Triangle Area Real Estate News & Information

First there was Zillow and their Zestimate, now we have Trulia offering their own online free estimate and I won't be surprised if before long before Realtor.com starts offering the same.

The public sees these “valuations” and many get confused and occasionally angry at these valuations failing to understand that this purported “data” is about as worthwhile as the answers you get from a childhood toy of mine (that's still being sold today) the Magic 8 Ball. For those of you who don't remember this toy it's a plastic 8 Ball with a small window in it. Inside it's filled with a liquid (I suppose it's water) and there's a die with pre-printed answers on it. You ask the 8 Ball a question, give it a shake and then look in the window for your answer. It's main form of entertainment is the absurdity of the answer in relation to the question.

Online Home Valuations Lack The Human Touch

Online estimates of real estate values are equally absurd though they're typically presented as true data generated by state of the art computers using the latest algorithms. Regardless they remain highly inaccurate for numerous reasons and the public would be well advised to read them the way they might read their horoscopes in a newspaper, interesting to read on occasion but certainly nothing on which to base a real life decision.

It's important that the public understand why sites such as Trulia, Zillow and others even waste their time offering such misleading information. Zillow was the first that I know of, with what they referred to as a “Zestimate” The Zestimate was created as a marketing tool to drive eyes to their site. Zillow didn't really care whether the valuation was accurate or not, that wasn't it's purpose, it's purpose was to generate web traffic so that they could justify advertising rates to their customers who are not the public but rather are people like me, professional Realtors, Mortgage Lenders, Property Mangers, Property Insurance Agents etc. We're the customers sites like Zillow and Trulia are after as we're the one's who pay for advertising on these sites.

Now understand Zillow, Trulia and others who have invested in these valuation algorithms aren't intentionally trying to mislead the public, they wish they were more accurate than they are but when the day is done they don't really care and they all do suggest (in fine print) that you work with a local Realtor to confirm their numbers.

Why Are Online Real Estate Valuations So Inaccurate?

If you're wondering why they are inaccurate, it's because no one at any of these sites is in fact an active experienced Realtor. These sites are and will always be Internet marketing sites and the people who work there don't know real estate (nor do they need to) they know advertising, marketing, the Internet, etc. These sites do not have any feet on the ground and have never once seen a single property listed on their sites, they gather data (some of which is inaccurate to begin with) from tax records and in some instances from MLS systems and then run it through their computer programs to generate an estimate of value. This may sound reasonable but think for a moment; not having seen any properties, they don't know what the finish quality of the construction is, they don't know whether a home has hardwood floors or old dirty carpeting, are the kitchen cabinets new high-end cherry wood, or old dated 1980's oak? Is the lot the house is sitting on in a bowl where water gathers, or on the highest and largest lot in a particular neighborhood. The list of things they don't know about a specific property is in fact larger than what they do know and this will always be the case.

This doesn't mean these sites don't have any value for the public, they do. They offer the public direct access to professionals to get their questions answered, they can help a buyer or seller find the top agents in their area to assist them, they offer good data on real estate value trend lines, and of course they offer you the opportunity to look around in any area of the country and see what's on the market for sale. There are many good things about these sites, however it's not their estimate of valuation which needs to be taken with a liberal dose of salt. When you view these estimates remember the old Magic 8 Ball, "the answer to your question is “More Info Needed - Try Again”