Zillow.com, a Seattle based company, operates a web site that provides free estimates and other online tools for real-estate buyers and sellers. Many real estate professionals also utilize its home values in analyzing feasibility for mortgages. The question is, how reliable and accurate is Zillow?
There is no definitive answer to that question because it really depends on where the property is located. In my experience I have found that Zillow is most accurate in newer neighborhoods that have a very homogeneous nature to them. There are two reasons for this: One, Zillow utilizes county records and sales data to determine values. This type of data is easily accessible on newer homes; it also tends to be more accurate. And two, newer subdivisions are usually built with only small variances in each home’s construction. This means with the exception of actual size, most of the homes are of the same condition and quality.
Zillow tends to be very sporadic with values for older neighborhoods, rural property and houses located in areas with very little sales. The older neighborhoods are typically going through a state of renewal so the values can vary greatly between updated and original homes. Rural properties are just too complex for a computer to determine a value for. And without many local sales, Zillow has nothing more to base its estimate on that local tax information.
With that being said, these automatic valuation tools are getting better and better everyday. This is great for consumers as it will allow them to perform their own research prior to making decisions regarding their homes. An educated consumer is usually more understanding of the entire appraisal process, including its necessity. Although online tools, computer generated values and AVMS will never replace appraisers, it will only be for one reason… accountability. Ultimately when an appraiser signs his name to a report he is taking responsibility for the results and all the research that was performed to come to the conclusion of value. That is something software manufacturers are a long way off from doing.
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