How Sites Such as Zillow and Trulia are Affecting the Real Estate Industry
It used to be that real estate sales associates were the only people who had the "inside scoop" on
properties. They could tell you what a house sold for, what the neighbor's house sold for,
estimated taxes, land size, year built, etc, etc. And most importantly, they knew the secret
formula for finding the value of a home. With the introduction of sites such as Zillow.com and
Trulia.com, those days are seemingly over, as almost any Joe Shmoe with access to a computer
can put himself in the driver's seat of real estate. Or can he? We will explore these two new
relatively newcomers to the Real Estate Industry below.
Zillow.com
homes in the United States. The brainchild of Richard Barton, who also founded Expedia.com a
decade ago, Zillow.com is built on a similar model. Expedia.com helped leapfrog travel agents by
giving consumers the same tools to book reservations that those agents had long controlled.
Zillow.com, in turn, offers property information that heretofore has been beyond the reach of
buyers and sellers alike, particularly those who, for whatever reason, decided against engaging a
real estate sales associate.
Practically speaking, buyers (or even sellers, for that matter), can go to www.zillow.com, type in
an address and receive an instant valuation of one or all homes on a street or neighborhood.
To extract that valuation, Zillow's software pores over public county records and other government
data on more than 60 million homes nationwide. It then uses a proprietary computer analysis to
come up with current values, which the company calls "zestimates." As found on their website,
"When our statisticians developed the model to determine home values, they explored how homes
in certain areas were similar (i.e., number of bedrooms and baths, and a myriad of other details)
and then looked at the relationships between actual sale prices and those home details. These
relationships form a pattern, and they used that pattern to develop a model to estimate a market
value for a home." So, one part public data such as assessors' records, one part actual sales data,
and a few parts speculation, create a zestimate. At one point, Zillow indicated their own
confidence level in individual zestimates by providing a range of stars, much like a movie review.
However, such guidance no longer exists.
A complementary but unaffiliated site to Zillow.com is Trulia.com, a real estate search engine that
helps buyers find homes for sale and provides real estate information at the local level. The site
claims that buyers, through information found on their site as part of its five-step process to
pinpoint specific zip codes and neighborhoods, can better understand real estate trends at the local
level. For example, a buyer will understand how a potential future home stacks up compared to
similar homes on the market, and similar homes that have recently sold. Additionally, it supplies
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