1) Zestimates are wildly inaccurate: If a seller’s house will fetch $100K, but Zillow says $120K, the seller is given unrealistic expectations. Same goes for when a buyer sees a low Zestimate – they think that a reasonably-priced house should sell for 20% less, or that it’s a bargain at that price and they are already buying equity.
2) Their ad campaign takes the home-buying process and turns it completely backwards. According to Zillow: Find house>find agent to show you the house>write offer> talk to lender. The infinitely better method is: find lender>establish budget and financial ability to buy home>find agent>search for homes>write offer>inspections>more negotiations>closing. Zillow has tried to make it appear that home buying is as simple as buying a car on craigslist, but it can’t be and never will be (nor should it be).
3) Their information is out of date. I spoke to a woman today who had looked on Zillow for information about a home on the market in her neighborhood. Zillow gave her no information at all, I found it on MIBOR in a matter of seconds. (She also could have looked at TalkToTucker.com, but I digress.) I am regularly contacted by people who are interested in homes that Zillow shows as “on the market,” which sold months or years ago. Simply put, they have bad information.
4) Real estate is a local business. I don’t have access to Chicago or New York or Los Angeles listings because I can’t use them: I don’t know the markets, I don’t know the trends, I don’t have any information about neighborhoods, etc. For example, I bought a house several years ago in Washington DC for three or four times what a similar house would have cost in a similar neighborhood in Indianapolis. What did those home values have to do with one another? Nothing.
Take two identical 1500 square foot, three-bedroom homes. One is minutes away from the nicest restaurants and the high school with the graduates who go to the finest universities. The other is in the approach path of the international airport. You wouldn’t expect to pay the same for both of these houses, and a local agent would know the difference in neighborhoods.
Zillow uses a proprietary blend of statistical analysis to compare homes that simply do not compare, and then assigns values to those homes that have no basis in local market conditions.
If you are feeling a mysterious pain, you may go to WebMD to look up your symptoms. WebMD tells you multiple times and in several ways that their information is not a substitute for a doctor’s examination. Zillow on the other hand, seeks to streamline the process of buying a home, making it seem like anyone who can’t offer a “point and click” solution is just trying to take money out of your pocket.
Buying a home is often the largest investment you will make. You owe it to yourself to find a lender and an agent who will not only guide you through the process, but will help you protect yourself along the way.