Online Home-Hunting Gets More Sophisticated

By Yinka Adegoke

When 32-year-old lawyer Elaine Lippmann and her husband were planning to buy a new home, they used the Web to find a wealth of information that would have been almost inaccessible just a few years ago.

The Silver Spring, Maryland, couple is part of the fast-growing ranks of U.S. home buyers who are turning to the Internet.

Online research tools helped them find key information about the area and the best ways to commute to Washington. Through the Internet, Lippmann also chose a real estate agent with a helpful Web site of its own.

But consumers like her might soon be using an even more comprehensive Web site called Zillow, whose founder hopes to revolutionize the way people research their home buying and selling.

According to Nielsen/NetRatings, about 15 percent of the active Internet population visited a real estate or apartment site last April, up 26 percent from a year earlier.

This helped convinced Rich Barton, who founded travel site Expedia and sold it to IAC/InterActiveCorp in 2003, to return to the dot-com fray this month with Zillow

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, backed by $32 million of venture capital.

The free service, which is funded through advertisements from local suppliers, is completely independent from real estate agents.

It doesn't feature any property listings. But in the same way that Expedia took the mystery out of ticket pricing, Zillow allows consumers to find out key data on neighborhoods and calculate the value of their homes.

And unlike Web sites like

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, which require users to fill in contact information so that a real estate agent or mortgage broker can call with a detailed estimate, Zillow allows them to do it all online.

"We're opening this thing up, allowing anyone to come in and use it to get smarter," Barton said.

To put its valuations in context, Zillow provides aerial photos of neighborhoods, showing prices of other homes along with charts and graphs with historical data and price movements of the property in question.

A quick search in a wealthy neighborhood in Marlborough, Connecticut, for example, showed home values, or "Zestimates," that start at $451,000. But that was only the beginning.

Besides the usual details such as number of bedrooms and baths, square footage, etc., Zillow tells you when the property was built, what kind of heating and cooling system it has, the type of roofing and even the construction quality.

For instance, the site says the most expensive home in the Marlborough neighborhood was built in 1984 on 1.15 acres (0.46 hectares), with three bedrooms and 2 1/2 baths. Property taxes were $6,310 in

2004. This one-story house, which sold for $470,000 in June 2004, ranks in the top 10 percentile for its zip code.

Exactly how much is the home worth now? Zillow lists it at nearly $630,000, but acknowledges the value could range from $553,000 to $754,500.

The accuracy of the Zestimates depend on historical data such as tax records and sales history -- and access to that data can vary from county to county.

The site is also still in its test stages, said Barton, who said the estimates currently have a 7.2 percent margin of error. He expects accuracy to improve as more up-to-date information becomes readily available.

Meanwhile, homeowners who feel some the details about their house are out of date can simply update the information and see how that affects the Zestimate.

With Zillow, Barton is now competing with IAC/InterActiveCorp, which owns such leading real estate sites as

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, LendingTree
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and Domania
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Kim Gorsuch-Bradbury, senior vice president of networks at, said research showed that as many as 80 percent of consumers begin their search for property online.

"It's a logical place for consumers to search and educate themselves," she said.

Does this mean the traditional Realtor role is becoming redundant or just evolving?

"The premium has shifted to agents being an expert on the area," said Gorsuch-Bradbury, whose site has partnerships with hundreds of real estate companies across the country.

Corus Home Realty Chief Executive Michael Gorman said trends at his own company, which covers Washington and its suburbs, illustrate how the business is changing.

"More than half of our business comes in through the Internet with partners including and," he said. Corus also buys search engine advertising links on Google and Yahoo to lead to its own site

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Still, Gorman doesn't think that traditional real estate agents are headed for extinction.

"These sites have great exciting information as a starting point," he said, "but there are too many other factors such as improvements to the house that might not be recorded or general expertise on a local area."

Despite the growing popularity of do-it-yourself Web sites such as

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, most listings -- even on the Internet -- are through real estate agents. Most people need a dedicated professional to help them through the buying and selling process.

Even Internet-savvy Elaine Lippmann relied on Corus to close the deals for her home and for her parents' new house six months later.

The National Association of Realtors says sites like Zillow and its own

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add value by offering more than just property listings such as interactive maps and integrated mortgage calculators.

"Listing sites are a dime a dozen now because they don't differentiate your site anymore," said Mark Lesswing, the association's vice president for Realtor technology. "You need to supplement property listings with local information, mapping, blogs to educate the consumer."

Copyright 2006 Reuters Limited.

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