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Zillow Goes Live--Too Soon?

Posted by: Peter Coy on February 08, 2006

Rich Barton and crew finally got tired of all the jabs about how long it was taking to launch, their well-funded and well-publicized homebuyer website.
Barton even promised to shave his head if he didn’t get it off the ground by this summer. So today they pulled the wraps off. (To link up to an ongoing discussion about from an earlier post, click here. For an online article about Zillow by my colleague Tim Mullaney, click here.)

I'm wondering whether Barton rushed things a bit. First of all, the site apparently lacks server horsepower. When I checked in a minute ago it had been temporarily knocked offline by "overwhelming demand.") Second, it's incomplete. In tech lingo, Zillow says the site is in beta, which as I understand it is a Greek letter meaning "we realize we haven't fixed all the problems here but we can't let the world pass us by before we launch this thing."

Don't get me wrong. Zillow could be a big success some day. The idea is great: Give people lots of information to determine how much their own homes and other people's are worth. You can see detailed, aerial views of neighborhoods with "Zestimates" of current market values superimposed on every lot. That's catnip to homebuyers.

But it would be nice if it delivered on its promises now. So far Zillow has deep data for only certain parts of the country, including a lot of the West Coast. A couple of weeks ago, when Barton and his team came by BusinessWeek's New York HQ for a secret demo, I plugged in my house in New Jersey and was horrified to see it listed for about 40% 30% less than I think it's worth. The explanation: Inadequate data. I'm picturing thousands or millions of people across the country clicking on Zillow and getting that same stab of fear: "This can't be right!"

Not a great way to launch a much-anticipated website.

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Reader Comments


February 8, 2006 06:17 PM

I agree with your comment.
I just lost 20,000 on my house which is still new and even paint has not dried up.

Sara Gibbons

February 9, 2006 01:39 AM

I think this site is gettin alot of attention only because its from san fran. any site that comes out of the city, hits the front page, no matter what it is


February 9, 2006 04:03 AM

I like the Guy Kawasaki approach - get your product out there early, actively solicit feedback, and iterate, iterate, iterate.

I see that they have a blog, and let's hope they open up a discussion forum to help identify and resolve issues. Sounds like they may need to consider more criteria or different weighting in their valuation algorithm - experiences like your's aren't fun, but if communicated and captured properly will help grind down the rough edges.

As far as the loading, this was day 1. They learned a good lesson today, and now things seem to be running a bit more smoothly.


Matthew Haines

February 9, 2006 11:47 AM

If Zillow's excuse for a 40% error is "inadequate data", it would be fair to ask: what data do they consider to be adequate? And in how many markets is that level of data available?

My understanding is that Zillow's data comes from tax assessment rolls. It's rare for a tax assessor to do anything more than a quick annual drive-by, and many don't even do that.

HH Handley

February 10, 2006 03:56 PM

Wow, Zillow goes live too soon. You betcha!! I live in a nice neighborhood in the Woodlands, Texas. Zillow only included the 1st floor as our square footages so all of our homes are grossly undervalued on the website. No one from will respond to my e-mail's so we are already thinking of a class action lawsuit!!! Check out any home on Piney Plains Cir. These are all 2 story homes with an actual square footage of almost twice what shows on Help!!! how do we get them to fix this???


February 11, 2006 02:14 AM

There are some very nice features, but many of the "Zestimates are way off. I recommend that you leave the valuation of a large investment to a professional with experience, training, and local market knowledge. It's worth the relatively small percent that you pay in real estate commissions. In most cases, you get what you pay for. You could also try to save a little money by performing your own appendectomy, but is it really worth the risk?

Jeff Amrell

February 11, 2006 08:37 AM

The 30-40% decrease in home value could be due to the fact that most real estate has been over valued for far too long! An adjustment is needed in many markets! Hats off to Zillow for informing the homebuyer!


February 11, 2006 06:31 PM

I'd be happy with a drive-by comparison. I have tried the many houses I have lived in, all over the country, plus anyplace my relatives lived, and have come up with no data (but "Done" in the progress field). This may be something someday; I hope they have plenty of money to overcome the negative reports that surely must be circulating by now.


