While searching for a blog topic, two reports spanning the good/bad news spectrum caught my eye, because Zillow.com had a hand in both.
To check out a Zillow-backed report showing the relative strength of the South Bay housing market, CLICK HERE.
To check out a different Zillow-cited report showing how home values and negative equity are still headed in the wrong direction, CLICK HERE.
Zillow is good for a few things, and not particularly good for others. They track housing statistics, and have some very detailed market reports that can be fairly telling. Their site also has all of the latest mortgage rates, and other helpful tools for buyers and sellers.
Housing statistics simply report what has already happened, and there isn’t much room to screw that up. Yet where Zillow use can get dangerous is when people treat it like the Kelly Blue Book of housing, and believe what they find out. Users can plug their home’s address into Zillow and get a “Zestimate” of value. Apparently, this value is derived from some sort of algorithm involving tax record specifications of a home, and reported sales activity in the area.
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Sometimes, conditions are in place for Zillow to provide near-exact values. For homes that are located in complexes or communities of similar homes, sales data for the immediate area may be a strong indicator, especially if the area has high levels of sales activity. Yet for most other homes, things aren’t so simple.
Often times, tax records don’t accurately report what’s on the ground, which can throw estimates off big-time. Additionally, location is widely considered the number one factor driving values, and this is often measured by more than just geographical distance. All things considered, Zillow can miss the market value for a home by as much as 50%, with the disparity being greater in rural areas, older homes, and homes with a greater deal of location-driven value.
Obviously a mathematical formula isn’t the answer for those curious about a home’s value. Yet so many trust something as arbitrary as Zillow when making major housing decisions. Don’t. A qualified real estate professional can give an accurate idea of a home’s market value using statistical data coupled with intuition, a formula that computers have not quite mastered…yet.