The Fuzzy Math of Home Values
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In a housing market that’s been mostly a cause for gloom, so-called home-valuation technology has become one of the few sources of excitement. After years of real estate pros holding all the informational cards in the home-sale game, Web-driven companies like Zillow, Homes.com and Realtor.com are offering to reshuffle the deck. They’ve rolled out at-your-fingertips technology via laptop and smartphone to give shoppers and owners an estimate of what almost any home is worth. And people have flocked to the data in startling numbers. Vigilant homeowners check their values to help decide whether it’s worth the hassle of refinancing, while others who are ready to sell use them to gauge if they’re priced right for the market. But for figures that carry such weight, critics say, the estimates can be far rougher than most consumers realize. Valuations that are 20, 30 or even 50 percent higher or lower than a property’s eventual sale price are not uncommon.
Zillow, Trulia and other websites post estimates of home values. But as Alyssa Abkowitz explains on Lunch Break, these popular sites can be — by their own admission — wildly inaccurate.