When the economy went south, two brothers in the home-building business decided to do the same. Each put their Glastonbury home up for sale at prices well below the value of others in the neighborhood. Both homes were snapped up in cash deals. But while that saved the brothers, who were regrouping to focus on projects in Florida, it blindsided their neighbors who suddenly found their property worth less.
Unfortunately for them, property cards in the town assessor’s office note only the sale price of a home, not the subtleties surrounding a sale, such as the motivation of the seller or the circumstances leading up to the transaction. And therein dwells the problem with Zillow, the popular online home valuation site that, since launching in 2006, has grown into the go-to source of housing market data for the digitally savvy consumer.
But the site’s trademark estimates, which can be wildly inaccurate, have become the bane of real estate professionals already up against tight credit, revamped appraisal rules and a glacially slow economic recovery. The computer-driven valuations, or Zestimates, are based largely on publicly available data which, besides to sale price, typically includes square-footage, the number of bedrooms and bathrooms, and recent home sales in the area. Variables such as the condition of the house, improvements and the quality of construction are not factored into the proprietary algorithms of the Seattle-based company.
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