Appraisals can either make or break a deal. If you are a first time home buyer and you have found a house that you think matches your criteria, the next thing you would do is to find comparable online. One of the top results as you search for a property online, would be Zillow. Zillow provides information for most properties, using the records they gathered from county offices or info from website users. They also have an estimated market value for properties called the Zestimate.
Many people who don’t have experience in real estate use the Zestimate as a legitimate reference of their property’s value. This causes conflict with price expectations and offers for both sellers and buyers. Zillow admittedly says that the Zestimate is not an appraisal. They compute these values using a home’s features, location and market condition given the available data. It is created by an automated software process, and it doesn’t have the ability to let humans alter the values.
As per Zillow, Zestimate has a median error rate of 5.6%. It may be further off in some states. For instance, in the Pittsburgh market, Zestimate’s accuracy rated two out of five stars. With around 1M houses on Zillow and almost 90% has Zestimate, this shows how inaccurate it is, and why it should not be used as a basis for pricing.
An appraisal is a critical step in the real estate business, thus it should not be taken for granted. This should be done by real estate professionals, who have the ability to determine a home’s current condition, location and sales information. Would you rather believe a computer generated data or a person who has the ability of examining a property physically?
In this age and time where everything is readily available online and automated data can be found with a click of a button, it is still a smarter move to consult professionals who can look at a property on its full scale.