Zillow makes a profound analytical statement
Zillow has been under fire by the realtor community for being "just OFF" in their Zestimate pricing model for individual homes. Sure, realtors work on this microscopic level, and that's why the best realtors can understand that they can make the best pricing evaluation through visual inspection of the listing property vis-a-vis comps and other homes currently on the market.
The real value of Zillow became more apparent with the introduction of Zillow city heat maps - an extension of the Zindex, an aggregate neighborhood pricing model - that mapped price ranges by neighborhood. As a former physics major with a love for differential equations, the heat map is a graphical equivalent to position - where prices stand today.
Now, Zillow has followed up with a set of home value reports for five cities, including my SF, that graphically measures neighborhood velocity - how fast home prices are appreciating/depreciating - and price deceleration - the rate of slowing that economists watch in predicting "bubble/no bubble".
Zillow gets kudos from me for providing rich real time detail. In comparison, the best graphical resource I had before is to look at neighborhood trends from a title database - here's an example of one SF zip code. The data displayed below is more microscopic than Zillow's reports and therefore a bit more helpful for realtor's comps, but I bet Zillow will be able to reproduce these data in more finely tuned neighborhood reports that will eventually prove more credible to the realtor.
Now that Time Magazine has proclaimed Zillow as cool, the mass media has in effect set up Zillow as a standard anyway.
Technorati tag - zillow real estate technology
Interesting post.
The more sales data the better, provided it is fresh and accurate. But what will reduce the margin of error and get you CLOSER to value?----Data alone or data PLUS visual inspection. If it is the latter, experienced agents will remain necessary. Even knowing value is not enough to set a listing price in a given market. (I am planning a zillow post on usefulness in up vs down markets.)
Thus, Zillow may have more value as a broker tool than a consumer tool since brokers may be better equipped to take the zestimate & then factor in any "unzillowables" in a visual inspection.
Given that real estate trades in the hundreds of thousands of dollars, if an agent CMA w/visuals gets you closer to value (or what you can sell a home for) by only single digits % over a zestimate alone, you have saved/gained thousands of dollars. Consider now multimillion dollar homes & that same single digit advantage means tens of thousands.
Perhaps the value of zestimate vs. CMA/zestimate w/visual inspection (if visual is deemed more accurate), decreases as the price of a home increases.
See our poll results and glean what you may. It is interesting that buyers and sellers don't agree on the value of a ziestimate. And it there opinion that ultimately counts most.
http://blog.sellsiusrealestate.com/?p=1718
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