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« Mortgage Broker vs. Mortgage Banker | Main | Arizona Sellers Facing Diminished Demand & Increasing Price Resistance » Tuesday, February 28, 2006Beware of Online Property Valuations Like Zillow.comRecently, I have seen several articles talking about the new real estate website Zillow.com. This site claims to calculate your home's value within a matter of seconds, based solely on your address. I've seen many websites make similar attempts in the past few years. However, I have yet to see a website that can accurately 'comp' a piece of real estate with just an address. So I had to check out Zillow.com and see what all the buzz was about. I have to say I was terribly disappointed. I entered addresses for 2 houses that I am very familiar with. As a real estate agent, I already knew the values of these homes before I went to Zillow.com. One of the properties was undervalued by at least $200,000 on Zillow.com, and the other was undervalued by about $75,000. Why? My natural curiosity made me look closely at the Zillow.com comps, because I just couldn't believe a site that claims to be providing a service to sellers could actually be doing such a disservice. I did NOT find a single comp less than 3 months old. Real Estate 101 teaches you that anything over 90 days old when it comes to comps doesn't count. Especially in the crazy market we've seen lately. I also found that one of the property's square footage was incorrect by about 30%, which matters a great deal - almost $200,000 worth. And while both properties had pools, neither property's Zillow value took the pool into consideration. I'm guessing that Zillow.com uses information from public records in determining a property's value, among other factors. That could account for some of the incorrect information that led to incorrect values for the properties I tried. Public records has bad information in many cases and if Zillow.com or any similar website depends on public records data, it will inevitably be incorrect a certain percentage of the time. I realize that this is not Zillow.com's fault. But relying on public records to determine property value creates even bigger problems because it may not contain real time data like MLS does! The Maricopa County Assessor for example, takes several months to update their records after a real estate sale. In most cases, by the time the assessor's records are updated, the comp is no longer valid because it's too old. In fact, there is a "View Comparables" feature on the Parcel Search portion of the Maricopa County Assessor's website. If you look closely, you will see that the 'recent sales' it uses are generally several months old. That's why real estate agents use current MLS data, not the assessor's data to determine prices. Additionally, MLS has data on current active listings, which will absolutely affect the price you can ask for your home. Maybe I just expected too much because they really hyped this site up for a long time before it even went live. But I should have high expectations, because Zillow.com is trying to sell this website off as a tool for real estate agents, as well as for buyers and sellers. My tip for the day: if you see your listing agent go to Zillow.com to price your house, I really think it's time to call a different real estate agent! But seriously, let's say a homeowner decides to sell their home as a FSBO instead of hiring a real estate agent because they don't want to pay the 6% commission. So they go to Zillow.com and find out their home is worth $275,000. They only paid $150,000 for it five years ago so $275,000 sounds great! Since real estate values have gone crazy in the past few years, even a price that's $75,000 under market value may still seem like a huge amount of money considering what the seller paid for the home 5 years ago. But what if this house is actually worth $350,000? By relying on the property value he found on Zillow.com, this seller won't even realize that he is listing his house for $75,000 under the real market value. But at least he saved 6% on the commission! Hopefully, this demonstrates that even though you may not think you need a Real Estate Agent to sell your home, you should at least call and talk to one before listing your home for sale yourself. This may seem like an extreme example, but sellers giving up thousands of dollars unnecessarily in order to save the 6% commission is much more common than most people think.
Posted by Shannon Hubbard, AZ Realtor & Computer Guru on February 28, 2006 | Permalink CommentsZillow.com is not a tool for realtors, they are probably just portraying it as such so they don't alienate Realtors. Zillow wants to make money off Realtors in advertising, and I think they are eventually going after part of the Realtor's commission. I've seen interviews with zillow's founder Rich Barton and he can't seem shut up about realtors' 'big fat commissions'. I think he just wants a piece of the pie. Realtors need to watch out for this guy. His other site Expedia put many travel agents out of business. Posted by: AZ Realtor | Mar 3, 2006 9:10:36 AM "His other site Expedia put many travel agents out of business." No doubt Barton would love to stick it to realtors. But buying a plane ticket on-line is a far different animal than buying a home on-line. I can't see Zillow putting realtors out of business. (But I can see pics and agent contact info showing up in a Google like add nect to search results.) Posted by: Mike Steves | Mar 7, 2006 9:44:22 PM I like to use www.HomePriceMaps.com because they show how much homes were SOLD for using the google mapping technology. also-if you don't see HomePriceMaps for your area, simply email them your address and or zip and they'll update the site within a day or two and send you a follow-up email. Posted by: HomePriceMaps | Mar 13, 2006 12:13:59 PM The comments to this entry are closed.
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