A New World
Some websites promote their equivalence to or superiority over the flesh and blood real estate agent. While mathematical computations can be completed much faster by microchips and microprocessors, they lack the same thing Dorothy's beloved Scarecrow lacked: a brain.
Today's Lenn Harley post on Zillow caused me to consider: Just what is it that makes a real, live, on-site agent better than the Zillow machine?
What's Wrong with a Machine Estimating Value?
Probably the largest fault to be found with Zillow's calculations is that they are entirely mechanical. Data In - Data Out.
And what is wrong with evaluating data? Absolutely nothing, so long as the unquantifiable facts are considered as well.
Consider the Following
Suppose 3 really run down homes sell recently in an otherwise upscale neighborhood... wouldn't Zillow guestimate that all the other homes in the neighborhood are worth significantly less than they really are? While this may be good if the Seller is willing to give his home away, it doesn't help anybody who wants to buy or sell a home in the real world.
Suppose those same 3 homes are subsequently renovated... all values in the neighborhood should rise, right? Yet the formula within Zillow can't see past the raw data, which remains unchanged.
At one point Zillow had my property valued at 1.3 million. I was ready to call them up and sell it to them for 1/2 it's value!
Often, Sellers who have such good fortune will leave a copy of Zillow's justification for their ridiculous asking price on the kitchen counter. Buyers who are off their guard might even be influenced by such an unbiased, third party's "appraisal" of the homes value. Unrepresented Buyers might go into the transaction feeling confident that they are getting a good deal, all the while significantly overpaying for the home.
Has the day arrived that I can send over a LOW Zillow Estimate as justification for a Buyer's ridiculously low offer and not be laughed at and called unprofessional by other agents? It has not.
With time, Zillow might be able to give a rough estimate of value for a neighborhood, but a Zillow estimate should not be considered an accurate representation of actual market value.
Does a "zestimate" even take into account lot size?
Mitigating factors? (Power lines, busy street, view, etc...)
Does it consider the finish level of the home or take into account whether or not there were any concessions on the comparable sales?
Does it take into account that a home might have major structural problems?
What about whether or not the home has been stripped of appliances and fixtures (or maybe even copper wiring)?
Likewise, just because a few people relocate to the same area and overpay for their homes within a short period of time doesn't mean that the actual worth of surrounding homes has risen. It just means a few people recently overpaid.
If 2 or 3 people overpay within a limited geographic area, can Zillow comprehend this? Or will it add value to the surrounding homes as if their value actually did rise?
The Bottom Line
Data needs to be interpreted by a professional who can reasonably discern whether or not certain issues were taken into account when determining the sales price of a comparable property.
Buyers should seek out such an agent who will represent their interest only in the real estate transaction.
If you are planning a home purchase in the Salt Lake City area, make sure you get an Agent on YOUR side of the transaction!
If you have excellent credit and will be buying a $250,000-$750,000 home in the next 30-60 days and would like an agent who will work exclusively for you, call us at (801) 969-8989 or contact us via the link on this page.
©2008 Homebuyer Representation, Inc. "The Real Estate Agents on the Buyer's Side" ™ Exclusive Buyers Agents (EBA) - All Rights Reserved
Exclusive Buyer Brokerages do not list homes and never represent Sellers. Their agents represent Buyers ONLY on the Buyer's side of the transaction. They work to get BUYERS the Best Price and Terms when they Buy...
©2008 Homebuyer Representation, Inc. - Salt Lake City, UT
Exclusive Buyers Agents (EBA) - All Rights Reserved