"But Zillow said . . ."
I can't tell you the number of times I have heard that from clients or prospective clients.
Now don't get me wrong, I like Zillow (www.zillow.com). It's well laid out, it's easy to navigate, it's colorful, it has some fascinating information.
But it can't valuate houses very well. And while they are the first to point that out in the fine print (found at www.zillow.com/wikipages/What-is-a-Zestimate/), an average consumer is never going to find where this information is buried. From that page:
The Zestimate is not an appraisal and you won't be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow.com does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for, such as entertaining offers, negotiating, closing costs, timing, etc.
Here is a look at three homes in my area that all sold in the last four years or so. The Zillow data is in green:
Here's a Zillow graph for Property #1. It's a wilder ride than a monster roller coaster at Six Flags! If our market was truly this volatile, I think you'd see it in real home sales data. But alas, our market looks quite boring compared to this.
Since our area never had the huge real estate bubble that other areas of the country had, we are not experiencing that much of a price softening, either. And I'm not disagreeing with Zillow's assertion that there has been low single digit percentage drops in town since these homes sold.
But how do you explain the fact that the individual homes show 20% drops?? It's irrational, and it is wrong.
I correct people's misconceptions when I can, but I wonder how many people are there out there that want to sell, but don't because they think their home has lost too much value due to a faulty Zestimate? This is where Zillow can be a great disservice to the general public.
Stay tuned for my next installment - when Zillow zestimates are irrationally high.