Web Site Lets You See What Your Home -- and Your Neighbor's -- Are Worth

May 13, 2006 — -- In this fast-changing real estate market, you might drive around trying to guess the value of beautiful houses, and you probably wonder, how much is my home worth?

Lloyd Frink's wife saw a house and fell in love with it. It may have been his wife's dream house, but Frink wasn't going to let love get in the way of getting a good deal.

He wanted comparables, sales trends -- all the hard numbers available before dropping a down payment.

"We had been looking for houses for a long time in this neighborhood. I got data from the Internet in terms of some of the recent sales. I put it into a spreadsheet, and I came up with a valuation for the house I was looking to buy, and I said, 'There must be an easier way to do this,'" Frink said.

So because Frink is who he is -- a computer whiz who started interning at Microsoft at age 14, who then went on to make millions in the dot-com boom -- he got into the real estate business and started a Web site called Zillow.com.

Zillow offers free, instant valuations and data on 65 million homes across the country. The site gets its information from public records, tax assessments and comparables from recently sold properties, then mixes it all up using complex algorithms to come up with what they call a "zestimate."

This isn't Frink's first foray into putting do-it-yourself price comparisons on the Internet. Frink and his Zillow co-founder Rich Barton are the guys who turned ordinary travelers into travel agents -- they're the brains behind the online booking site expedia.com.

They figured they could do for home buying what they'd done for travel.

And Zillow has tapped a nerve in the real estate marketplace. Its servers crashed on launch day back in February, under the crush of people curious to know what their home -- not to mention their best friend's and their neighbors' homes -- were worth.

"We think there are two parts to buying a home," Frink said. "One is the very analytical, data-driven side, kind of the facts, which is what we are trying to provide you on Zillow. Then there is the more emotional, qualitative portion of figuring out how much a home is worth and then want[ing] to consult an expert."

Real Estate Porn?

So just how accurate is Zillow? Should you rely on Zillow's numbers if you are buying or selling?

Seattle real estate agent D'ann Jackson doesn't think so. She pointed out a house she sold that had an estimated value of $611,224 on Zillow.

"This property sold for roughly $80,000 moer than even the highest 'zestimate,'" Jackson said. "If you were a seller and you're going off what Zillow estimated your house was worth, you could be leaving a lot of money on the table."

But Frink says that Zillow is actually fairly accurate, given that they have never been in these houses.

"Zillow is meant to be the beginning point of the process, and it is not meant to replace going out and going in to these houses," Frink said. "Because in the end, that is really what it is all about, getting the emotional feel. Does this house connect with you, and is this something that you want to invest your own hard-earned money in?"

He does admit that Zillow has a way to go, and it's not the only Web site offering home valuations, but it wants to be the most comprehensive.

The site's 'zestimates' are most accurate in Seattle, San Francisco, Los Angeles and Denver, but they can be off the mark in other cities. But perhaps 100 percent accuracy shouldn't be the only concern -- there's also privacy to consider.

Are you comfortable with having all your neighbors and all your friends know how much you paid for your home?

Frink said it's something he's becoming more comfortable with. "And the reason is that there is such a benefit to the public to knowing how much you should be paying for houses and how much you should be selling houses for," he said.

Brad Inman, who runs a real estate news and information Web site, says that checking home prices is similar to checking the stock market quotes in the 1990s, when the market was booming.

"You know, people at work could be found checking their stock quotes more than they were working, and now the fact that you go online and put in your address and find out what your home is worth is very addictive," Inman said.

But even more addictive, he says, is checking what your boss's and co-workers' and friends' homes are worth.

"There is a little of real estate porn going on here, a voyeurism about other people's assets," he said.

Frink insists he's not trying to be a real estate broker.

"I would say that what we are doing on Zillow is no way replacing what real estate agents do today," he said. "We are just trying to give consumers more information so that when they do talk to a real estate agent, they are more educated. We are still computer nerds at heart."

ABC News' Vicky Mabrey reported this story for "Nightline."