All Intensive Purposes

Last week I posted a link to Zillow, a free internet service that superimposes real-estate information, including an estimated market value, on satellite photos. Cool concept, but after using it for a few minutes I was underwhelmed by the valuations -- from what I saw, they're useless. The Washington Post's technology columnist reached the same conclusion. She found others who agree:

"What scares me is the consumer who goes out there and makes a decision based on that data," said Richard Powers, president of the Appraisal Institute, the nation's largest appraiser association with 21,000 members. "Consumers really have no way to judge the accuracy of the estimate -- that really is the problem."

Powers said his board members have had mixed results on tests they've been running since Zillow's public beta test went live. "In some areas, we found the results were fairly accurate to the value of the home. In others, we found results that were at least 40 percent wrong."

For that matter, Zillow's own data suggests they're not doing well:

Zillow runs extensive analyses to calculate its own accuracy rate by comparing actual transactions as they occur with the automated estimates provided by its computerized valuation system. Nationwide, 62 percent of all Zestimates fall within 10 percent of the selling price, according to Zillow. That means 38 percent are more than 10 percent off the mark, which strikes me as significant.

Hell, even 5-10% is significant when you're in the market.

Zillow has potential. It would be nice if they could make it work.