Bronte Media

The buzz surrounding Zillow was reaching Microsoft vaporware pre-announcement proportions (no irony lost on the fact that the team is largely from the confines of Redmond). And so it was great to see them finally launch. For them and the rest of the real estate startups out there.

Here’s why. For Zillow, I think if it had gone on any longer, paranoid expectations would have ballooned to levels where the service would have to solve world peace to avoid anything but an underwhelming reaction when it launched. As it is, you could feel the collective disappointment. I think that is more a function of being teased for so long rather than the product sucking.

The idea to try and bring a liquid real-time valuation approach to a fundamentally illiquid asset (people move homes every six years) is a fascinating one. But I would have to agree with Steven Levitt - economist extraordinaire and Freakonomics author - there really is only one data source that matters: the market. I don’t think by adding in 10 more appraisel feeds or more tax records, the accuracy will increase. Indeed, it probably decreases the accuracy.

Rich Barton, the founder describes the service as a “Kelly Blue Book for Real Estate” but it feels more like Yahoo Finance and that’s probably a good thing for the mad-Jim-Kramer-obsessed-buy!-sell!-consumer-society we all live in.

It’s a much more consumer-oriented version of Housevalues.com, who have the most to worry about from Barton and co. But in the end, it is simply re-engineering that problem.

One other funny tangent to the launch was the classic quotes of fear from others in the industry. This from Glenn Kelmen of Redfin:

“Mr. Kelman of Redfin said he recognized that change might be difficult. “We are like the penguins on the edge of an iceberg when no one wants to jump in first. Redfin is going in first,” he said. “Maybe that isn’t such a good analogy. The first penguin in usually gets eaten by sharks or something.”

Haha. Mental note Glenn: don’t think aloud to a New York Times reporter!

And you can’t but root for the hungry underdog Propertyshark, even if they are green with jealousy or perhaps the possibility of what they might be able to do with $32m in financing:

PropertyShark has no outside financing. “It is scary, and frustrating and nerve-racking,” said Matthew Haines, the site’s founder. “It made it quite clear that we are underfunded.”

p.p.s Being a data nerd this caught my eye: “Barton said Zillow’s national margin of error for home values was 7.2% because it assessed more data than most online real estate evaluators.” Ahh the old 7.2%. He should have said 7.26% and people would have believed him even more! When you are forecasting a theoretical value and the house is not being sold it is a little hard to come up with a margin of error. And once the home is on the market you can simply pick that figure up and adjust the valuation accordingly. You’re never going to be that wrong. But all your guessword prior to that is just that: guesswork.