A friend of mine recently began ranting about Zillow.com and how it is leading potential buyers and sellers down the wrong path. Specifically, he was not ranting against the website, per se, he was complaining about the Zestimate feature exclusive to the site.  After using Zillow for the past 8 or 9 months, I agree wholeheartedly with him.

A Zillow Zestimate is a price estimate of a particular property you are investigating that is based on some special algorithm exclusive to the Zillow website.  Many factors are added into this estimate such as comparables in the area and if the property owner has created an account to update or correct the listed information. However, typically this “Zestimate” does not reflect actual figures created by Real Estate professionals and mortgage companies.  3 times out of 5, the “zestimate” has always been much lower than the comps my real estate agent has given me.

 What problem does this create? Well, the average buyer will walk into a property with a false sense of competence. And when their offer is rejected, they are left scratching their heads wondering what went wrong. Or worse, they will think the seller is unscrupulous or crooked. When the average seller utilizes the “Zestimate” to price their property, they literally shoot themselves in the foot.  The property is priced way too low, much lower than the market, and the seller loses profit – sometimes as much as 15 – 20%!.

You can always tell the amatuers from the professionals. (That is why I pay to have professionals represent me! As a newbie, never go into a deal alone!!!) The individuals who rely on Zillow will,  most likely, be out of range of the comps in the area.  And any good shark will smell that blood in the water…

 The jury is still out on Zillow. As a consumer, it provides a neat set of tools that can really help you learn about the housing market. As a business-owner, Zillow is nothing more than a toolset, like Wikipedia, where the information should be referenced, but not solely relied upon when there are potentially hundreds of thousands of dollars at stake.

 Just my opinion…