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Had a short chat yesterday with Spencer Rascoff, CFO of the new home-appraisal site Zillow.com, about a new feature that launches today (April 13). The new goodie is an upgraded satellite mapping feature that lets you zero in much more closely on a house you want to know more about. As Spencer says, “it’s the difference between seeing a picture of someone’s roof (on most satellite mapping sites) and seeing a picture of their house.” Zillow says the new feature covers markets that have about 25% of the U.S. population, including San Francisco, Seattle and Manhattan. See how it works, using this sample shot of a Zillow staffer’s Seattle home. http://www.zillow.com/aerial/DualMapPage.z?zpid=49086984
This feature's kind of cool -- but it's just icing. The cake at Zillow is whether its software is sophisticated enough to give you an accurate valuation, either of your own house or a house you may want to buy. The site is still in beta after opening to the public this winter, and it has taken a lot of well-deserved grief over many of its estimates not being very accurate. Peter Coy has blogged here http://www.businessweek.com/the_thread/hotproperty/archives/2006/02/zillow_goes_liv.html that Zillow didn't come close to the valuation of his own house. But in New Jersey, where Peter and I live, that's not a surprise: It's a market where Zillow relies on very limited information from property-tax records since it doesn't have the latest comparables and market data available from easily automated public sources. (Zillow values my house at what I paid for it in 2000, which is about half of what comparable homes are now commanding).
My bigger concern is very inaccurate valuations I saw when I compared Zillow's valuations of homes in Dallas, where information is supposed to be a little better, with the prices those same homes are listed for sale at right now. It's not yet a pretty picture -- and it underscores how difficult a task automating home appraisals still is. Compare this http://www.zillow.com/search/Search.z?addrstrthood=5008+Victor&citystatezip=Dallas%2C+TX&mode=search to this. http://www.ebby.com/details/268017.html
Rascoff says Zillow has expanded the number of homes for which it offers estimated values by 5-10% since its launch, and is trying to make the estimates more accurate as well. I have noticed some anecdotal improvement in Zillow's accuracy in Dallas, a market I know pretty well, in the last few weeks. But Rascoff says Zillow has not yet done the testing to know whether there's been any improvement in this key stat: When they launched, Zillow believed its technology could get the value of 62% of homes tested accurate within 10%. "We're definitely working on it," spokeswoman Amy Bohutinsky says. As well they should. Beta is beta, and fair is fair, but the data has to get quite a bit more accurate before Zillow is more of a home trader's tool than a very interesting toy. No matter how low they can get a plane to fly over a house to take a picture.
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.