Feb. 15, 2007
This is a featured article on the Wall Street Journal that finally rings some sense to a long debate about on-line home estimates and the craze surrounding these sites. Click on the link to read the full article
http://www.realestatejournal.com
When I first heard about Zillow.com it was from a friend looking for direction with what to do with his house. He purchased within a year, recently married, and with great sadness, was diagnosed with a rare and deadly disease. So naturally he entertained selling his home and started his search online. Since I was unfamiliar at the time of this site, I decided to investigate on my own.
What I found was enough to not only stun me, but enrage me as well. For my research, I chose to use my own home. My neighborhood is a small, long-standing one snuggled in the boundaries of a more notorious community. Naturally, I figured my home would probably be under-estimated in value. What most consumers fail to note, is these types of sites cannot differentiate between communities, neighborhoods, school boundaries, etc. with the accuracy necessary for proper valuation.
After entering my address, I noticed the first fatal error. The system was using our beloved city’s public record sites. Now, us professionals in the industry will clearly testify that you do NOT rely on the accuracy of these records. Just as an example, there is a woman in my neighborhood where her property is listed in the tax records under her deceased father’s name, her deceased mother’s name, her name, and her and her husband’s name. So, without cross checking for error, you would have conflicting information as to who the current owner is.
In addition, records from our large metropolis unfortunately, does not work in real time. A property could have been re-assessed, sold and sold again before the system ever catches up. Why then is that important? My home and many like it, where listed in the public records as 1 bedroom, 1 bath homes. Now, bear in mind, my home isn’t new. The homes in my area date back more than 70 years, and none of them by original construction were 1 bedroom.
Needless to say, after I stopped laughing I plunged further into my personal home evaluation to a shocking discovery that Zillow.com estimated my home at over $600K. Currently 3 bedroom homes in my specific neighborhood have an average market value of $360K. We have on an average year, sufficient number of homes for sale and sold for comparison.
Now addressing the homeowner’s ability to customize the information such as recent repairs, etc. to generate a clear estimate according to these sites. This is yet another fatal error. Can I get a “realty check” amen from the real estate industry when I say that homeowners rarely have grounded opinions as to not only what improvements are worth, but also how they relate in determining resale value?
Arguable you say? Ok, then lets look at how one specific job; repair/improvement in your home can yield several different cost values. I recently inquired about tuck pointing an area on my home, all of the estimates came from a legitimate referral service (Angie’s List) and ranged from $500 to $3500, for the same job. I had the exact same experience when I dormered my upstairs attic space. I had quotes from $28K to $98K, with very similar details of work to be done. Now of course logic tells you that depends on what they are doing, what materials, labor etc. But do we, as average consumers know how to break down the charges and weigh out the pros and cons of each one?
Well what if some of these values are coming from homeowners who are adjusting for work THEY themselves had done? I don’t know about you, but the home depot slob job for a bathroom upgrade doesn’t weight necessarily the same in value as one that was done by professional hands. Or even on the reverse end where someone over pays for an upgrade/repair/improvement and thinks they should not only recoup that, but tack on profit as well.
Despite the sound reasoning of professionals, which consumers believe we are all about getting the listing therefore cannot be trusted; the confessions of these site representatives that even state that these sites should NOT be bankable information; the public is still obsessed with having that control. News tip, getting the information is only a fraction of the responsibility. What and how you use it, determines the ultimate success or failure with selling/buying a home.
I do believe that consumers have a right to understand what’s going on around them. Your home is perhaps the largest investment you own. I am not advocating as a real estate professional that we should keep information like this under lock and key. What I do hope, is that the public will have that light bulb moment that what we do as a profession, is much more detailed and carries a great deal of responsibility then we are given credit for. You cannot be a monkey and do our job well! Having the information is not what empowers you, knowing how to use it, does.
In closing, use these sites for basic information (preferably not a means to spy on your neighbor or boss as statistics seem to indicate) regarding your investment. But when it comes to making a serious change, i.e. refinancing, home improvements, investing by equity, and buying/or selling a home, do the smart thing and consult a professional. After all, its what we do.
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