In his book The Future of Work, Tom Malone posits that the steady reduction in the cost of communication has enabled dramatic shifts in both society (from kingdoms to democracies) and business (from vertically integrated, hierarchically managed firms to decentralized companies self-managed by independent worker/owners). Malone’s best example of this transformation is eBay, where reduced telecommunication costs enable 400,000 independent sellers to communicate quickly, easily and across geographical boundaries. eBay's model provides sellers with the scale of a traditional centralized corporation but with the freedom (over product, pricing and marketing decisions) of a mom-and-pop business.
Several new websites represent the further democratization of business. For many years the process of buying a home was fraught with virtual “kingdoms” – real estate agencies like Prudential and Coldwell Banker and banking institutions like CountryWide – who charged usurious fees, drove up transaction costs, and kept me paying rent. But two new sites, Zillow.com and Prosper.com may signal a Malone-like shift in residential real estate from kingdoms to something more democratic. Zillow.com aggregates tax records, sales history and actual prices of ‘comparable’ properties to provide incredibly detailed, and unbiased, valuation information – exactly the kind of information you used to go to an agent for – for free. And Prosper.com matches prospective borrowers with prospective lenders who set their own interest rates; while both borrowers and lenders benefit, banks must forfeit their traditional 8-10% spread. Both sites have received a lot of attention from investors and the media, but will consumers follow? I know I will – after all, my lease is up in a couple months.
After reading the Zillow.com article mentioned in your post, I decided to test some of the home value sites currently available. I’ve been following these kinds of sites for a while and in the past I was able to get an estimated value of my house from numerous sources, including Domania.com. And it used to be hassle free. Now, they all made it difficult.
After providing all my personal and contact information, Domania's response was: "Currently we do not have enough information to compile an accurate report for you. However, your real estate agent will be able to assist you..." Interestingly, I was able to get the information from the same site without any hassle a while ago when they focused on pleasing their customers, not the real estate brokers. I also checked housevalues.com mentioned in the article, and after providing contact information, I received e-mail saying that "a local real estate agent will provide this information to me by email within three business days". Not very helpful. So the customer experience on both websites was frustrating and miserable. I invested my time doing everything they asked me to do and they didn't deliver on what they promised. They obviously are here to serve the real estate agents, not the home owners.
Zillow.com, however, is great! I was excited to see what this website can do and even though they currently don't have enough information to provide "Zestimate" in my area, this site has huge potential. They already offer tax estimated value and property tax data in my neighborhood, which allows me to compare how much taxes I pay vs. my neighbors (I always wondered about that). And the neighborhood maps are amazing. You can literally see your house, street, and the whole neighborhood. I can't wait to see when they have enough data for my county to calculate the value of the house. And best of all, I don't have to provide any personal or contact information. We will definitely hear more about this site in the future. I only hope that they will not follow the same path as Domania or some of the other house values websites, and will keep it to serve the customers, not the industry.
Posted by: Katarina Gizzi | February 17, 2006 at 03:53 PM