Zillow and the internet for home buying. Good or Bad?
In the world of real estate, many of us real estate professinals did not like Zillow's "Zestimates" when they first came out because they simply were not accurate. They tended to undervalue homes based on criteria that were not taken from real time market anaylis.
I read a post on Active Rain recently by Jessica Horton in regards to Zillow and how they have publicly dealt with criticism of their formula for giving estimates for homes. Her post got me to wondering if they still use the same methods and if they are closer to reality these days or not.
I went to their site and pulled my parent's neighborhood. My mom and dad live in a different state in the same house I grew up in. I still visit them regularly. This means I still know most of the people in the neighborhood. And further, I know who has been there as long as my parents, who has sold, what many of them got for their homes (you know how older people talk!) and what the neighborhood looks like and how it is doing. Let me say this though...it is a large neighborhood, so I tend to keep my immediate knowledge to their area of the neighborhood. I may be wrong in doing that, but I don't think so. Many of the homes on the higher part of the bluff do sell for higher values. That's because they have an incredible view up there and they cost more to build and maintain. House values in my parent's part of the neighborhood do not have the view, all pretty much are similar in features and square footage and have about the same size lots. They were all built about the same time too.
This is the map of the neighborhood I was given. Notice the values. My parent's house is $150K. That probably is about right given today's market situation. However, look at the house across the street. It's been given a value of $47K more than mom and dads. And the one next to it is $126K higher! And, of course, you can't miss the $308 model at the end of the street either. That house is valued at $158K higher than my mom and dad's house is.
Now, here is my issue. I've been in all of these homes. I grew up in this neighborhood. They are nice houses. They've been kept up nicely through the years. Some are a bit more updated than others. I've been in at least two of them in the last couple of years as my parents are friends with these people. These houses are NOT $50-$158K higher in the same neighborhood. This is simply not accurate. And anyone who put their house on the market, priced that much higher, based on this data would be sorely disappointed.
What Zillow Say's
This statement is found on their Zestimate page (http://www.zillow.com/howto/Zestimate.htm)
"The Zestimate home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value...We encourage buyers, sellers, and homeowners to supplement Zillow's information by doing other research such as..."
Way to go Zillow! I think that statement is an excellent reminder to all of our clients that there are a lot of opinions out there in regards to home values.
And that reminds us of the importance of the Real Estate Professional!
When you're looking for a house to buy, you want the best value for your money. Your local real estate professional knows the market. We live in the neighborhoods where we work. We are on the ground, working in real time with real market numbers. We have accurate information in regards to what houses in the neighborhood are selling for. We can show you the house that sold for the highest dollar value and the house that sold for the least. We can give you the average cost per square foot and show you the comps to back up the information. In short, your real estate professional has the most accurate information, even in the digital information age.
Advice to home buyers
So what's a home buyer or seller to do? If you're going to be buying a home, go ahead and start your search on the Internet. That's what a majority of people do these days. You can find houses there to look at. However, DO NOT PAY A WEBSITE TO LOOK AT HOUSES! That's ridiculous. Most don't charge although many will require you to register for free.
Keep in mind also that a better way to see homes that meet your criteria is to select a Real Estate Professional in your area and to have them send you houses via email or through their web resources. This is free and can be taylored to your specific, individual desires. When you work with a real person, you can talk to them to get further information about homes. This will help you to narrow down your search so that when you go looking, you'll be seeing homes that really interest you.
The chart below will show you the Home Buying Process and where you can benefit from using the sevices of a licensed and experienced real estate professional. Remember, the internet is a great place to begin your search, but you will be best served when you work with a real live person who has your best interest in mind!