Online home-pricing sites are like distracted driving

By Todd Fahlman

Prospective home buyers and home sellers often want to get pricing information for properties without having to always rely on a real estate broker. The issue becomes how accurate and reliable are those prices? Just type in an address, push enter and you will soon discover pages upon pages of online prices and estimates.

In March 2019, The Zebra conducted a survey of driving behaviors and found that roughly nine people are killed and more than 1,000 injured daily in accidents in which at least one driver was distracted. Distracted driving costs society nearly $40 billion a year.

Using your smart phones and computers to determine value for a property is a huge distraction. For example Zillow is a popular place to go. Zillow is a business website, established to get eyeballs on a bunch of homes for sale and, in turn, to sell advertising to real estate brokers. Zillow is not a real estate company with a group of brokers.

Zillow and similar sites use price opinions formed by algorithms – a collection of data from various sources. No matter how great the algorithm is, opinions are not facts. Zillow can’t predict how a buyer will feel when they enter a home, what they smell, what they see. Zillow and other similar sites can’t tell you whether the interior has been updated, if the workmanship is superior, whether the materials used are of good quality, or whether the home two doors down the street has four cars parked on the front lawn and the house next door is painted yellow.

Online home pricing estimates never claim to be 100 percent accurate or even 80 percent accurate most of the time in all areas. This is a major distraction. When I go and meet with a home seller, and they say, “Zillow says my home is worth,” or “Redfin says my home is worth,” I just have to inform them that distracted home pricing can cost you thousands of dollars and the demise of the home you are thinking about purchasing.

Here’s a quick example of three homes in Marysville we have just closed. Zillow had it priced at $428,665, and we sold it just over $435,000. This home was in a newer community with many good recent comparables. Fortunately, I wasn’t distracted by the low Zillow estimate and received an additional $7,000 in my seller’s pocket. This next home I was representing a buyer, and we found a very nice home on acreage that needed a lot of work and updates. The listing broker had it priced just above what Zillow estimated it for at $423,129, and I negotiated a sales price of $399,950. The buyer saved $23,179, and we were not distracted by the online price estimate. Just a few weeks ago I helped another buyer purchase an investment property that Zillow had estimated at $427,227, and my buyer purchased it for $317,000 – it was listed for $335,000.

This is a very busy time of the year for buyers and sellers to be making a move. Please do not rely on Zillow or similar sites to determine home prices. Consult a local real estate broker for the best advice.

Todd Fahlman is a real estate broker in Marysville.

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