Your Home Valuation Is Wrong

Do not make any major decisions based on an online, automated home valuation. You could lose a lot of money. A lot.

How does a $60,000 loss on a $300,000 home sound to you? Ridiculous? Read on.

Of course you are going to look up the value before you make an offer on a home, or prior to selling your current place. Just remember, that number is almost guaranteed to be wrong.

If you make life-changing decisions based on bad information, then you’re jeopardizing your future.

How can I be so sure the information you get online isn’t correct? Because it is statistically unlikely, and most of the sites will even tell you so, in the fine print.

Does it matter which site you use? Not really. Some are better at guessing than others, but they all vary dramatically.

When determining value on a property I typically check ten different online valuation sites. Not because I think they “know” what the home is worth, but because the seller and potential buyers are checking these sites, and it’s better to know in advance what disinformation they are consuming.

Those values are all over the map!

For example, a home with a true market value of $300,000 might have automated valuations ranging from 225,000 to 375,000. That is a large margin of error!

What about the infamous Zillow Zestimate? This is the margin of error stated on their website as of July 26, 2018:

  • Nationwide, Zestimates are currently within 5% of the final sale price 52.9% of the time.
  • In the U.S. as a whole, Zestimates are currently within 10% of the final sale price 73.3% of the time.
  • Nationally, Zestimates are currently within 20% of the final sale price 85.8% of the time.

Let’s put this into real world numbers using the $300k actual value example.

Just over half of the time (52.9%) the Zestimate is within $15,000 (5%) of actual final sales price. That could be high or low, so a $30,000 swing from 285,000 to 315,000.

The Zestimate is within 10% on another 20.4% of homes. That means a $60,000 swing from 270,000 to 330,000. If the buyer believes the real value is 270,000 and the seller thinks it is 330,000… well it’s easy to see we now have a significant problem.

Another 12.5% of homes are within 20%. That produces a $120,000 range of value from 240,000 to 360,000! That is 40% of the actual value! You don’t want to make any decisions based on this information!

Zillow admits they are not even within 20% (high or low) on 14.2% of homes nationally.

Do you want to guess which group your Zestimate falls within? It’s a roll of the dice!

If you’re in the 52.9% group you could lose $15,000.

If you’re in the 20.4% group you could lose $30,000.

If you’re in the 12.5% group you could lose $60,000.

If you’re in the 14.2% group you could lose even more than that!

The last two groups comprise 26.7% of properties. That means you have a greater than 1 in 4 chance of losing $60,000 or more if you base your buying or selling decision on the information you obtained from the big gorilla of real estate data online.

This is a multi-billion dollar company that draws millions of people to the website each and every month. And I have the nerve to warn you against believing what you see in black and white on that website? Yes. That website and dozens of others. Pay attention.

The actual Zestimate, not the range of possibility, the actual published number on my personal residence has gone up and down over the last year $59,000. That is absurd. Home values don’t rise and fall with the wind, like the stock market.

Side note: Facebook stock is down 20% today. Your home doesn’t go on a roller coaster ride every month.

These robot valuations use raw sales data available from public records but they have a huge disadvantage: They have never been inside your home.

They don’t know if the flooring, kitchen cabinets and roof all need replaced, or if they were just completely updated. They can’t see the view; they don’t know if the comparative sales were well cared for or not; they can’t tell if the home next door is an eyesore or worse; they can’t hear the traffic from the highway that decreased the selling price on three of the comparable sales they are using.

The bottom line is you need a trustworthy professional to give you good information.

Contact a full-time, experienced and knowledgeable professional whom you trust to give you good advice so you can make the best decision for your family.

http://www.SweatSellsFlorida.com

All the Best!

Jim Sweat, ABR, CLHMS, CRS, CDPE, GRI, e-PRO, ILHM

Featured in Scene Magazine’s Men on the Scene 2016 issue

Author of REAL ESTATE CSI: CONTROVERSY, SECRETS, INSIGHT (coming soon)

Jim Sweat – Helping Buyers & Sellers Choose Wisely Since 1995 ™

Re/Max  Alliance Group

Mobile: 941-306-7384

http://myfloridahomesmls.com/JimSweat (Home Search)

https://jimsweat.wordpress.com/ (Blog)

www.linkedin.com/in/jimsweat (LinkedIn)

A Proven Professional Working for You!

