People that know me know that I complete a lot of real estate transactions. Not bragging here, just the way it is. So I’m kind of like a doctor at a cocktail party. People usually have questions about real estate and I do my best to respond to them on a regular basis.
Recently a local homeowner mentioned that he had just looked up his Palm Springs area home value as posted on Zillow®. Oh-boy I thought, this should be interesting. Anyway, he asked for my opinion so lets take a look together shall we?
$515,000 Or $999,540 - What's The Correct Price?
Trulia® estimated that his desert home is worth $515,000. But rival mega real estate site Zillow came in with their Zestamite® of $999,540! So which site is right? It turns out neither one.
Now I happen to have sold the majority of homes in his neighborhood over the last couple of years, so I have a pretty good handle on values. Regardless I ran the numbers and I would set the value of his home at $825,000. And if I were buying or selling this home for myself I’d be right around that number.
Too Many Variables For A Robot
So how did Trulia® and Zillow® go so wrong in their estimates? Many times a computer program can’t ‘see’ the difference between one neighborhood and another. In the case of Trulia, it looks like they compared values for a luxury-gated community to those in a nearby but entirely separate non-gated entry-level community where homes were selling at around $200,000. Zillow appears to have been looking at nearby new construction homes, which typically are valued by banks and mortgage companies at a ten to fifteen percent premium over resale homes.
Now for anyone who believed in Zillow’s $996,571 price for this home, the website conveniently displayed three “expert real estate agents” that you could contact to help you buy it. Keep this thought in mind when browsing national real estate sites; Their main purpose is to sell advertising, and mostly to agents who need clients.
I’ll keep a print out of these estimated values in my office should should you like to view them. And I have many more where these came from.