Ballpark Figures
Online home values often come out of left field DECEMBER 2011
About the only online segment growing faster than Cyber Monday sales might be real estate search websites such as Zillow.com, Realtor.com and Homes.com. One reason for the huge gains in web traffic (the above three sites now draw approximately 50 million unique visitors per month - and growing) is the home-valuation tools many of these sites offer. Resources like Zillow.com's Zestimator have become the first place many consumers turn in order to gauge the value of their own home or one they're considering buying.
Online value estimators are certainly interesting and more than a little entertaining. But they aren't the best way (and, in many cases, not even a good way) to get an accurate picture of a home's market value. A recent article in The Wall Street Journal pointed out that online home valuation models can "veer off target with alarming frequency." And most of the websites themselves acknowledge the potential for inaccuracies.
For example, Zillow features an accuracy table that rates the site's pricing estimates for major metro areas on a scale of one to four stars. Chicago is a three-star market for accuracy. The site claims that 78% of Chicago-area Zestimates fall within 20% of the actual sale price, and there is an average margin of error of 7.9%. Of course, that's for the entire metro area. What do those stats tell you about the accuracy of price estimates in your town, your neighborhood or your block?
To put it another way, if your real estate agent told you that slightly more than one in five of their pricing analyses missed the mark by 20 percent or more, you'd probably go out and find yourself another agent. Which begs the question... Why not call your agent in the first place?
If Zillow can give you a "three-star" guesstimate of your home's value, then a full-service professional REALTOR®, who's working from up-to the-minute MLS data, walks through dozens of homes each month, and has knowledge of those homes that can't be found in the public record, is probably worth five stars at least!
Of course that's not to say these websites and their home valuation models aren't relevant. Full disclosure - @properties advertises on many of these sites because we do recognize their value to the consumer. Sites like Zillow, REALTOR.com and Trulia have invested millions of dollars in developing excellent search technology. And it's important to recognize that online valuation tools are new. Algorithms are constantly being updated, and the better sites encourage participation from their user communities to acquire more data on individual homes. Over time, online valuation models can only get better.
Ultimately, however, the best estimate of your home's value will come from a professional REALTOR®. And you don't have to be buying or selling right this minute to get that information. I'm happy to provide an informal estimate or a thorough comparative market analysis anytime - even if you're just curious. Just pick up the phone and call me, or send me an e-mail or text.
On a final note, let me take this opportunity to wish you a very happy holiday season and a joyous New Year. I value our continued relationship and I'm grateful for your support. If I can be of assistance to you, your family or friends in 2012, please let me know. And remember that I always appreciate your referrals.
