Should first time home buyers use Zillow to value properties? Absolutely not! Zillow is an imperfect system that was created with the intent to attract home buyers and sellers, so that Zillow could sell add space to Realtors.
But Zillow uses comparable properties to come to their valuations, right? No. Zillow simply searches for properties in the near vicinity that have sold recently with the same number of bedrooms and baths. These characteristics alone don’t justify using a property as a comparable.
So if a home has the same number of bedrooms, why isn’t it a comparable? There are many answers to this question. One example is Zillow calling a 3 bedroom home WITHOUT a view, a comparable for a 3 bedroom home WITH a view! Everyone knows that a view can be very valuable, but unfortunately Zillow nor any other automated valuation system has come up with a way to evaluate something like a view.
But I’m a first time home buyer and can’t afford a view anyways! This may be true, but it still doesn’t make Zillow a good evaluating tool. Another example is Zillow trying to use a 2 bedroom home on a major arterial as a comparable for a 2 bedroom on a quiet street in a residential neighborhood. The lack of traffic makes the home on a quiet street more valuable in the eyes of buyers, but Zillow also hasn’t found a way to take this into consideration either.
What else makes Zillow an imperfect system? We could go on about this subject for hours. The end answer is that you should align yourself with a knowledgeable Realtor that knows the area and is familiar with values in the area you’re interested in. And if you’re already working with an agent that uses Zillow themselves in an attempt to value a property, then it’s time to find a new agent!
Don’t make the biggest financial decision of your life without getting educated first! If you’d like to find out more about evaluating properties or the home buying process in general, please go to our Calendar/Reservations page and sign up for one of our FREE First Time Home Buyer/Down Payment Assistance workshops.