February 13, 2006 01:46 PM

In my area (Annapolis, MD), the zestimates I looked at were about 1/2 of the what the properties are actually going for. It compares a waterfront house in a snobby, secluded neighborhood to a "similar" house without waterfront that is in a high-crime area.


February 14, 2006 02:02 PM

I think the Zillow site has great potential, but if you (like me) are planning to put your home up for sale in March, I can only hope that Zillow writes a "40% Solution " disclaimer. In response to some of the appraiser/realtor comments, that 40% represents a licensed appraiser's assessment - Zillow is 40% below his appraisal! I'm willing to wait for the right buyer - let's hope it's someone who has also experienced a 40% markdown in their own property assessment!


February 14, 2006 02:48 PM

I'm sorry about my backward thinking but I don't think a computer can do an appraiser's job, specially since some of the work is subjective and legally appraising is not an exact science.


February 15, 2006 07:45 AM

well, the site has been down for a week, but i am sure it works


February 17, 2006 01:16 PM gives zillow a run for its 32 mill

Richard Mo

February 17, 2006 09:21 PM

my home is a 4 bedroom. If your are going to list it, get it right.

John Boudreau

February 23, 2006 09:40 PM

Only in America, where else can you launch a product (Zillow) which is designed to take business away from your competition (realtors)and get your competition to tell you how to make it better...realtors need to take the blinders off...

mr coyne

May 4, 2006 05:12 PM

zillow seems to be quite accurate from my viewpoint. It provides highly accurate comparables for the boston area. I've been sellinghomes for 15 years with 5% fees and now you can get real information at no cost! Internet strikes again!


May 31, 2006 01:34 PM

As a Realtor and Investor, Zillow caught my attention so I decided to check out some comparables. The estimates in my city, Albuquerque, are WAY overpriced. For instance, I researched a neighborhood which has homes ranging around $275k-$325k, but when compared against Zillows estimates, it placed the neighborhood in the $450's to lower $500's. It's as if they are using a different market for estimates here. In turn, some people here will find it largely disapointing when they try to sell there home and true value is significantly lower than what this site had told them. Fun to use, but not reliable info.


December 29, 2006 10:39 AM

I had aninvestor intrested in buying my house, the deal stopped early due to Zillow's bad information. First the map that came up to show my house was for another place even the street name was wrong. Second the Zestimate was way below what my tax rate is. in november I had the house appriased and it came in $63,000 above zillow. The appraiser is right, because I don't know of any real bank that would use a zestimate(my bank was Bank of America)in a purchase or refi. If there is a class action lawsuit I'd be intrested in knowing more.

Ron Asteak

July 27, 2007 10:13 PM

Zillow "Guess-Idiots" appear to rely on public tax records that in some cases haven't been updated in twenty-five years. The zestimator is a sketchy tool to rely on. I believe it's best to use a Professional Realtor when appraising property.

Maureen Wright

November 19, 2007 03:25 AM

I would be interested in participating in a legal suit to prevent Zillow from incorrectly listing a zestimate on the value of my house. This estimate implies that they know the value of your house, when in fact it is statistically very incorrect. Zillow does not publish the criteria for their zestimate either, which is ironic considering that they insist on publishing our homes values but not how they arrive at this value.

Jacquie Masterson

July 21, 2008 05:09 PM

We would also be very interested in any law suit action against Zillow. We filed a complaint with the Better Business Bureau, but nothing will probably come from that. Maybe it would help if we all started complaining to our local and state legislatures and local press.


August 1, 2008 04:06 AM

My home is located in a gated community. The surrounding houses outside of the gated community do not compare to my house. Yet, Zillow uses these comps. to come up with their undervalued zestimate. My house is currently listed for sale and buyers want to make low ball offers because they see the zestimate on Zillow without even looking at the community or the house. Please let me know how I can join a class action suit.

s c

February 10, 2010 10:30 PM

ZILLOW CAN'T EVEN GET TAXES RIGHT!!!!!!!!!!!!!!!!!!!!!

Thank you for your interest. This blog is no longer active.



BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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