Earlier this year, the state of Arizona issued two cease and desist orders to ban Zillow.com as they give “Zestimates” in the form of home appraisal values that have largely been found to be grossly inaccurate. The ban has since been dropped on mere semantics, as the site claims they are simply “valuations” or “calculations” that are based on THEIR OWN proprietory algorithms. There is, however, no visible disclaimer on the site to state this. The company claims the value is simply a starting point in home value, however the problem lies when sellers and buyers begin to view this information as concrete evidence (i.e. an automated appraisal) of their home’s value.
From what I can tell, after dabbling with some of my own listings on the site, the formulas they have used to determine the home values are based on an overall general square footage of ALL properties within a designated area (i.e. state, city, and zip code – zip code being the default). They then attempt to try and factor (with a minimal list to choose from) some items that may be considered upgrades. While an area within a zip code is not unreasonable (it is safe to assume that if a buyer will look within several square miles of their ideal location), comparing, for instance, a less desireable tract home builder to a custom home in Circle G seems to me that there would be an apparent difference in value even to the most untrained eye. Furthermore, if we could calculate value based primarily on square footage, every 2000 sqft. would be priced the same.
The farce of zillow is further perpetuated when it allows you to do a “manual valuation” because when similar properties are hand selected the values change substantially. Why is this? It is because the standard algorithmically created values compare properties that are totally unlike the subject property, therefore when similar properties are hand selected, the values then change. Sooooooo…WHY AREN’T THEY COMPARING THESE IN THE FIRST PLACE?
Explain this, a testimonial from one user: “I was overjoyed to find that the new bathroom we are adding in the basement will increase our home value by $85,000. Nice! Better yet, I found that if I just add five more bathrooms, I can double the value of my house. I guess buyers would agree with me: it is nice to have a bathroom nearby when you need it.” Try it yourself, what can you add to get a million dollar property?
As a team, we will never value a clients’ property on the first meeting. Why? Preparing an accurate comparative market analysis (CMA) is part art and part science. There are several factors that go into valuing a home that all must be taken into consideration. You must have not only an understanding of the market, but an in-depth analysis of all figures. These figures include: comparable properties (this is done by neighborhood, then grid [slightly larger area], then area [several square miles]), location, lot selection/location, and upgrades (interior and exterior), just to name a few.
Wonder what your home is worth? Ask us for a FREE market analysis, and go ahead, compare it to Zillow!