Real estate agents across the nation have been ruminating about Zillow.com, the new "Expedia" of real estate that went live this week. The website is supposed to give you the value of your home by just plugging in your address. Many comments were posted on a national real estate list serve from professional agents regarding their "test drives" of the site. Each one found the service to be inaccurate. Some were overpriced. Some were too low. Could REALTORS be eating sour grapes?
Finally tonight I had a few minutes to do my own trial run of the site. Afterall, it might end up being an effective marketing tool for why one SHOULD use a REALTOR! 
My first test property was my current home. Since I purchased this home 18 months ago and have subsequently put thousands of dollars into renovation, I felt this was a good starting point. I knew what I paid and am familiar with the neighborhood. Much to my surprise, the site values my home at $21,000 less than I paid. The homes used to compare with my 3 story Victorian in St. Paul were 2 story Sears catalog homes in an entirely different city: Minneapolis!!!! The closest comparable home used by Zillow was 5.8 miles away. Not even in the same neighborhood or the same city!
Okay, so they messed up on that one. I figured I'd give them another chance and chose my former home address. That home, even though it had a recently recorded sale, was also valued at $20,000 less than the sale price. Plus Zillow said our old house had 5 bedrooms when it was only a 3 bedroom home. That's a significant difference. I'm guessing Zillow has been programmed to reflect a "bubble" deflating in the real estate market which is not the case in the Minneapolis/St. Paul market. My additional check on other home prices all reflected similar errors.
My conclusion: A comparable market analysis takes hours of personal attention by an experienced real estate professional. . . a human being with training, experience, and the ability to make judgments. I labor over mine, trying to find the homes in the same neighborhood most like the one I'm evaluating.
A computer cannot compensate for the esthetic value of being across the street from a park or lake; having an older home with all the original wood versus the same home that has been stripped of its character; having new mechanicals; etc. A computer can't tell that the house it's comparing to the subject property is across a major railroad track and near a lake, in a totally different neighborhood. The computer uses only properties within a certain mileage or whatever parameter it has been programmed to use. It cannot think and discern that the two identical homes are in two completely different neighborhoods and will have completely different values as a result. The computer cannot make the judgment calls that a trained professional real estate agent can!
March 27, 2006 - 100% TRUE!!
I have not tried zillow, which is free and therefore I would not care too much about what it said, BUT, have tried electronicappraiser.com, and paid for it only to find it was about $17,000 below what our house would/could have sold for. I know you can't expect much from something that charges $20 but what we were not aware of? That these "home value for $20-30" are just computers set up to compare data that at times can be about 3 years old, and in todays market that is worse than my 1993 laptop.
Back to Zillow, I don't know too much about them, but the fact they offer a free service does not seem nearly as bad as those like electronicappraiser.com, who are asking you to pay for the SAME service zillow offers for FREE. I also think it is unfortunate that the public is getting duped into thinking these kinds of services could replace an actual appraisal.
I did however come across one site that I wanted to share, which is www.uappraiseit.com, which offers the CMA appraisals that are actually done and prepared by an appraiser, not just a computer. I have had nothing but good experience with them to date.
Posted by: Anonymous | November 20, 2006 at 01:50 PM
Comment on February 14, 2006 transferred from old Real Estate Snippets site:
For lots of chatter on Zillow, pop over to RainCityGuide.com
Hey Bonnie...your only favorite links are your own websites. More links!
Keep on blogging...
Posted by: Ardell | November 20, 2006 at 01:47 PM
Posted February 10, 2006 by an anonymous REALTOR
I looked up a listing of mine on Zillow. Sellers bought in 2004 for $192,500. Recent tax reassment gave it a value of $186,500. Zillow has it valued for $172,000.
The sellers have poured money into it. They took out walls, raised ceilings, put in a new kitchen, added a master bath, put in new mechanicals, installed new flooring throughout the house, replaced windows and added a patio and replaced the front porch. I wouldn't expect Zillow to have a clue about updates but I am perplexed that it is valued under what they paid for it. It is an area where prices are appreciating. To Zillow it is worth less than what they paid for it 18 months ago?
The comps Zillow used are not all comps but they did not go far afield for the comps as in your example Bonnie just used comps outside the neighborhood. Looking at three homes in the neighborhood that sold in the last couple of weeks and their Zillow estimates, they were all undervalued by about 10 to 15%.
Another neighborhood in town sales, two recents sales Zillow undervalued by at least 10% and one was valued about 20% high.
I think Zillow will get better at it though.
Posted by: Anonymous | November 20, 2006 at 01:44 PM