Zestimate Offers Free
Instant Online Appraisals – Zillow.com Website Helps Determine What Home is
Worth
March 12th
2006
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Zestimate Map |
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There is a new website that may make appraisal fees a thing of the
past. At least that is what some have speculated about Zillow.com
(otherwise known as Zestimate). Rich Barton, Zillow chairman and CEO
said “Until now, finding out a current market value of any home --
whether it's yours or one you want to bid on -- has been quite
difficult.”
Banks pay appraisers $300 or more for appraisals, depending on the
difficulty of the valuation. Most of the time appraisers can look at
the property, take some pictures and compare the subject property to
comparables. This is a relatively simple process for track homes, but
can become more difficult for older homes or non-conforming houses.
Some appraisals can be difficult to calculate. Sometimes the appraiser
will need to find the worth by determining the value of the land by
comparison, and then by adding the cost of construction of the house.
The appraiser may subtract depreciation, due to the age of the
improvement (i.e. the building). The appraiser will always document the
final valuation process.
The appraisal can be a complicated process, but Zillow hopes to change
that. Barton said “We believe you shouldn't need a computer science
degree or a real estate license to find out what a home is worth. That's
why we created Zestimate values, providing free and instant valuations
for millions of homes in America. This beta is just the beginning...
Zillow will continue adding tools and services to empower consumers to
make smarter real estate decisions."
It is not clear whether Zillow takes into account the value of unseen
improvements. What about the tile? Ceramic tile is more expensive than
linoleum. The kitchen improvements, like walk in pantries, may not be
considered. The estimate may not take into account bonus-room or
finished basement square footage. It did not take this into account on
our own home.
So far the service is free. Barton founded Expedia while working at
Microsoft. Unlike Zillow, Expedia makes their money by selling stuff.
The Zestimate revenue appears to be generated by Google Ads that appear
on the Zillow pages. It is unknown whether these ads will cover the
cost of data collection (Multiple Listing Service (MLS) or other data
collection services) and map views made into plat maps.
Each estimate comes with a satellite image of the subject property and
surrounding properties. What is impressive is that Zillow found our
property. When we look for our address on other map services, it
appears in the wrong location. This is the first online map that
actually got it right.
The map also gives the value of properties around the subject property.
According to reports, the estimate not only considers the past sales of
properties in your area, but will also take into account the current
interest rate influencing the value.
It is possible that Zillow may generate revenue by working with buyers
and sellers in the future. Previously, this has been the job of the real
estate brokers who typically charge 6% for the service. Some brokers /
agents have been offering discounts or flat fees for processing the
paperwork and listing the property with the multiple listing services.
So far the service
is currently available on the west coast, but is spreading. Although,
the website does threaten real estate appraisers and possibly the
brokers / agents business, there will be always be need for personal or
expert help. The old-saying is that value is determined by “Location,
Location, Location” – but everyone knows there are other variables.
By
Dan Wilson
Best Syndication Staff Writer
Real Estate
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