I have had a bunch of people email me lately on how to deal with their customers who use both Homegains and Zillows Home Valuations.  As we all know, both these tools are not accurate.  They are really a starting point for the consumer to start determination of their homes value.  I have read a ton of blogs on this issue and most Realtors are against these tools being out there.  Personally, I don't have a problem with either of them because it allows me to show my customers why I am the professional Realtor and why they really need us. 

Before we look at how it affects both buyers and sellers, I want to tell you about my findings.  I have found, each time I have used both tools on the same property, that Homegain was usually more accurate.  Both companies however come in usually lower and sometimes substantially lower than the actual value of the home.  The main reason for this is their inability to look at factors that affect valuations.  As an example of these factors, we can look at waterfront.  For instance, I live on a canal in Merritt Island Florida.  However, just a block away from me are homes that are not on waterfront.  The difference in valuation is sometimes at least $100k to much more.  When my home is run through Homegain and Zillow, the value it gives me values as low as $186k and only as high as $290k.  My home was recently appraised at $400k. 

From an Agents standpoint, the other reason I like Homegain is I believe they do a better job of capturing customers and traffic which usually end up on my site!  That's a good thing! 

So let's look at how they affect your sellers and buyers.

Sellers

I love when one of my customers has used Homegain or Zillow to value a home.  Since their valuations are almost always very low, it gives me a chance to be a knight in shining armor!  For instance, in my home example above, if I went by Zillow or Homegain the most I would have thought my home would be worth would be $290k.  As a Realtor, wouldn't you want your customer to believe their home is worth much less than much more.  I know what I prefer. So say you are the Realtor and you come to my house and all of the sudden you telling me my home is worth $400k versus $290k.  You use your expertise to show the real comps and how this all affects the price of the home.  Instead of having to fight with the potential customer on how they need to lower their price like we do every day, you just made your customers a potential $100k more.  I think they would be excited.  If they wanted a quick sale, you could lower the home price to $375k and still be way above what they were prepared to list. Great stuff.  Thank you Homegain and Zillow for that help!

Buyers

Ok, so this one gets a little tougher.  Since the price comes in so much lower, the buyer thinks they should offer that price.  Again, this is where you need to use your experience and expertise to explain to them why the Homegain or Zillow price is incorrect.  You simply explain to them this is just an estimate and how it doesn't take into outside influences when pricing the property.  You simply show them real comps (which you should be doing with your buyers anyway) to support the asking price or the offer they should really be offering.  I like this to as it proves your value to your customer.  But let's look at another possibility.  Maybe, with the help of their valuation, you can get a great deal for your buyer.  If you submit the Homegain and Zillow valuations with the offer, they may be more apt to negotiate at a lower price since these companies are saying their home has much less value.

In the end, these companies are not going away and if they do, there will be one right behind them opening their doors.  With the advent of the Internet will bring new tools.  Some will be good and some will be bad.  I know I wouldn't have it any other way since my entire marketing program is online and all my business comes from online leads. 

As always, if you have any questions or need any help with anything please don't hesitate to ask.

Have a fun Wednesday!