Why On-Line Home Evaluations Fall Short

When first considering a move many sellers and buyers hop onto one of the more popular home price evaluation sites such as Zillow® to get a feel for the market. While many of these sites are entertaining, they hardly are a tool that can be relied upon as a definitive guide to value when buying or selling a home. The following are several reasons why computerized valuation models fall short—especially in Belmont.

First the good Zillow offers.

We use Zillow to get our listings out in front of thousands of buyers by paying for a premium listing service they offer. Buyers searching for a home can easily locate properties, see surrounding neighborhoods with the built-in mapping feature and unlimited photo upload, and get a general feel for prices in a given neighborhood.

But at the heart of Zillow’s offerings is its Zestimator® which purportedly calculates the value of your home by using recent sales of neighboring properties. In fact it does exactly what it says—it “calculates” the value based on an algorithm they invented but it doesn’t define a home’s value nor does it create value. This is a recent release from Zillow's Research team : “For the three-month period ending March 31, 2011, our national median error was 8.5 percent”. On the median home price in Belmont that could mean being off by almost $50,000.

Why is Belmont not a good place for Zillow?

Zillow’s algorithm uses nearby properties for comparison. In an area such as Foster City where many of the lots are of similar size and the homes of similar construction and functionality it works better since the difference from one home to another is minimal (unless your home is on the wide water). Whereas Belmont has many more unique neighborhoods which command far differing prices and lots that are anything but conforming. While one home might enjoy a 14,000 square foot lot that is entirely unusable due to the extreme slope, another smaller conforming 5,000 square foot lot might enjoy full functionality with a large level area for entertaining. And where do views factor into Zillow’s data feed? The data they receive does not offer details such as panoramic San Francisco views.

Other inaccuracies are uncovered when homes which have never been updated are compared to homes which have had extensive remodeling—another variable which Zillow’s automated Zestimator cannot factor into its calculations.

With all this said, we still enjoy Zillow and use it frequently, just not to ascertain home values; because  in the end it’s just a computer model—an algorithm—hardly a substitution for an accurate determination of value if you are considering purchasing or selling a home. So don’t worry if you look on-line and see your home’s value $200,000 less than that of your neighbor’s, or if the home you want to make an offer on shows up as $75,000 underpriced. You will still find the advice of your local REALTOR® invaluable in helping you weigh more than the size of your home when determining a value.

Interested in keeping up on Belmont home values visit monthly published stats on our web page:MorganHomes.com

Drew and Christine Morgan are REALTORS® in Belmont, CA employed by RE/MAX Star-Carlmont. (650) 508-1441                    

The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.