Has your client been Zillo-Fied?

By
Real Estate Broker/Owner with Jeri Creson, Realtor 0995689629 Louisiana

Technology - Our Friend - and sometimes, not so much.    I recall my earliest experiences with potential sellers - and buyers - coming to me, armed with Internet Proven Facts - IPF's, as I like to call them, Zestimate in hand, ready to take on the market.   And I, like each of my real estate pro friends did the very same thing:  We chuckled.   

 

Information is a great, and sometimes dangerous thing, especially when there is too narrow a slice of it.   As a consumer, it's important to understand the limitations of the consumer-facing internet tools that provide some form of an "AVM" - Automatic Valuation Model.   Here's a great example for a house that I recently sold:

 

Zillow Zestimate:  $390,190

Trulia states:   The property has a lot size of 1 acre. The average list price for similar homes for sale is $1,157,800

Chase Home Value Estimator:  $301,710--$376,290   Est. Value

 

Envelope Please:  The house sold for $475,000 one year ago, the market is decidedly up, and an interested buyer just approached my client offering over $600,000.   So there you have it - all over the place. 

 

This is not to say that the information gleaned from these services is inherently wrong or useless.  There are times when these estimates are right on the mark.  I often find that this happens when one is referring to a subdivision home, located in an area of similar subdivision homes, where there are no drastically devalued areas within one mile.   For example - a typical logirithm  written into an estimating tool will be looking for similarities in size, age, proximity to shopping areas, parks, amenities... but how, exactly does a computer know that the North side of the Hwy is significantly less desireable, than homes, within a few short blocks, on the South side of the Hwy?   It doesn't - it can't - and there are human reasons why some neighborhoods, and some properties create specific appeal - or don't.    A simple computer estimator, for example, can't know that one, almost identical looking neighborhood has less appeal than another neighborhood only 5 blocks away, because one of them is upwind of a local brewery enjoying the odor of burnt hops all afternoon - or perhaps that one development was built by the top builder in town, and the other has been plagued by issues of "Chinese Drywall" or other construction defects.   It takes an experienced local Realtor to know, and tell you these things.   You're not going to find these facts on the internet.  

 

A computer can only look at numbers and statistics, and the estimate is only as good as the information that it pulls from.  In many cases, we find that the sources used to create the estimate were flawed to begin with - inaccuracies in tax records,  or, simply, a problem with merging data sources whose data fields don't match up nicely with the program's query -  It's a "Garbage In - Garbage Out" data situation.   

 

So at best, these internet estimates are clues - places to start asking questions, rather than hills to plant one's flag upon, or reasons to get stubbornly entrenched and invested in the factual basis of these figures.   Got an Estimate?  Great!  Let's start there, and look at all of the factors influencing the price of your home (or desired home).  It's important to remember that market valuation is an art, as much as a science, and best left to a collaborative process involving a truly open-minded Realtor, historical data factoring in several approaches to the market, local knowledge and key information influencing that specific location, and the current trends of buyers and sellers - supply and demand.    All of these things are necessary for a serious analysis of your property.   Computer estimates are fun, and an often useful piece of the puzzle - but don't stake your net worth on them....just yet.

 

 

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Rainmaker
3,078,958
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Uggg Zillow....dont even get me started!  Great post!

Aug 29, 2016 10:08 PM #1
Rainmaker
46,433
Jody Wall
BANCROFT REALTY LLC - Grand Prairie, TX
jodywallrealtor.com

Zillow has its uses.  My husband likes it for searching for potential investment propeties.  He displays the sales price of property and the asking price for rent on the same map.  He then looks for disparities.  Is an asking price out of line with rent in the area?  Is there an opportunity?  

That said, when it comes to making a decision he comes to me and the MLS.  He doesn't even want to consider seeing the property unless I have verifid the comps in the area.  

Use Zillow for what it is good for.  When it comes to spending money, trust real data.

Aug 29, 2016 10:12 PM #2
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Harry F. D'Elia
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

There should be a therapy session that people need to be detoxed from Zillor for 48 hours get it out of their system.

Aug 29, 2016 10:20 PM #3
Rainmaker
3,211,290
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

You would think by now, enough people with enough time and money would have sued them out of existance....we can only hope.

Aug 29, 2016 10:21 PM #4
Rainmaker
220,050
Carolyn Crispin
Keller Williams Tri-Lakes - Branson, MO
Crispin Team Sells Branson Homes Land & Commercial

Maybe the realtor should be proactive with the seller, explaining these large search portals such as Zillow, will attempt to forecast their house value range. The reason they have a realtor is to give an accurate house value range, based on current market conditions, area, etc.

Aug 29, 2016 10:32 PM #5
Rainmaker
3,100,373
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hello Jeri Creson,  So amazing of how many seller always look at Zillow for advice on a sale price.  I have to fight them all the time with sellers.  Great blog!!!

Aug 29, 2016 11:15 PM #6
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Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

You are so right.  Those computer generated estimates are just all over the place.  They need to be verified by an expert.

Aug 30, 2016 01:37 AM #7
Rainmaker
1,523,577
Sybil Campbell
Long and Foster REALTORS® 5234 Monticello Ave Williamsburg, Virginia - Williamsburg, VA
REALTOR® ABR, SFR, SRES Williamsburg, Virginia

I think most of the residents of our country have been Zilow-fied.  I like to see them get zillow-fired!

Oct 15, 2016 04:44 AM #8
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Jeri Creson

Dually Licensed Broker in Louisiana & California
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