Let me start by saying, Trulia.com and Zillow.com are great companies that I think bring great additional resources for home shopping to consumers. I love their websites and resources they offer. Zillow.com became a hit with it’s “Zestimate”. Just recently Trulia.com launched, what I am guessing is a competitive response to Zillow’s “Zestimates”, called “Trulia Estimates”. These are these companies attempts to provide real-time property valuation using proprietary algorithms. Sounds simple enough right? Think again.
One of the things any Real Estate Professional will tell you they wish was automated is . . . property pricing. This is one of the most daunting tasks that truly requires a hands-on approach. The common question is, “Why?” Seriously, look at all the amazing things computers can do today and they can’t automatically tell me the price a property should be just by typing in an address? Computers can tell you a price, but they can not tell you the price a property should be priced at accurately. The biggest reason being is that no two properties are the same. Even houses of the same model have different features added by owners over times, conditions can be different, location, etc. All of these factors play a role in pricing a property.
Novelty or Not?
Novelty . . . definitely. Be very careful with these valuation systems because we are not talking about possibly sacrificing just a few dollars with wrong information, you’re looking at tens of thousands of dollars if not more. Let’s take a look at Trulia Estimate’s Accuracy for my area Flager County, FL:
- Properties on Trulia: 65,001
- Properties with Estimates: 40,669
- Median Error: 14.3%
- Within 5% of Actual Selling Price: 19.2%
- Within 10% of Actual Selling Price: 35.6%
- Within 20% of Actual Selling Price: 67%
At their best range of “Within 20%”, 67% of the properties fell within that range. What does “20%” equate to in dollars? On a $150,000 that 20% is $30,000. No small amount of money at all to be guessing about. Zillow’s Zestimates are not much different for the area either.
Again, be careful with these systems. Believe me, I would love for an as-close-to-accurate automated pricing system but unfortunately it just doesn’t exist right now.