All over the map

Real estate Web site Zillow gets mixed reviews

John Rebchook, Rocky Mountain News

Monday, April 2, 2007

Zillow.com quickly is becoming to buying a home what the Kelley Blue Book is to buying a car.

Launched slightly more than a year ago by two search-engine pioneers, Zillow.com receives more than 4 million visits each month, which the company says makes it the sixth-most-popular real estate site on the Internet. It was created by Richard Barton, who founded the travel site Expedia when it was owned by Microsoft, and Lloyd Fink, an early hire at Expedia.

In Denver, 54 percent of the homes listed on Zillow have been viewed.

Zillow allows consumers to see what their home is valued at, their neighbors' homes or even their boss's. It's also a free way for people to list their homes for sale, much like Craigslist.com.

Just go to Zillow.com, type in an address at the prompt - and a wealth of information pops up.

But some experts, in Denver and across the country, say they have doubts about some of that information.

"Some of the estimates offered by www.Zillow.com only claim to get within about $100,000 of the true price," wrote Elizabeth Razzi in her book, The Fearless Home Seller. "Well, a Magic 8-Ball has that kind of precision. Is $435,000 the right price? Shake, shake, shake. My reply is no. How about $535,000. Shake, shake, shake. You may rely on it."

Denice Reich, a broker at RE/MAX Alliance who specializes in high-end homes on Denver's east side, recently put one house under contract for $1.995 million. The "Zestimate," or Zillow estimate, valued the house at only $574,000.

In other words, Zillow low-balled the home by more than $1.4 million.

"Zillow is not even in the ballpark," -Reich said. "It is just wacko."

The biggest differences appear to be in older Denver neighborhoods.

"They're probably very good in the suburbs," Reich said. "If you have a subdivision of Richmond Homes, where you have several models that are identical, it probably is very good."

Reich said it is frustrating for her - and her sellers - because Zillow estimates have led to low-ball offers.

"They think that Zillow is so authoritative, when the truth is individual properties are so different," Reich said.

She said she knows of one couple in Hilltop who recently sold their home to a developer who used Zillow.com as a way to justify his offer.

"They lost $200,000 on it," because the home was on a corner lot and the value was in the land, not the house, Reich said. The developer plans to tear down the house and build expensive townhomes on the property, she said.

Amy Bohutinsky, spokeswoman for Zillow, said the company is only as good as public records. Homes in older Denver neighborhoods are notorious for being inaccurate, especially since many people 25 years ago did things such as add living space to houses without pulling permits. Public records in newer communities are likely to be much more accurate.

"Obviously, no one from Zillow has ever been in these houses," she said. "We don't know that you might have put in a new kitchen or bathroom, for example."

Zillow created My Estimator so a homeowner can input improvements and correct errors. "For example, if you spent $40,000 on a kitchen remodel two years ago, Zillow might say that added another $36,000 in value to your home," Bohutinsky said.

Some brokers don't like that feature because they think -homeowners could exaggerate.

"Most people who use that are getting ready to sell their homes, so if they lie, they will be caught pretty quickly," she said. "There's really no point to say you have eight rooms when you have four."

Also, Zillow's My Estimator allows homeowners to choose more relevant comparable homes, so your home on a quiet street is not compared to one on a busy intersection. For one northwest Denver home, for example, Zillow uses a comp that is almost two miles to the north and in a totally different, lower-priced neighborhood, while it did not include a home that sold last month on the same street.

Zillow emphasizes it is a "starting point" and is no substitute for a real estate agent or some other expert who is familiar with a particular market.

Still, some brokers are troubled by what they see as inaccurate estimates on Zillow.

Paul Tamburello is listing infill developer May Dean Marshall's two-home estate at West 32nd Avenue and Bryant Street in the Highlands neighborhood for $1.775 million. The main home has 4,418 square feet, and the carriage house has 1,872 square feet. Both sit on a 17,836-square-foot lot. Originally, the estate was priced about $2 million.

Zillow values both homes at a little more than $1.1 million.

"I think that is low, for sure," Tamburello said. "We've already come down about $300,000, and now we are starting to get some serious interest."

Looking up his own home on Zillow, Tamburello said, "They're probably $200,000, maybe $300,000, low on my home."

He said he searched several homes on the MLS that recently sold, and in several cases Zillow's estimate was off, in one case by more than $100,000.

That's too big a spread, he said.

"When I'm doing an estimate of a home's value, if it's under $250,000, I should be within $5,000. If it's between $250,000 and $500,000, I should be within $15,000," Tamburello said. "If it is over $1 million, I should be within $50,000 of its value.

"I think most Realtors work within those type of ranges. Valuing a home is not an exact science, but I can drive down any street in the country and say homes are within a $130,000 range."

John Skrabec, principal of Live Urban Real Estate, said some house hunters trust Zillow to be more accurate than it is.

"I hate Zillow," Skrabec said. "It has gotten so much positive press, but the truth is, their estimates are often way off. Some buyers will say, 'But Zillow says it is only worth this much.' It can be very frustrating and is another obstacle Realtors have to deal with."

Also, some people might not even consider a home because by Zillow's estimate it is vastly overpriced, even though it may be very reasonably priced for that specific street and neighborhood, he said.

Liz Richards, an agent with Kentwood City Properties, said that last year, when she was with Leonard Leonard and Associates, all the agents in her office "Zillowed" their own homes.

She said Zillow was off by as much as $150,000.

"Zillow is interesting," Richards said. "Definitely a wild card and potentially dangerous tool if it's in non-Zillow-educated hands. More times than not, it is inaccurate."

Still, agents find much to like about Zillow.

"Their aerial views are great," Tamburello said. "You can practically read the license plate numbers of the cars in front of the homes."

Skrabec agreed that Zillow's graphics are superb. And he said that Realtors can't pretend it is not a factor.

"Zillow is putting information in the hands of buyers and sellers that at one point was information only Realtors had," Skrabec said. "Zillow can't be ignored."

Figuring the 'Zestimate'

Zillow.com determines home values based on tax appraisal or assessed value depending on the home's address. So-called Zestimates are computed by entering data into a proprietary formula. Following is an example of a recent home sale compared with the Zillow estimate.

Northwest Denver

3-bedroom, 2-bath, 1,605 square feet on a 4,440 square-foot lot

• Zillow estimate $321,562

• Actual sales price $455,000

Not created equal

• Zillow's own 1-through-4-star rating indicates what data determine their figure:

4 star - Best Zestimate

3 star - Better Zestimate

2 star - Good Zestimate

1 star - Tax assessment

Zillow rates its accuracy in Colorado

Source: Zillow.Com

rebchookj@RockyMountainNews.com or 303-954-5207