Home “Zestimates”

Communications Specialist

A new Web site is causing quite a stir in the real estate industry. Former Expedia Chief Executive Rich Barton unveiled his newest Internet venture, Zillow.com. The site is designed to give consumers a value on homes located throughout the country.

Barton has been quoted as stating, “We think you shouldn’t need a computer science degree or a real estate license to find out what a home is worth.” His site takes into consideration historical property information, square footage, number of bedrooms, neighboring homes and other factors to determine a “Zestimated” value of 42 million of the 85 million residences in the United States. Using aerial and satellite maps, it gives visitors an aerial view of a neighborhood.

However, visitors to the site find that “Zestimates” aren’t always available for their communities, and they aren’t always accurate.

PAR First Vice President Bob Hay, of bobhay.com in Stroudsburg, says he found Zillow.com to be unreliable in his region of the state. “Apparently, the public records they had access to were not accurate,” he says.

Hay, who uses the Internet to gather leads for his real estate business, says there’s a difference between a large, national company using the Internet to attract buyers and sellers, compared to a local company.

“I have a conventional office,” he says, “and I use the Internet to generate leads, but the leads are serviced by my agents.”

He says companies like Zillow.com, which is rumored to be applying for real estate licenses in at least its home state of Washington, are engaged in collecting leads and will basically sell leads and referrals. “It doesn’t give the customer any choice in the real estate agent that’s selected.”

“I don’t really see a benefit in a company like this,” he continues. “A computer can’t establish fair market value on a home by using public records. There are so many variables that go into establishing fair market value. You really need to do a physical inspection of the property, evaluate the neighborhood and the surroundings.”

Michelle Czekalski Bradley, a certified general appraiser and associate broker in Natrona Heights and vice chair of PAR’s Specialized Practice Issues Subcommittee, says, “Zillow.com cannot replace the real estate appraiser. Computer models such as Zillow simply give an average range or value for what a typical house may be worth.”

She continues, “An appraiser doesn’t estimate an average. He or she analyzes a specific home in a specific market and considers its location, style, condition, remodeling, features, etc. The computer model can’t consider over or under supply of homes in a particular market or the affect a change in interest rates has on a property because it utilizes historical data to determine the average price of a typical home.”

Bradley adds, “The computer also can’t consider or analyze the effect on value of regional development or a loss of jobs in an area and how that affects the demand for housing.”

After looking at 16 random home sales in Allegheny County, Bradley noted that Zillow’s estimate of the value was significantly wrong on the vast majority of the homes, compared to the actual sales price.

Both Bradley and Hay suggest cautioning clients that the numbers given on Zillow and other such Web sites can’t replace the value of an experienced professional who is familiar with specific neighborhoods and communities.

“I would caution consumers that if they want a quick ball park figure on their home, this might be a resource to do that,” Hay says. “But anything more detailed – basing your next purchase or selling your home – you need to talk to a qualified REALTOR® and appraiser to do a market analysis and inspection.”