Is Zillow a help or hindrance?

By now most even remotely following real estate or technology have heard of Zillow.com. For those of you who haven't, Zillow is a new website currently in beta (or test phase) that allows either a home buyer or owner find out how much a given house is worth. The idea is to use as many data points, they say "zillions" but what that really amounts to is as much information as they can get their hands on.

But what most people want to know is whether it's any good and my cousin just asked me the other week what I, as a Realtor thought of it impacting real estate in general. Answering the second question first, many think it's an industry changing macro level thing much related to auto websites like KBB.com, Vehix.com and Edmunds.com which give buyers invoice price as well as incentive and rebate information, thus putting the buyer in a much stronger negotiating position. Whereas it can be seen that way from a certain perspective, all Zillow really does is provide buyers and sellers the very thing they use to determine their prices, which is just another data point. Now is it any good? If you do a couple of home value calculations, you can quickly see that while general prices for a given neighborhood can be in the ballpark and give people a start, that individual home values can be drastically incorrect as they have a 5br/3ba 2300 sqft home in my cul de sac worth less than the 3br/2ba 1530 sqft home. Also being data driven, an estimate or as Zillow calls it a "zestimate" is only as good as the data the model is being fed which in Zillow's case can be delayed so you can never be sure whether the "value" you get is the most recent possible or based on date that is a few months old.

As a Realtor, I welcome Zillow and its competitors such as RealEstateABC.com because it doesn't really decrease the need for agents, it in fact increases the need as individuals will increasingly look to professionals to make sense out of all these new data points they are receiving. The great thing will be that both buyers and sellers will be better informed which will facilitate discussion and communication so that we are all on the same page. Also, you can't beat a Realtor who is out there every day monitoring activity. The real estate market can turn on the sale of a single home and only a real live agent in your neighborhood can know that.

So the upshot is to definitely use these new tools to educate yourself, they are very good, but also be aware of their limitations so you aren't just taking the output of these websites as gospel. Very much like the financial investment industry where the disclaimer is always to consult your financial advisor before taking action on any investment advice, likewise, contact your Realtor to best dissect and understand all of this new information out there in cyberspace.