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.