A previous article i posted looked at a web application called WalkScore. In the discussion which followed a good point was raised about the accuracy of the ranking system used to determine the Index score. This led me to think about the accuracy of other real estate related applications and whether they actually help the agent/vendor sell a property or deter property seekers from further investigation.
WalkScore bases its calculation on the distance a property is located from amenities. It has been argued it should include things such as the number of crossings, pedestrian bridges, steps and convenience for a pedestrian to walk around, not just the numerical distance from and to.
Zestimate home valuation is an estimated market value for a property computed using a priority formula belonging to Zillow. Zillow calculate this estimate through taking past sales data information for similar properties and combining it with the property information advertised by the agent or vendor. Most agents/vendors would be a little dubious (and have every right to be) regarding the accuracy of the Zestimate property value. Zillow thinks otherwise;
“Our data shows that the majority of our Zestimate home valuations are within 10% of the selling price of the home.”
Zillow do however provide property owners with the opportunity to update their property facts which will result in a comparable vendor’s Zillow estimate.
Residex in Australia has attempted to duplicate the success of Zillow through their own property estimate portal Findmeahome. Findmeahome provides a price range for properties listed for sale in Australia and a rating for that property out of 10 compared to other properties listed in the street.
“Based on the great Australian tradition of “a fair go”, FindMeAHome.com.au provides you with the right price and gives you an ability to have your say.”
On a whole the listing price of most properties are between the property estimate but the price range of some estimates are just ridiculous. This property 2 / 119 Victoria St, East Gosford has an estimate between $384k and $1,418k which isn’t too helpful for a property seeker.
One property I looked at 3/28 Webb St, East Gosford had a price estimate of $352k to $367k and on RW it is listed at $372k the Residex rating is 8/10. Now surely, given the price is listed below the estimate it should have a rating 10/10.
I certainly look at all of these property value tools with a certain level of pessimism. I see them as gadgets to keep amused rather than an informative tool which users should rely on for factual information. It would be great to hear how agents view them and more importantly whether property seekers gain any value.
3 Comments
Peter Butterss
I recently used the Residex right price report and was very satisfied with the outcomes. The only issue that these style of reports encounter is the vendor not updating enhancements such as renovations.
My strong view is that anything that helps a vendor form an informed view of their properties value is great; as with most new technologies it will improve with time.
If as the buyer, as i was in this case, the tool enabled me to cut through agent speak and get to a realistic price then the residex tool was valuable.
Surely well armed buyers and sellers make life easier for everyone?
Robert Simeon
Comparing an online application such as walkscore with online applications such as home valuations bear no resemblance in my opinion. Having been one of the first websites to use walkscore, it has been very well received from our users perspective. http://www.rwm.com.au/119431
Now for property data compiled from the aggregators that is months and months behind as in the vast majority of cases it is complied from settlement data. Until such time that it is compiled from exchanged data it will never be relevant or accurate for that matter. The problem with property data is that the aggregators don’t advise consumers of this – and if they do I have not seen it although likely it is somewhere in the small print.
The Insider
Peter, did the report include a rating for the property or an Index? I think past sales data is fine, just the index/rating systems leave a lot of unanswered questions.
But as Robert has pointed out, it is past sales data and what something sold for 3 months ago can be a lot different than what it sells for today.