Apr 25 2009
I may be one of the few Realtors that actually likes Zillow. I think fewer Realtors would be afraid of it if they truly understood it and explained it to their clients and even encouraged them to use it. Many of my colleagues are afraid of it, and even degrade its validity, going so far as to tell their clients it’s useless.
I disagree. Zillow is a great place for information! However, keep in mind that the information it gathers is based on general information. What I mean is that it basically gathers sales prices in specific areas, comes up with an average price per square foot, and then determines a ‘zestimate’ of a home’s value based solely on square footage. This is a great starting point, but it shouldn’t be the only basis for determining the actual value to sell a home for, or the purchase price of a home, either. (BUT… if you’re buying, and the zestimate is substantially lower than the sales price, your Realtor would be amiss NOT to use Zillow as a means of backing up a low offer…)
Remember that there are factors that Zillow does not take into account when determining the zestimate of a home, such as condition or backing to open space (among others).
An excellent tool Zillow provides is the market value graph. You get an idea of what the neighborhood prices have done over time. If you check the graph of several homes in a particular neighborhood, you will see a common trend. In many zip codes, prices remained on a steady track up through about 2004, when they skyrocketed. Now the prices are readjusting back down to a more fair representation of the market value. There may have been foreclosures or short sales that contributed to a large decline in the homes’ ‘values’. This is happening all across the US, which is what you are hearing about all over the media these days. I live in the Denver area, where prices have remained pretty stable and a more accurate representation of fair market value. Therefore, we aren’t having the seeming drastic loss of value.
Keep in mind, too, that real estate retains its value through the test of time. Now is a GREAT time to buy. And if it’s possible to sell, it’s not that bad a time to sell, either. I hear SO MANY PEOPLE say “I don’t want to sell when the market is down.” I’d like to put a different spin on that: “So, you’d rather buy when prices are up?” Even if you ‘lose’ a few thousand dollars selling, the thousands you could save on the purchase of another home far exceed what you may ‘lose’. For example, over the course of a 30 yr loan at 5%, you will pay aproximately $100k in interest for every $100k you finance. If you wait to sell when the market is ‘up’, you also purchase when the market is up. And I don’t believe those interest rates will stay down then!