Are Zestimates Accurate?
The short answer is NO. Real estate values are very micro. By micro, I mean that they can change from one street to the next, from one school district to another. In some cases values can change significantly. I can speak from experience that It has taken years of experience to be able to accurately valuate a property taking into account all the nuances that add or detract value. Here is a real world example of a property that just had an appraisal done. The appraisers job is to evaluate all of the micro factors that dictate the value of a property. There is no algorithm that spits it out, it is a manual review, using their local knowledge and analysis of market conditions. In this situation the property was valued at $700,000. The Zestimate for this same property at the same time as the appraisal was $624,000. Or $76,000 less. That is a big difference!
So in summary, while every smart tech industry start up is racing to UBERize another industry through automation, real estate isn't going to be that easy to do that to. There is so much information out there on the web and without expertise and market knowledge to interpret it, it doesn't tell you anything meaningful. It is the equivalent of saying, the world doesn't need pastry chefs because we can get all the ingredients and recipes online and make it ourselves. First off, what are the perfect ingredients? Second, what is the best recipe? Third, how do you put it all together to create something amazing? It is the knowledge and expertise learned through years of experience that allows professionals to create amazing results. Real estate is the same way. The information is just a piece of the puzzle. The first step is making sure you have the right pieces. Then you have to know how to fit those pieces together. The end result is a picture of something meaningful.
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