Internet marketing finally overcomes the value barrier

Citation

Pitta, D.A. (2007), "Internet marketing finally overcomes the value barrier", Journal of Consumer Marketing, Vol. 24 No. 7. https://doi.org/10.1108/jcm.2007.07724gag.001

Internet marketing finally overcomes the value barrier

Edited by Dennis A. PittaUniversity of Baltimore

Internet marketing finally overcomes the value barrier

Internet marketing has grown from its infancy 15 years ago when web sites featured low value and low risk products. The value of marketed products has steadily risen and surpassed the automobile price level. Until recently, really expensive products like housing were hardly served. Now there is a web site that makes searching for or selling homes a bit easier.

Zillow.com (www.zillow.com/)

One of our colleagues who teaches real estate marketing brought the Zillow.com web site to our attention. Zillow.com is a product of the creative team at Google.com. It marries aerial and mapping technology with real estate listings. More important, it allows owners to list their houses for sale directly, without necessarily using a real estate agent or brokerage.

Zillow.com launched its web site in February 2006 and unleashed an unprecedented flow of real estate information to the general public. It was followed by other companies such as Trulia, Redfin and PropertyShark which aim to place information in the hands of the consumer. The information was previously reserved for the industry and includes free home valuations, transaction history, property information such as bed and bathrooms, selection tools for comparables, neighborhood and school information, and for sale postings. The nature and scope of the information is startling to the layman. The information on the number of bed and bathrooms as well as a home’s square footage may seem like an invasion of privacy to some. The rather precise home valuation is more clearly of concern to those who like to keep things private.

One might wonder where sites like Zillow.com get their information. In fact, the information has been collected and stored for years in county courthouses, generated by the property settlement process when homes change hands. Home improvement activities generate additional information contained in building permits. Every time a home sells or is improved, the information is verified and refreshed to reflect the value of the transaction. In some cases, homes will have up to date information. In others, the information is more dated.

The time seems to be right for internet web sites devoted to real estate. Data from the California Association of Realtors suggests that 70 percent of homebuyers now use the internet as an integral part of their home buying experience. Specifically, the data came from the 7th Annual California Association of REALTORS® (CAR) Internet Versus Traditional Buyers Survey. The survey findings reveal that use of the internet has grown as online access has become easier, faster, and cheaper.

For real estate, the internet has evolved from an information gathering tool for home buyers to an aid in the real estate transaction. Industry experts state that it is changing the dynamics between buyer and agent and, consequently, the way the industry does business.

One innovation is aerial views of property. Zillow.com delivers aerial photographs without needing an airplane. In the USA during the 1950, real estate agents who were also private airplane pilots pioneered the bird’s eye view of property. They combined their love for flying with the notion that novel aerial views of the neighborhood would attract a buyer’s interest and perhaps his business. Zillow.com has extended that practice. The web site announced its position as the first residential real estate site to add Microsoft’s Virtual Earth “Bird’s Eye View”. Bird’s Eye View is a high-resolution aerial image of a location viewed at an angle of approximately 45 degrees. The perspective adds detail that is missing from a flat, overhead view. The angle perspective offers 3D-like quality that is attractive and informative. Viewers might be able to see the architectural style and type of siding of a home on a street, in a neighborhood. In contrast, a flat, overhead view might provide a map like idea of houses in a neighborhood with much less detail. Back in the ancient 1980s, industry experts commented on the visual quality of contemporary online retail dismissing the poor resolution imagery with the admonition that people will not buy clothes that look like Lego blocks. Zillow’s Bird’s Eye View provides very sharp detail to allow thoughtful consideration of not just the property for sale, but also others in the neighborhood as well as amenities like local schools.

Other competing sites have added aerial views and now the Bird’s Eye View widely accepted as a critical piece of search functionality for a real estate site. In fact, traditional brokerage sites have added features such as Bird’s Eye View in order to make their sites more exciting for consumers.

Zillow.com adds a great deal of information and functionality for users. Valuing real estate is one of the more difficult tasks and usually requires the eye of an expert. Laymen now can gain some expertise by using Zillow’s proprietary estimating tool. It is called, Zestimate™ (pronounced ZEST-ti-met, rhymes with estimate). Zestimate estimates market value, computed using a proprietary formula. It is not an appraisal and certainly not a final figure. It is, however, a starting point in determining a home’s value. The Zestimate is based on data; a real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. The big three factors, location, location, location comprise the most important elements in the estimate. However, home amenities, lot size, home age and condition also factor in. Variations in price also occur because of negotiating factors, closing costs, and timing of closing. Zillow.com encourage buyers, sellers, and homeowners to supplement its information by doing other research. Specifically, Zillow.com advises that buyers should:

1. 1.

   get Comparative Market Analysis (CMA) from a real estate agent;

2. 2.

   get an appraisal from a professional appraiser;

3. 3.

   visit the house; and

4. 4.

   create their personal estimate using the My Estimator home valuation tool.

The My Estimator tool allows sellers to enter their address in a search field and click on an address in a bubble on the map. They can then create an estimate by clicking the “Owner Tools” button and then “Create an estimate”. The tool is straightforward and allows a measure of customization that can return a more accurate estimate of the home’s value. This figure would typically be discussed with a real estate professional to fine tune the number.

Zillow.com combines extreme ease of use with helpful tools that allow sellers to value and list houses for sale and allow buyers to find houses that fit their needs. In the recent past, prospective home buyers complained about the need to use real estate professionals as tour guides who would offer few services beyond showing houses for sale. Using Zillow.com, buyers can pinpoint property and rely on professionals for aid in the purchase and negotiating details. Zillow.com seems to make the agent’s job simpler since buyers can select their top choices from available properties based on the robust information on the web site. This is before they ever need to get in a car and make a visit.

Zillow.com is not perfect. Not all properties for sale can be found accurately. Some addresses are incorrect and Zillow.com returns aerial views of properties across the street or several blocks away. Still, the mistakes seem to be few and should be addressed as the service matures. Zillow.com represents an ambitious and well implemented advancement in real estate marketing as well as a giant leap for the internet.

In our next issue, we will investigate other informative sites and invite readers to submit their favorite internet sites for our consideration.

Reader requests

Please forward all requests to review innovative internet sites to: Dr Dennis Pitta, University of Baltimore, 1420 North Charles Street, Baltimore, MD 21201-5779, USA. Alternatively, please send e-mail to: dpitta@ubalt.edu for prompt attention.