Online platforms such as Trulia and Zillow are wonderful in helping the general public learn more about real estate and real estate value. They have done a good job at establishing themselves as a starting point for market analysis and allowing homeowners, or soon-to-be homeowners, the chance to gain a general idea about an area.
How They Do It
These online platforms use algorithms and formulas to determine the value of a home based off of information the website gained from public records and information entered by homeowners. From there, the system analyzes other factors and gives a general ballpark of the value. The fact that they are able to do this on such a mass scale is a remarkable feat.
They are inaccurate, and it can cost you.
Sites like Zillow cannot be taken as fact, as they average a difference of around 5%-40% difference in property value. This can be caused by errors in their system, the fact that they can use a county to calculate value rather than a neighborhood, or the fact that the system just can’t be a replacement for a property assessment.
From Zillow’s website:
“No. The Zestimate is not an appraisal and you won’t be able to use it in place of an appraisal, though you can certainly share it with real estate professionals. It is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction. Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.”
Plain and simple, sites like Zillow/Trulia are great at giving consumers a ballpark of what to expect, but unless you plan on paying more than you need to, or selling for less than true value, keep in mind that these numbers don’t reflect the actual value of a home and should not be taken as such. Zillow does not know you have spent $75,000 on upgrades the other day, or that the property you’re looking at online has a $20,000 structural crack in the foundation. Remember, everyone’s situation is different and real estate is not a one-size-fits-all. To get the most out of buying or selling, a custom experience is needed, and real estate agents can give you a wonderful custom experience.