While the internet has made the process of buying and selling homes much more efficient, there have been a few drawbacks associated with the ability of buyers and sellers to easily access volumes of property information online.
One notable drawback has been what I refer to as the "Zillow Effect".
Zillow is a popular website that allows buyers and sellers to look up listings of homes and then determine an estimate of the home's value. Zillow, like other desktop appraisal software, bases its values on recent sales from databases of public information.
Zillow is very good at giving broad general estimates of value. However, Zillow does a poor job of providing a detailed analysis of value based upon a particular home.
Zillow does not have the ability to judge the interior quality of a home. It also has no way of knowing whether the home has large items of deferred maintenance or needs immediate repairs. As such, Zillow's estimate of value can be off by more than 10% in many cases.
The problem with sites like Zillow is that sellers have started relying upon the values provided as the absolute accurate fair market value for their home. In many cases, the estimate provided by Zillow creates unrealistic expectations for sellers. This unrealistic expectation of value and sales price is the "Zillow Effect".
Sellers need to understand that Zillow is a great tool for getting a general sense of the market but a poor tool for determining exact value for a home. Zillow is simply processing readily available public data of sales. It does not process the quality of individual homes. As a result, sellers need to take Zillow's estimates with a grain of salt and need to understand the other market factors that drive prices.
At Flat Fee we do things different. We send real people to our properties and use our real estate expert's opinions toappraiseproperties. If you're tired of automated everything, try a company that is, too. Contact us or visit our website to learn more about Flat Fee and how we do business.