23 Years Experience

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Can you believe what I found when I searched “Jim Sweat” online?

Online search reveals “Segal’s Law” scenario.

Wow!

This is a problem for me, other Realtors, and our clients.

Segal’s law is an adage that states:

“A man with a watch knows what time it is. A man with two watches is never sure.”

It refers to the pitfalls of having too much potentially conflicting information when making a decision.

The same thing happens on the internet. I just searched my own name, something I have to do from time to time because I am in a very public business.

The results showed that I have been in the real estate business for 4, 8, 9, 17 or 20 years. Quite a spread.

My production during that time is even more interesting: I have sold 1, 2, 43, or a vague “hundreds of homes” during my entire career.

When you go online to get answers, you want good information. Admittedly, many of the websites I found myself on I have never heard of before, but I did only look at the ones that had my “actual info” and not one of the dozens of other Jim Sweats out there.

Let’s be smart about this. To sort through all of the garbage online and get the real scoop, let’s just look at the best websites.

Is it safe to assume that the top two sites would have the best information? I am talking the two with the most monthly visitors; the largest dollar valuations; publicly traded companies that dominate all of the others for real estate search. This should give us the most accurate, up to date information available, right? They even state that they update their information regularly.

Zillow and Trulia (who are in the process of merging, subject to government approval) are the dominate players in real estate search, and they do not have my information correct. Not even close.

Yes, they have my 20 years right, but Zillow had me completing only two (2) sales during my entire career, and Trulia had me down for just one (1)!

I am in the process of getting those things updated, so the numbers should be different by the time you look for yourself. But, let’s get real! I have had a profile on each of these sites for over five years! How long does it take to “update regularly”?!?

So, is the problem that I have not paid them to make my information accurate? Possibly. I have called them and they tell me they will update my information and it will begin to fill in. But I didn’t pay them, and nothing changed. Trulia says I don’t have any reviews, but there are seven on the site. However, I don’t have any ratings because the reviews were added by folks before the ratings featured existed.

Millions of people go to these sites every month. I would like to ignore them, because the information is factually-challenged, but I can’t do that when most of my potential customers are on these sites.

What about all of the websites I have never even heard of?

See my blog: Real Estate Misinformation and Extortion for more details on the extortion that takes place. https://jimsweat.wordpress.com/2015/01/16/real-estate-misinformation-and-extortion/

Thousands of companies’ business models can be summed up simply “Get money from agents”.

I used to try to keep my info updated on real estate sites, but there is no way to keep up.

The public is going to get a LOT of bad information when they go online. There is no alternative.

Be careful, folks! There is a wealth of information, and misinformation, available online. Find someone trustworthy to help you make sense of it all. It could mean thousands of dollars in your pocket!

Respectfully,

Jim Sweat, ABR, CRS, CDPE, GRI, e-PRO, ILHM

REALTOR

Author of REAL ESTATE CSI: CONTROVERSY, SECRETS, INSIGHT (available 2015)

American Realty of Venice, Inc.

700 W. Venice Ave

Venice, FL 34285

941-484-8080

http://myfloridahomesmls.com/JimSweat Home search

www.linkedin.com/in/jimsweat LinkedIn

http://www.trulia.com/profile/jimsweat Trulia

https://www.zillow.com/reviews/write/?s=X1-ZUyz3incawqo7d_93ahq Zillow

Real Estate Misinformation and Extortion

Your money is at stake here.

Our lives are entangled with the internet.

But, can you trust the websites you rely on?

Entire industries have evolved because of the internet, but does that mean you can believe the information you find, even on your favorite “reliable” websites?

Is it wise to depend on the biggest, most well-known websites when you need good information to make decisions about your largest asset?

Your home is likely that asset, and bad decisions could cost you tens of thousands of dollars.

Value estimates are notoriously incorrect, and that is a topic for another day.

Agent rankings can also cost you, and hundreds of websites promise to help you choose the best agent, but behind the scenes it can get pretty ugly.

Real Estate Misinformation and Extortion

Thousands of companies’ business models can be summed up simply “Get money from agents”.

What if you couldn’t actually trust the websites that claim to be giving you great information?

If agents can “pay for placement” does that influence how reliable the rankings are?

Are customer reviews a better indicator than computerized or “professional” recommendations?

I don’t have all of the answers, I am just going to give you a bit of my personal experience with the top websites, and encourage you to ask good questions and tread carefully.

