When all the ancillary real estate Web sites started cropping up about five years ago I thought, “Great! These give consumers more information, which is always a good thing.”
Looking back, I was wrong. Giving consumers more quality information is a good thing, but misleading information does far more harm than good.
Take Zillow’s “Zestimates” for instance. They use statistical model that looks at all sorts of online data and produces a property value. Let’s put aside, for the moment, that their model appears to infringe on a patent held by First American. Instead, let’s see the damage done to home buyers everywhere.
Determining the value of a property is part art, part science. The most expert in determining home values are Home Appraisers who do this work as their primary business. Next come good Realtors. I say “good” because there are agents who don’t put much effort into their Competitive Market Analysis (CMA), in which case they aren’t worth much at all. Next in line would a tax assessor who basically looks at previous sold prices and modifies the value based on geographic averages.
Last in line would be statistical models like Zestimates. I’ve seen values so wildly off from a home’s true value that it was embarrassing. They can be high, they can be low and sometimes they can even be on target but that’s only because they were lucky.
Is it OK if I asked you to do me a favor? You will? Great! When the time comes to sell your Louisville home, please don’t put any weight on an online guess as to its value, contact an appraiser or Realtor to help you. Otherwise, you’ll find yourself facing unrealistic expectations or worse— underpricing your home.
Zillow Zestimates are bad. Period.