By Tiana Baur
Zestimates. Clients love them, yet they are largely the bane of the real estate business as a whole. In theory, they sound amazing, but the problem is that they’re often horrifically inaccurate, leaving homeowners upset and agents anxious. In fact, the median error rate of Zestimates is 5 percent. That may sound menial as a percentage, but when computed with the median home sales prices, it can be tens of thousands of dollars lost to the bottom line, and that’s if you’re lucky. According to the Washington Post, “Zestimates are within 5 percent of the sale price 53.9 percent of the time, within 10 percent 75.6 percent of the time and within 20 percent 89.7 percent of the time, Zillow claims.” So, unless luck is on your side, that 5 percent is likely to grow.
Wouldn’t it be nice to showcase the Zestimate inaccuracy to your clients?
Our CMA presentation tool, Moxi Present, encapsulates the relevant information about a house and enables you, a professional agent, to consult and advise clients with accurate information, and information that can give true context to a Zestimate. It does this by showcasing what the Zestimate was on all selected comparable properties to your current listing versus what they actually sold for. Here is an example of Moxi Present at work.
You are not an algorithm, don’t get treated like one.
Have you ever been sick or not feeling well and tried to look up what your symptoms mean online? If you have, chances are you panicked when the results came up because it eluded to you probably having a horrible flesh-eating disease (even though you just have a flu that’s going around). My point is, when you’re talking about your health, you go see a doctor, a professional doctor. When you’re trying to sell your home, you might take a peek online beforehand, but in the end, you want and need a professional’s advice.
Remember, Zestimates are a computer algorithm. You, the real estate agent, have access to a wealth of data when using modern tools (like Moxi Present) that go well beyond what some computer algorithm is using. You also have access to things that no algorithm can. Let that sink in for a moment. Zestimates can’t see the details of the home’s interior or know the character and culture of a specific neighborhood. As their agent, you are their trusted advisor, the professional.
Find out more about this industry-leading CMA and presentation tool here and why agent’s that used it in 2016 did 43% more business than those that didn’t.
While the idea behind Zestimates® seemed awesome for homeowners, it’s entirely frustrating for agents and often ends up disappointing their clients with inaccurate pricing forecasts. Even though Zestimates know a home’s approximate size and location, there are many factors they don’t take into account. That is why homeowners need to hire a real estate agent that can be their trusted advisor through every step of the home selling process, because Zestimate accuracy doesn’t cut it.
Zestimate Accuracy Backlash
What happens when Zestimates are seen without proper context or guidance? A lawsuit. While this is the first lawsuit of this kind, we are not surprised to see it come to light. It states that, “Homeowners, realty agents and appraisers have been critical for years about the valuation tool, citing estimates that too often are far off the mark — sometimes 20 percent or 30 percent too low or too high — and misleading to consumers. Zillow itself acknowledges errors.” That’s why we empower agents on our platform to be true consultants.
“The idea of an AVM (automated valuation model), an algorithm, that determines the price of a house is flawed from the very beginning,” said York Baur, CEO of Moxi Works. “There’s no such thing as standard housing product. If I buy a car, it comes off an assembly line, and they’re all the same. But every piece of property is different.”
Baur went on to say that, “Zillow has been very clever to give consumers a ballpark idea of what their house is worth, but it’s just that: A teaser to get them onto the website. So, why would anyone leave the most financially and emotionally charged transaction in someone’s life to a computer? You wouldn’t. Like with any large investment decision, you would seek professional advice, and that’s what realtors give you.”
Our CMA presentation tool, Moxi Present, encapsulates the relevant information about a house and enables a professional agent to consult and advise their client with accurate information, and information that can give true context to a Zestimate. “A realtor using modern tools like Moxi Present, has access to a wealth of data beyond what some computer algorithm is using and in particular can access things that no algorithm can,” said Baur. He means things like the details of a home’s interior or the exact character of a given neighborhood, which only an agent, a human, can speak to.
The importance of using a trusted advisor cannot be overlooked. As we all well know, this is one of the most important and personal transactions in someone’s life, and it needs to be treated accordingly. If you were to get a surgery, would you consult a professional first?