Many real estate agents lose their minds when you mention Zillow. Why? Here are some responses:

  • “The Zestimates are way too high!” (Or way too low);
  • “The listings people call about don’t exist!”
  • “I get calls from Zillow all the time! No, not customers: salespeople. Trying to sell me leads, ads, upgraded profiles and websites. All they want is my money, money, money!”

I have been a full-time, licensed real estate professional since 1995. I set up my free profile on Zillow, the largest real estate website, 7 years ago. So what is my personal experience? First, I can relate to the above issues. But the “Ratings and Reviews” is even more interesting to me, because after all these years, Zillow still hasn’t figured out how to obtain my past sales data. They show that I have completed two sales. Total. In twenty years. Wow! I am a beast!

I actually have more reviews than I do past sales. Fortunately I am “Five Star Rated” by my past customers and clients!

These sites are very popular, but they are not very accurate! While Zillow has me with a total of two, Trulia has me currently listed as having completed only one (1) sale during my entire twenty year career! This is from the number one, and number two real estate websites (who are currently merging to become a super-sized gorilla).

So, is the problem that I have not paid them to make my information accurate? Possibly. I have called them and they tell me they will update my information and it will begin to fill in, but I didn’t pay them, and nothing changed. There is a free option to load my past sales into the system, and I will have to work on that angle.

Trulia says I don’t have any reviews, but there are seven on the site. However, I don’t have any ratings because the reviews were added by folks before the ratings featured existed.

Millions of people go to these sites every month. I would like to ignore them, because the information is factually-challenged, but I can’t do that when most of my potential customers are on these sites.

There is a big plus to not having sales on these sites: the extortion sites are not yet gunning for me! Yes, there are real estate sites that will do ANYTHING, legal or otherwise, to get money from agents. The most notorious will simply give you a bad rating, and then send you an email alert that you have a bad rating. Because they are generous and upstanding (cough, cough) you are given the opportunity to have the information “updated” for a fee.

When enough complaints come in, a court case is threatened. This may quench one fiery dart, but hundreds of new websites pop up regularly to “get money from agents!”

One website that is frequently mentioned in the Realtor discussion groups as promoting misinformation is still in the “flattery” stages with me. They have me ranked as a “top listing agent” in a town that I have never had a listing in. Or even a sale. They suggested that I pay to promote my status, but haven’t gotten ugly with me yet. Probably because Trulia and Zillow show I only sell one home every ten or twenty years.

I am a bit concerned that I will rank higher on the “extortion index” if I get more of my sales listed on the primary sites. I have had hundreds of sales in my career, so these fiends could decide that I am a better target as time passes.

However, the multiple listing systems have changed in both of the markets I have worked. It may be hard to validate past sales on websites when the MLS says they can’t pull the data themselves from the previous system. Hmmm….

Oh well. I will still get calls and emails from all of these companies every week. And the occasional inquiry from a live person about a listing they saw online. Realtors hate these calls because it perpetuates a credibility problem.

Picture this common scenario:

Someone calls asking for details, or to see a new listing they just found online. The agent looks it up and tells them it sold months ago, or is not actually a listing at all.

The caller repeats, “I just found it today as a listing online.” The agent responds, “It is just a public notice that the owners have fallen behind on their mortgage. The property is not for sale, and the bank won’t actually own it through foreclosure for several months (or years here in Florida).”

Who is the public going to believe? The information provided by a famous, publicly-traded website with a market capitalization of Billions (with a “B”!) of dollars; or some unknown real estate agent who happened to answer his phone when they were calling around for more details?

Be careful, folks! There is a wealth of information, and misinformation, available online. Find someone trustworthy to help you make sense of it all. It could mean thousands of dollars in your pocket!

Respectfully,

Jim Sweat, ABR, CRS, CDPE, GRI, e-PRO, ILHM

REALTOR

Author of REAL ESTATE CSI: CONTROVERSY, SECRETS, INSIGHT (available 2015)

American Realty of Venice, Inc.

700 W. Venice Ave

Venice, FL 34285

941-484-8080

http://myfloridahomesmls.com/JimSweat Home search

www.linkedin.com/in/jimsweat LinkedIn

http://www.trulia.com/profile/jimsweat Trulia

https://www.zillow.com/reviews/write/?s=X1-ZUyz3incawqo7d_93ahq Zillow