Yesterday the Zillow Group (NYSE: Z) shook up the real estate world by announcing during their third-quarter earnings call that they have decided to exit their “Zillow Offers” direct-buying practice, a move that will elimnate 25% of their workforce over the next few months.
Nobody wants to see people lose their job but the Zillow decision has many people talking, once again, about what it really means to price properties effectively. In the earnings call Zillow CEO Rich Barton said “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated” (quote credit: CNBC). In other words Zillow determined that when it came to using THEIR money, the valuations they generate with their algorithms are not effective enough to continue to use.
While it is important to say that Zillow offers was never an option for home buyers and sellers here in Montgomery, Bucks or Philadelphia, Quinn & Wilson agents have been saying for a very long time that the “opinion of value” that Zillow provides (aka the ‘Zestimate’) is just that. It is a computerized guess, based on data from other houses in other neighborhoods in other towns. Zillow even publishes their error rates! When you want a real opinion of value, you need the insight of people who understand the nuaces of the market…down to the neighborhood level…not just a smarter computer.
We will continue to use our tools to price homes effectively and will continue to counsel sellers on the best strategy for getting their home sold to buyers who are not necessarily using capital they raised from investors, but who are probably trying to start the next chapter of their individual lives. That’s what “Transitions Made Seamless” is all about.
If this news made you think about the value of your home, contact us today and we’ll provide a data-driven, experience-based valuation.