Big news today from the Zeenormous online real estate site that brought us the Zestimate.
Zillow now comes out of its “beta” phase.
That’s not really the big news; it’s the punch line delivered as a throw-away in the company’s press release. It is also the remark that got the biggest laugh at the pre-release briefing I attended last night given to a few of the die-hard real estate bloggers attending the Inman Real Estate Connect Conference in New York City.
If you are a real estate agent, you will get the joke. About seven minutes after their initial launch in 2006, our clients were flailing their own homes’ Zestimates about like the unabridged King James Bible, only this bit of “truth” was considered far more credible. It came from a computer. The concept that Zillow’s web site and all its data has in fact been “under development” has escaped most to this day.
There was an embargo on the news until midnight last night. No worries; in the City That Never Sleeps, I went to bed. As I considered my options before crashing (write something timely or attempt to move this week’s sleep tally into the double digits), I decided that Zillow could wait. That is because the real news is not in the press release itself but in the larger and less time-sensitive issue: Zillow is upside-down. They are upside-down, and this is precisely why their enterprise is genius, but more on that in a moment.
First, the party line:
SEATTLE – January 10, 2008— Real estate Web site Zillow.com today announced a major expansion and upgrade to its database of nearly all homes in the country– increasing data coverage from 70 million to 80 million U.S. homes in 48 states, or 88 percent of all homes in the country. Zestimate values are now available on three out of four U.S. homes, or 67 million, up 68 percent from when Zillow launched in 2006.
That’s big news for some. However, if you, like I, live in San Diego County, our properties and our Zestimates have been represented on their site from the beginning.
Zillow today also announced it has dramatically expanded and improved its Zestimate algorithm, incorporating 20 times the number of statistical models than before that factor in more local and home-type variables…
Blah, blah, blah. In other words, the geeky science guys (and I mean that only in the most affectionate way) have been working overtime to achieve a greater accuracy in their published computer-generated estimates of value. In other, other words, bits and bytes which have never once set foot in my neighborhood, in any neighborhood, never seen my impressive Koi Pond or my highly upgraded home, every inch of which has been appointed with fancy 18th century Italian wall paper depicting cherubs and zoftig unclad ladies of the period, and never enjoyed my view of the shopping center (“evening lights,” in agent-speak), are now better prepared to nail that magic number.
They are factoring in more “variables.”
… and now integrate homeowner-edited home facts – such as the number of bedrooms, bathrooms or square footage. More than one million homes have been claimed and updated by their owners to date, contributing to improved Zestimate accuracy on many of these homes. Incorporating these changes… have resulted in a 12 percent improvement in Zestimate accuracy nationwide. Many larger metropolitan markets, such as the greater San Francisco, Miami, Los Angeles and Atlanta areas, have some of the most significant accuracy gains at 18 percent, 21 percent, 22 percent and 28 percent respectively.
Hold on! From where I sit, that is kind of a big deal. No, it’s genius. They are now considering the one “variable” that truly matters: Their users. Zillow is outsourcing (albeit just a teensy bit), and they are outsourcing to the consumer. But, there’s more.
More specific details about Zillow’s coverage and accuracy down to the county level can be found in its updated data coverage and accuracy pages that now show how often a Zestimate comes within 5 percent, 10 percent and 20 percent of the final sale price… These pages will now be updated every three months, arming consumers and real estate professionals with the most frequent and detailed information possible, supporting the company’s commitment to information transparency.
Transparency is not just a buzz word anymore but expected, even demanded, by the consumer. The consumer wants information, lots of it, and they want honesty and full-disclosure in its delivery.
In Zillow’s case, the consumer is both the real estate agent and the homeowner (which makes for one crazy-big target market), and Zillow needs two things to succeed. They need data, sales and “for-sale”, and they need eyeballs. You can’t have they latter without the former, but rather than build their reputation and their inventory by taking the more-traveled route, courting the big real estate brokerages, they have reached this point primarily by appealing to the individual agent. It is the individual agent who is online and socially connected – and blogging. Appealing to us makes us happy, which in turn inspires us to write nice things about Zillow.
And, instead of pushing the information to the customer, they have given them ownership. What Zillow has done is build a business model designed to work from the ground up, a MySpace for your home. Rather than cling to yesterday’s antiquated marketing practices wherein the customer was slapped silly with a message and expected to respond, they have recognized what so many are resisting. Zillow is recognizing and capitalizing on a new social culture. The conversation is no longer between the guy with something to sell and the guy who might be buying, top down, but between the buyers themselves, upside-down.
Wikis, consumer reviews, chat boards, and, yes, blogs; the customers are the ones doing the talking now, and they are the ones making the rules. We are all journalists, researchers, and analysts. Google and Yahoo! and the likes have made us all, to some extent, famous. The Internet has given the individual enormous power, the power of information and access, certainly, but more importantly the collective power born from connectivity. We are living in a new “Me” generation, and we are all going online to show off our “All About Me” poster to our friends. And, my goodness, do we have friends! When the people with something to sell in our new world celebrate this, they will rock the house.
Since the day they first opened for business, the much-maligned Zestimate has been under attack by most real estate agents and by many homeowners. By introducing more fancy algorithms and, more importantly, by listening to their clients and including them in their product development, Zestimate accuracy will now be improving. But the Zestimates themselves will still be wrong. Every time. So what?
Rational people know that any estimate, whether it comes from your real estate agent or it is preceded by a “Z,” is just that: An estimate. How good or bad or better Zillow’s data is today is not the point. The point is that they have included the consumer in the conversation and have positioned themselves to dominate that conversation. Genius.
(Note: There are undoubtedly 50,000 sites out there who posted on this hours ago, but I haven’t peeked – That would have been cheating.)