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Is Zillow a Good Alternative to Hiring An Appraiser?
By Don Foster Scoggins
If you've heard anything about Zillow and its so-called house price "Zestimates" in the past month, you're likely to answer this question in the negative. Zillow is a online calculator created to offer the homebuyer and seller quick access to home values across the country. It was was supposed to revolutionize the real estate industry.
As of now, this has yet to occur. The brainchild of Rich Barton – the former CEO of Expedia who transformed the travel industry by making it easier for people to purchase plane tickets and travel packages online– Zillow was hyped up as the next big thing and intensely marketed in the media. But in the end, the excitement petered out once people had a chance to try it out. At its best, Zillow misses the dollar value of a house by 5% - 7%. At its worst, property is undervalued by much more.
For instance, according to AppraisersofLasVegas.com, the first test of Zillow showed that 60% of the results were over 5% off. The second test revealed that a whopping 100% of the results were off over 5%.
For the first test, Zillow valued the homes 6.2%, 2.8%, 14.0%, 1.5% and 8.0% below recent appraisals.
In the second test, Zillow failed to find three of the properties and undervalued the rest by 19.5%, 27.0%, 11.3%, 8.0%, 10.7% and 11.9%. It's interesting that Zillow undervalued six out of six homes.
In addition, the site lacks information for many areas across the country and often experiences moments of inconsistency when requesting house prices. You may be able to search for a house at one moment and the next moment, the property is nowhere to be found.
To assess a home, Zillow takes into consideration historical property values, square footage, number of bedrooms and neighboring homes to calculate a house price. The numbers that seem to come out of the system, as a result, are extremely inaccurate. Exept the fact that Zillow uses old data, its methodology is similar in many ways to valuation approaches utilized by Realtors who arrive at a number by comparing features, such as number of bedrooms and square footage, with similar homes that sold in the neighborhood. Valuing a home by "comps" usually means the agent estimates a house value by calculating the price per square foot. Essentially, they divide the sale price by the living area and average the results. Of course, this method is lacking, in that it consistently undervalues an above-average home and overvalues a below-average home.
There is more to valuing a house than looking at the size, neighborhood and number of bedrooms. A qualified and licensed or certified appraiser, for example, takes much more into consideration when conducting an analysis of a person's home. Homes with a pool, view, large lot size and other upgrades or unique attributes typically sell for significantly more than comparable homes in the same neighborhood. Zillow and Realtors who have not physically visited homes in a given area are not equipped with the right knowledge to make a proper valuation when all aspects of a home's value are factored into the calculation.
In the end, only a professional and licensed or certified appraiser has the requisite tools, education, and skills to conduct a full sales comparison analysis and appraisal. Appraisers examine a home and its features on a line-by-line basis to arrive at an appraisal that is accurate, complete and trustworthy. Can a computer program achieve the same results? Not by a long shot.
About the Author
This article was written by Don Foster Scoggins of http://www.appraisersoflasvegas.com/. Appraisers of Las Vegas .com, voted the top appraisal firm in Las Vegas for five consecutive years, appraise houses to high rises, condos to casinos in Las Vegas and residential properties of Nevada. With over 40 appraisers and over 400 years of experience, Appraisers of Las Vegas .com can create an accurate full 1004 report delivered to you within 24 to 48 hours of inspection for just $350.00. Or a limited report for just $59.95 in a few hours. Reproductions of this article are encouraged but must include a link pointing to http://www.appraisersoflasvegas.com/.
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