Today's Lewes, DE house hunters are using the web more than ever—and more than ever, they're running into seemingly omnipresent "Zillow." It's unavoidable because Zillow ads are everywhere—often in the first and/or second position on the search engine results pages. With annual revenue topping $2 billion, the e-commerce mega-company can afford it.
From its national data processing centers, Zillow uses automated formulas to "mine" local multiple listing service entries for data, which it then displays in its own format, making it appear as if the properties are connected with Zillow.
Although it can be argued that for the most part, there's no harm in this form of robotic data repackaging, it can be a mildly annoying detour for house hunters who would prefer directly looking in on the listing agent's own presentation. That Realtor® has devoted much hands-on personal effort visiting the property, working with the seller, and creating an accurate and comprehensive description of it. Zillow, on the other hand, is a computer—and computers can't visit anything!
For the most part, Zillow's approach may cause no harm, that's less true for one facet of its approach: the Zestimate®— Zillow's brand name for its automated estimate of a property's value. Although Zillow has admitted the shortcomings of publishing a dollar figure for properties without conducting basic research, "such as visiting the home," the Zestimate figure (along with an "estimated sales range") is often displayed under a "Home Value" tab.
It is a fact of human nature that the first price a person sees is a hard one to forget. For a house hunter who is exposed to a Zestimate figure that's unexpectedly (and perhaps, undeservedly) low, it's likely to become embedded as the top price the property deserves. For a seller who sees an overly generous figure attached to the family home, that too easily becomes the minimum it deserves. When a "value" is put on screen, it had better be a reasonable one—lest mayhem ensue.
Last month, thebalance.com analyzed the accuracy of several Zestimates and, to no one's surprise, found them wanting. Especially in older neighborhoods, "it won't be that close at all." One home was estimated to be worth $389,733, but sold at $349,000; another was valued at $983,097, yet sold for $1,085,000. For one high-end property, the actual cash closing price differed by more than a quarter-million dollars (the Zestimate was more than 20% too low).