Student debt is first-time home buyer issue, but not always a barrier

Published 8:58 am Monday, August 7, 2017

When news broke that a Chicago attorney had sued Zillow over a Zestimate, it blew up the Northeast Tennessee Association of Realtors®’ Facebook page. Our page wasn’t a lone wolf example.
Zestimate estimates have caused a lot of grief in the real estate industry. To be fair, they have probably helped some individuals, too. But for the most part, they are more of an irritant than a help.
Zillow officials have publicly said their web branded estimates can be off anywhere from 5% to 20%. But they still get a lot of attention and draw customers to their site. That drives revenue. Here’s how it often plays out. If the Zestimate is low, some buyers wave it in the seller’s face. If it’s high, some owners dig in their heels. And almost all of the time Realtors ® are caught in the middle trying to sort the mess out and get a deal back on track.
After getting fed up with arguments with Zillow about the Zestimate on her home real estate attorney Barbara Anderson took her dispute to the Cook County Court System. She described a Zestimate as a sloppy computer-driven appraisal of the value of her home.
That got a big amen from real estate professionals.
Her suit doesn’t seek anything except the court ordering Zillow to remove the estimate from its site or to “amend it to an agreeable market value to her.” The latter point could be an issue because an appraisal’s legitimacy isn’t a matter of whether or not the owner likes or agrees with it. But that’s another story.
Zillow’s site explains that a Zestimate is not a professional appraisal, but Anderson says it meets the Illinois legal definition because it estimates the value of a home and is promoted as a tool that potential buyers can use to measure a home’s value. “It gives the appearance to the public of being an appraisal,” Andersen told reporters.
Here’s how Zillow says its proprietary algorithm stacks up in the Chicago area. The estimate comes within 5% of the eventual sales price 47% of the time, and it comes within 20% of the sales price 86% of the time.
It will be interesting to see how this case plays out, and you can bet there are a lot of people watching. Other websites and calculators make similar claims. Their owners are not likely anxious to defend their math in court. There are other homeowners who don’t agree with the number Zillow attaches to their property. And there are legions of real estate professionals who would love to see this entire mess go away because when push comes to shove the only thing that matters is an appraisal that lenders will accept, or what a willing buyer has agreed to pay.
Some have suggested the internet should make buying a home like buying an airline ticket or a share of stock, but they’re missing the point. You don’t live your life in a share of stock, raise your kids in seat 26a, or build your future online. Realtors® combine technology with real-life insight and market knowledge that buyers and sellers need to succeed.
Regardless of how this suit is settled, there’s a lesson in it. Looking for properties online is a good start, but when consumers get serious about buying a house the best option to ensure they are entirely knowledgeable about the home and process is to work with a Realtor®.
Eric Kistner is the 2017 president of the Northeast Tennessee Association of Realtors®. The real estate education and trade group is the voice for real estate in the Tri-Cities and has over 1,200 local Realtor® members and over 100 affiliates.

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