Some of that information can come from sites like Zillow that offer what’s called an “automated valuation model” — AVM for short — that purportedly present a great estimate of the current market value of millions of homes. It’s cool technology, amassing an enormous amount of information from publicly available sources in one place that is then scrubbed through very sophisticated algorithms to predict value. And all of that is presented in an easy-to-use user interface.
And to its enormous credit, Zillow has done a tremendous job in reaching “top of mind” status with consumers. There’s just one problem: Those predicted values are wildly inaccurate and inconsistent.
Do you have a client or family member that is stuck on the Zestimate value of their home? Contact the appraisers at www.scappraisals.com and let them assist you with an accurate value of the home.
It simply isn’t possible for any AVM to predict the value of a home with a level of accuracy sufficient to make a housing decision.
Zillow knows that’s true — and they say as much on their Web site (although you have to dig a bit to find it). They have this to say about their “Zestimates” of value: “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 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.”
Yet not a week goes by that we don’t encounter a consumer who is fixated on a particular value for a home because that’s what Zillow says it is. Kudos to Zillow for making this kind of impression on the public — brilliant marketing. But our research shows that, on average, those “Zestimates” are within 5 percent of the actual value of a home just half of the time. (Funny, that’s what its research shows as well.)
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