Many of my colleagues rail against Zillow® and other public listing services on the internet, but I see them more as a Frienemy. (I hope I spelled that right. I had to guess because this new slang word combining “friend” and “enemy” hasn’t made it into my dictionary app yet. Spelled right or not, “Whatever could she mean?”)
I help a lot of renters and frequently they contact me about homes they’ve found on Zillow® or other public sites. This gives me an idea of the area that they are looking into as well as what they are looking for in a property. When it works, it’s a benefit to both my client and me. When it doesn’t work, it’s because what my client wants to see isn’t really available. Sometimes it’s because the property has been off the market for a long time. Sometimes rentals on these public sites are bogus, that is, they were never real listings. Some despicable people will put rental ads on public sites for a property they find listed for sale. They take in the security deposit and first month's rent leaving their poor victim without recourse. This happens more often with ads on Craig’s List, but regardless of which public site you’re looking at, please, please talk to a licensed agent to get the real scoop.
I’ve also found public sites can be helpful when I’m working with buyers. Again a client asking me about a property they’ve found on a public site can help me understand the area and property features they are looking for. However, the way these sites work means they are not as helpful for a buyer as for a renter. On a public site, buyers are more likely to find the house they like is a) gone (sometimes long gone); b) not up-to-date in the listing status (i.e., there is a contract pending on the house, sometimes for a more than the usual time needed to close); and, unfortunately, sometimes c) smelly like fraud. Public sites screen for operations like “c),” and work hard to make their sites safe. However, these public sites simply don’t have enough clout to deter. As a license professional, I am happy to be bound to ethics and regulations instituted by my Board, by the state of Texas, and by the National Association of Realtors®. Because these ethics and regulations are like my own values, it’s easy-peasy for me to abide by them. However, I am also happy that the fines and other penalties have some real muscle and pretty effective for weeding out the bad guys.
So what happens if the property is legit? The biggest hurdle I run into with buyers is helping them to understand that, at least in the San Antonio market, the Zillow® “Zestimate” is quite a bit lower than the market value. Buying a home is emotional enough. When a buyer gets excited by a property on a public site that is outside of their price range, it’s really disheartening.
Why are “Zestimates” unhelpful? One reason is because Texas is a non-disclosure state. When you sell your property in Texas, the price at which you sold it is not part of the public record—the sales price is not disclosed or made available to the public. Zillow® is then restricted to pulling data for their “Zestimate” from tax valuations. All homeowners want their tax values to be as low as the County will agree to. When prices are on the rise, the County will be eager enough to re-assess property at a more current rate. Fortunately, the County’s process of re-evaluating tax values lags behind the market, which is a good thing for an owner's tax bill when prices are rising, but a bad thing for the accuracy of "Zestimates."
So what about sellers? In other parts of the country where the “Zestimate” may be more in line with the actual market, the complaints I see from real estate agents is that they find sellers expecting their house to sell for more than it’s worth. As John Pignatelli of Montgomery County Pennsylvania wrote in his blog, “Zillow® doesn't seem to care if there is a New Kitchen, New Bathroom, New Heater, etc., and all those other Very Important factors we [agents] use to determine value based on Sales Comparison and the individual Homes Market value.” The problem is a little different in the San Antonio area. One thing I’ve run into is people who think they can’t afford to sell based on the “Zestimate” given their home.
Relying on the Zillow® "Zestimate," whether in Texas or other parts of the country, isn’t the best place to get an accurate picture. I’m not saying it’s not a potential starting place, I’m only advocating talking to a professional who knows the local market and can help protect your interests.