Zillow.com has received a lot of attention lately in the real estate industry. In essence, this site allows users to pull up the value on any property in the U.S., ideally their own. The site uses public data to get among other things the property square footage, age, year built, and most important, sales data. It then crunches all this information and comes up with its current valuation, which typically is a wide range. It allows the user to add information to their property that may change the value or that is wrong on the site. It is a pretty interesting site and quite fun to mouse around and look at all the details it pulls up on properties. There are even some satellite photos with different angles that you can view. The site is still in beta testing and they continue to add new features. Take a look at the site here.
When I first heard of Zillow earlier this year, there was a conversation out there that this service was going to replace the real estate agent. The thought was it would be very similar to what the founder of Zillow did to the travel agent business when he founded Expedia.com. I have heard the same comments many times before when the Internet was coming about and real estate advertising was going online. With each new technology change, that argument comes up. What many people do not understand is that a real estate purchase is vastly different than booking your next vacation. From the dollars involved to the number of occurrences it happens in a persons lifetime, the two fields are vastly different. No matter how much technology changes, the majority of consumers are still going to want a lot of hand holding when it comes to buying or selling a home. That is what a professional real estate agent is for.
I have found that using Zillow to valuate properties in the Big Bear area can be inaccurate.
First of all, Big Bear is a second home resort area with not a lot of commonality between homes. A typical neighborhood in Big Bear consists of a new home, next to older home, next to a smaller home, next to a big home. Zillow seems to work best in areas that have a lot of commonality, like a tract of homes with similar size and year built. In those cases, it would probably work great and with some degree of precision.
Secondly, Big Bear properties can vary differently in the views and settings, not to mention properties on the lake as compared to the ones across the street from it. From what I can tell, Zillow sees no difference in the two and leaves it up to the user to figure that out and put whatever value they want on it.
Lastly, and probably most importantly, Zillow puts no importance or price on the emotional value of a property. I know emotions are not supposed to be a part of a property’s value but having sold over 500 properties in the Big Bear area, the emotional appeal of a home will make a big difference in the sales price of a home. Setting, views, & mountain charm can make just as big a difference in the sales price as square footage, year built, and lot size.
When I am asked to give a client a marketing evaluation, I like to run my numbers and compare it to what Zillow comes up with. Sometimes it is right on with what I am seeing, but other times it is way off. For example, today I went on a listing appointment to a lakefront property in Big Bear Lake. It is a superb location with a great piece of property on the water but not much of a home. The property had been recent appraised at $1,300,000, in which I was in agreement with. According to Zillow, the home was valued in the range of $508,000 to $650,000, not just a little off. Of all the comparables Zillow used to substantiate that price range, not one property was on the lake.
In another instance, Zillow valued a particular Big Bear property in the range of $567,000 to $730,000. This home has been on the market for sale for 6 months, initially starting out at $659,900 and now it is still on the market priced at $609,900. I guess one can say it is still in the range, but how reliable is it?
I think Zillow is a good tool to use, but that is it, just a good tool. Inherently, computers are not going to have the answers to everything. Especially with the Big Bear real estate market, consumers will need some “human” interaction to help digest the “computer” data, to make sense of it all and how it relates to what is really going on.