Are Online Home Price Estimators Unreliable?
Does this mean online home price tools and estimators of home values (like Zillow) are unreliable? The answer is NO! While studies showed Zillow’s early estimates were off as much as 14%, more recent studies show a very respectable 2% error rate as the company matured. Ultimately, Zillow’s biggest mistake (and the cautionary tale for us) is how they used or did not use their data. As the housing market heated up early this year, Zillow found themselves not purchasing as many homes as their executive team “felt was necessary to make iBuying profitable”2. Instead of listening to their data, they tweaked their algorithm to be more aggressive; a lot more aggressive. Suddenly, Zillow began buying house after house, acquiring more than 10,000 homes in the third quarter. They purchased more homes than they could process, resell and paid more for the homes than they were worth.
What Can We Learn From Zillow's Missteps?
So what can we learn from Zillow’s missteps?
- First, much of the online data available on home values is good but never trust just one source and don’t assume the highest valuation number you see represents your home’s worth.
- Second, don’t make any decisions regarding your home based on the highest estimate found online.
- Third, seek outside sources to validate your assumptions. While we can learn much from online resources, we should always talk to professionals who work with this data daily. I can learn a lot from WebMD, but I still want my doctor to give me my diagnosis.
So what is your home worth and what options do you have with potential increased equity? The GOOD NEWS – you don’t need to try and answer these questions by yourself.
Revival Lending – Certified Mortgage Advisors
At Revival Lending, we are Certified Mortgage Advisors. We will work to design a customized loan to facilitate your goals. At times, that means advising our clients not to refinance because sometimes the best mortgage you can get is the one you already have. We want to earn your business over a lifetime and not just through a one-time transaction. Therefore, we promise to take the time to truly understand your goals and help you map out a plan to use your mortgage and home to reach them. Set up an appointment with us today. I promise you will not be disappointed. Call 714-257-5284 or email us to schedule a complimentary mortgage review today.