Ok, class, today’s quiz has two true/false questions. No copying!
- Zillow is like Cyberhomes
- Zillow is like NBC
Time’s up…here are the answers:
So, how’d you do?
Much of the criticism of Zillow centers on the fact that its estimates are not the last word in accuracy, and in many cases can be far off. If Zillow were, in fact, strictly a home valuation site a la Fidelity’s Cyberhomes, that would be a pretty damning indictment. Zillow’s only hope would be to consistently have the best, most accurate estimates in the business, and Cyberhomes would arguably have a better platform to achieve that, since its affiliation with Fidelity gives it access to more data, more accurate data, and more timely data.
These criticisms are valid, but they simultaneously miss both a relatively minor and a crucial point, both of which can be illustrated by another analogy, this one between Zillow and Google, arguably the best known online media company.
- 100% accuracy simply isn’t possible: When you type in a search on Google for, say, “Radish recipes,” what you typically get is a “good enough” set of search results to help you find the content you want. It’s an amazing testament to the brilliance of Google’s search algorithm engineers how often within the first page of results you find what you’re looking for. Sometimes, however, the answer isn’t on the first page…or the second or the third…or it simply isn’t found on Google. Somewhere out there on the Internet is the answer, but Google hasn’t found it or classified it or interpreted it correctly for your particular needs. A computer algorithm, however sophisticated, simply can’t always give the right or best answer. Similarly with Zillow, what you often get is a “good enough” estimate. The home’s true value might be $400,000, but Zillow might say $370,000 or $440,000. For many purposes, that’s a “good enough” answer for people to keep coming back, and when they need a more accurate answer — say, they’re planning on selling their home — they bring in an appraiser or a Realtor to give a more accurate estimate. As with Google’s search, sometimes the Zillow answer is way off. As frustrating as that is, it’s just the nature of the beast: A computer algorithm, however sophisticated, simply can’t always give the right or best answer…no matter how smart the engineers, no matter how many data points, no matter how powerful the computer.
- Successful media companies are all about content and entertainment Google monetizes its search pages by selling relevant ads — just like NBC monetizes Saturday Night Live by selling ads. Google’s “content”, its “entertainment” is the search result and experience.Zillow’s content is all real-estate focussed. During its first season, there were two shows: “Home Value Estimates” and “Sales Prices and Details of Neighboring Homes.” We’ve just entered the second season with the release of a few more shows: “Make Me Move”, “Homes for Sale”, and “Real Estate Wiki.” Just like NBC, some of Zillow’s shows will be hits, and some will be flops. With any enough hits, Zillow will become successful.Don’t get hung up on the fact that Zillow’s “Home Value Estimates” show has inaccuracies in it. These estimates will improve, but they will never be 100% accurate, not only because they can’t be, but because what Zillow is providing is real estate entertainment, not the be-all and end-all of real estate valuation.
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Tags: Eppraisal.com, Google, Online advertising, Real estate, Zillow
