further refine a home’s value.
What’s more, a home’s value on Zillow
can be tracked historically against the performance of local, state or national real
estate markets, much like comparing a stock
against the Standard & Poor’s 500 index.
That’s a feature Barton says is unique.
“We think that a key component to a
fundamentally healthy marketplace is price
transparency,” he said. Most buyers and sellers
“are not seeing what the last 20 people
paid” for a property.
But in a Web world clogged with real estate
offerings, will Zillow be able to stand out?
Barton says that on a “snoop level,” consumers
will be attracted to his site, in part
because it requires no registration and doesn’t
route users to real estate agents, which is common
among other sites. Zillow instead hopes
to make its money by selling advertising space
to brokerages and mortgage companies.
At this time, Zillow would not provide sales
listing information and thus would not indicate
if a home is on the market.
In February, the site launched and crashed
when too many people tried to log on.
Barton responded, “There are areas in
which our data is robust, and others that need
some work. This is a beta –a first step — and
we are continually improving our coverage.”
