Online real estate valuation services offered by companies such as Zillow.com, Homes.com and Realtor.com have become ubiquitous in the past several years. They automatically collate information on all listed and sold real estate, available from a variety of sources and using advanced algorithms compile that information into data used to estimate the value for your home. The only problem is: they are often wrong. When not outright wrong, they are wildly inaccurate. There is no way to value property purely based on numbers unless all properties are exactly identical in every way. Few properties, even in the most homogenous of neighborhoods are. These valuations don’t take into account many of the variables that your local real estate broker or appraiser considers when accurately valuing a house. Some of the variables include location, condition, taxes, house style etc.
Personally, I have had clients using Zillows “Zestimate” as a baseline for deciding what offers to put in on houses, when the baseline was off by as much as $100,000 from the actual values. This results in a very frustrating experience for the buyer, the seller and of course the Realtor. These actual clients had to look at over 60 homes to finally convince themselves that the local Rivertowns neighborhoods they were looking in and the valuable advice their Realtor was giving them was not reflected by Zillow.com. While they did eventually purchase a home, they lost several well priced homes in the meantime, that they really wanted and could afford, because they could not disassociate themselves from the gospel advice of online valuation.
A recent article in Smart Money Magazine confirms that these estimates “seldom hit the bulls eye” being off by 20, 30 or even 50 percent. Using a service which can be off by as much as 50% is almost worse than using no service at all, especially when valuing one of life’s most expensive investments. In one legendary instance in Brooklyn, the Zillow Zestimate for a brownstone was $31 million. The property is currently listed for $5 million. Sounds like a good deal. Remarkably though it is still unsold.
More information at:
http://www.smartmoney.com/spend/real-estate/the-fuzzy-math-of-home-values-1320260595148/?mg=com-sec-sm
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Filed under: Real Estate | Tagged: Dobbs Ferry Real Estate, Realtor, Rivertowns, Scott Rosasco, Smart Money, Zillow |
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