Zillow Is a Headache for Sellers
Apparently, Zillow isn't just a fun tool to find out what the neighbor's house is worth: it's also being used by buyers to figure out how much they want to pay for a property. After all, it's really easy to just get online and check what Zillow says about that great house you are interested in. This would be a good thing, right?
Well, only if you are the buyer, it would seem. Zillow's "zestimates" can be astoundingly inaccurate according to some unhappy sellers. In fact, Zillow itself says its estimates are typically on target, falling within 10 percent of the actual home-sale prices 62 percent of the time. Only 62 percent of the time? Heck, if my estimates for consulting work were that bad, I'd soon find myself out of work.
Contrast Zillow to a real estate agent: while I'm not a particular fan of real estate agents, agents generally list and sell homes within 99 percent accuracy, according to a recent report by the National Association of Realtors. Now, they obviously want their own profession to look good, but even if you check your own local newspapers, you'll notice that most properties sell pretty close to their list price, and definitely within 10 percent of list. That's a huge difference in accuracy between how an agent works with an owner to price a property and how Zillow does it.
So why should we care? Well, Zillow will gleefully put a price on ANY property. That means that buyers are using this system to see what a house "should" sell for when they go house-hunting. However, if Zillow underestimates your property by a large amount, and you are trying to sell, then the buyers are getting the wrong idea -- and you might not be able to sell your house at a "fair" value. You may even have to pull it off the market.
No big deal, right? You just contact Zillow and get it worked out. Wrong! Zillow doesn't take individual complaints about how their system assigns values to homes! So, there you are with your home on the market, properly priced with the help of a real estate professional, and Zillow is blithely publishing a value which is tens of thousands less.
This would seem a situation ripe for someone to launch a lawsuit.