Update August 10: It looks like Greg at Bloodhound has been thinking about Zillow too. He reinforces my comments about Realtor perception and has some great details.
Update August 15: Lots of talk in the blogosphere about Zillow. Sellsius is polling Zillow users about their experience.
We founded Altos Research because quality real estate market information is really difficult to find. Any analysis on the housing market tends to be old, based on last month's, or year's, sales data. In Silicon Valley from 2001 - 2003 was nuclear winter. Lot's of people out of work, huge piles of stock option wealth evaporated. During that time, we wondered what was happening to the value of our little, old, over-mortgaged, Silicon Valley homes. Because real estate market data was so lousy, we had to invent the system to get us the data that would really help us understand the market in real-time.
Apparently that's roughly the same impetus for Rich Barton and Lloyd Frink and Zillow. Zillow's initial success has been stellar and it warrants attention, especially if you have $55 million in venture capital.
This is a remarkable study because the fundamental proposition, "how much is my home worth?" is an entirely pedestrian offering. Literally HUNDREDS
of sites will give you the same number (realestateabc, HouseValues, Home Gain, Domania, not to mention any local agents). The feature is so common frankly because it's
compelling and because it's easy to calculate. (input public records data and do a multivariate regression. Tweak it a little better with some natural language processing techniques. That's it. You can do it for your local market in Excel, if you like.) In fact, Rich Barton said at the Inman conference, "We seriously thought about not launching the company until we had something more..." I'm pretty sure I would have been one of those arguing to hold back.
So they had to do things well to get noticed. Well, they've done a lot of things well and here are those that, in my mind, really made the difference:
- Sexy UI - this is web 2.0 after all. And Zillow is a clean, pretty interface. People like to use their site. I'm surprised that folks like Zip Realty haven't fixed their stuff up yet.
- No Hassle - This is the most obvious one for anyone who's surfed around the online real estate market. Of all those sites above, Zillow was the first to open it wide up for consumption without giving your contact information hungry real estate agents. Thank you!, says the market. Good for them.
- Ballsy confidence - where the first two items are clear business choices, #3 is really the secret catalyst. This decision illustrates a victory of great marketing over engineering. Zillow decided to publish the one number. The Zestimate they call it. By showing one number they demonstrate confidence and confidence equals authority. But let's face it: the number is, ahem, unreliable. Anyone familiar with the math can tell you why. Anyone in the real estate market will tell you that property variables are so myriad that you can't know until you've spent time in the home. Bad carpet could pull percentages from the price. All of the online price my home sites deal with this reality by giving you a range. (which what good statistical methodology says, too.) "Your home is probably worth between $500,000 and $680,000. Have a professional narrow it down for you." Zillow said, Screw it. "Your home is worth $647,415."
The result is that the average surfer says, "Wow! that's useful!" and Zillow gets millions of visitors. In general though, the serious researchers or home buyers tend to be a bit
frustrated. And real estate professionals tend to be
incensed. The noise introduced can be difficult to navigate around with clients. But everyone else seems happy. And everyone else is a big group of folks.
Zillow can succeed with this strategy because, where HouseValues and HomeGain are real estate firms, Zillow is a media company. Business Week sells a lot of ads and with this headline - an exact, though meaningless, number. The secret is that people react to specifics. They crave the exact number. Zillow is in the advertising business and they prudently chose the fastest course to readers. Rock on.
Altos Research, on the other hand, exists to serve the serious researcher types and the real estate professionals. Maybe we're dinosaurs in not chasing a million eyeballs. Time will tell, I suppose.
