In the Terminator movies, a robot from the future (Arnold Schwarzenegger) hunts down the human heroine in order to change the future by altering the past. Although that’s actually the present. It’s complicated.
Although generally considered science fiction, the same thing is happening right now in the realm of home appraisals! Now, before any readers panic, there’s no immediate danger to the community. The authorities have the situation well in hand; in fact, the robot in question has already been hauled into court. There’s certainly nothing that could affect any individual homeowner…that is, unless your own house is about to be entered into the listings.
First, about the robot: this is not the Terminator (Arnold) himself. In real life, if you saw him in the supermarket or walking down the street, there would be nothing to fear at all. In real life, he is an actor/Governor who is actually an American/Austrian who is a conservative/liberal and in no way the fictional robot character who was the antagonist/protagonist featured in the Terminator movies.
Neither is the robot that lurks in some online listings: the home appraisal robot. It, too, is nothing to fear, even though it has probably already visited your house without your knowledge. This robot comes from the Zillow website, and its name is “Zestimate.” It means no harm and is doing the best an automated home estimate robot could be expected to do. Any unintended consequences of what happens when it visits your house are, as the phrase indicates, unintentional.
About that court case: the online information company Zillow publishes a dollar figure that its robot calculates for most U.S. home addresses. It is featured as its “Zestimate” of a property’s market value. An Illinois realty lawyer has sued them because she claims that in her case that number is so low and off-kilter that it has materially hampered the sale of her condominium. State law has it that nobody can publish an appraisal without permission of the property’s owner. Zillow says that the $ number it calls its “Zestimate” is not an appraisal at all: instead, it’s an “estimated market value.” Who wins the court case is yet to be determined.
How this might affect your own home is because prospective buyers might visit Zillow to see what the robot thinks your own property is worth, and be slightly (or in some cases a lot) misled. Zillow admits that, compared with actual sale prices, their Zestimate number has a median error rate of 5% (not bad)—but that it is only within twenty percent 89.7% of the time! A 20% error would be terribly misleading; especially when it happens more than one out of ten times.
The fact is, this robot doesn’t come from the future like the Terminator. Its numbers are based solely on publicly recorded information, which may be outdated, incorrect, or, most likely, unable to factor in anything other than basic square footage and general comps. What the Zestimate cannot account for are things like how upgraded, or outdated, or depressingly dark, or delightfully light, or traffic-noise heavy, or majestically awe-inspiring the subject property actually is in comparison to the comps used to calculate the Zestimate. When human beings aren’t involved at all, the subject property itself is not actually compared. We think there is room for this kind of automated approach, if used correctly. It can be fun and interesting to look around a neighborhood to see how various individual properties fare, even if the numbers aren’t to be taken too seriously. As the name implies, it’s really just an estimate.
But when the time comes to actually sell your own Grand Forks area home or to start looking in earnest for a house you will be calling home for many years, that’s no time to rely on anything less than comparables and guidance researched by a living, breathing real estate professional. In other words, when the information needs to be right—call us! Or you can also fill out our Property Value Request form to receive a FREE, no obligation, Comparative Market Analysis (CMA) that will give you an estimate of the current market value of your home.