My High School Basketball Coach reminded us after a bad first quarter, "It's not where you start. It's where you finish."
Real Estate Coaches should be emphasizing this same idea to their Agent Players, too, when the seller's tax assessment or Zestimate is "bad". It's not who is the first contact, but the last agent.
The Art and Science of Home Price Assessment is a Continuum:
- Tax Assessment
- Percent above Tax Assessment for recent home sales in your area
- Zestimate (or other AVM, Automated Valuation Model, computer/software generated)
- CMA Wizard (computer/software generated)
- CMA Wizard + Realtor Special Sauce (The Spin Zone)
- Asking Price
- Lenders' AVM
- Selling Price
In Real Estate we deal with the many approximations of Reality, The Reality of the Selling Price.
We know how far from Selling Price Reality a home's tax assessment can be. We deal with this by saying: "Oh, that's just the assessment. We all know how wrong assessments are". Zillow's Zestimates, or our CMA's, are just another approximation of The Reality of the Selling Price.
I'm still amazed at the flack for their estimates Zillow gets from the NAR, Realtor.com and certain sections of our Real Estate Community. It's a real case of NIMBY (Not In My Back Yard). I've heard all the Zillonoia about: Zillow taking over Real Estate, Zillow buying Brokerages and dominating Real Estate, and even that Zillow shouldn't use the word, "Assessment". Realtors treat Zillow worse than they treat FSBO's.
I was taught to do CMA's by using our company's CMA Wizard. I locate the 3 closest sold properties. The computer puts them side by side. I push a button and the computer gives me the estimated selling price. I sprinkle in a little negotiating room, add 2 All Beef Patties and Special Sauce, and I come up with my price. After I know the owners motivation and wallah, a price we both can live with.
I print this out for the seller, who always thinks his house is worth more than I say it does (even after I tell them, "It's not me saying this. It's the Market saying this."). Or I print it out for the buyer, who always thinks the house is worth less than I say it does (even after I tell them, "It's not me saying it. It's the Market saying it.").
When I sold my lake house (in a former life, BC, Before Commission) I got 3 estimates (just like my father told me): $500,000, $400,000 and $325,000 ($499,000; $399,000; $324,000 in Real Speak). The lowest estimate was a "preliminary estimate" from an Agent of the area's largest broker. He told me, he'd give me his final estimate, after I signed an "Exclusive Right To Sell Contract." He's still waiting.
Why was he so angry, when I gave him the courtesy of calling him to say I had signed with another Agent? I had hoped to give him some feedback, about how he didn't listen to me and how he had treated me. He didn't give me a chance. He didn't want to know. So much for correct estimates and customer service. The house sold for $480,000.
In Real Estate, we've been dealing with all kinds of incorrect assessments since the government created tax assessments and and we created CMA's. Do we get upset with a wrong assessment, or do we deal with it? Zillow's estimate, or Zestimate, is their computer generated assessment of a home's value. It's there. It's not going away. Get used to it. Even better, use Zillow, their Zestimates and their Website to your advertising advantage.
GIGO (Garbage In Garbage Out). The Zestimate is only as good as the data it comes from. If that data is outdated or incorrect, there is little chance Zillow, or anyone else will get a good estimate or CMA.
Zillow, being closer to the first approximation, should be less accurate. But Zillow, because of its easy availability, Google-Like speed and low cost; is much closer to the first place home buyers and sellers will look. Zillow will always be cheaper and faster. So we always must be BETTER.
Our local Realtors' Association (GRAR.org) can't get a lot of Agents to post their closing information on our MLS site. These Agents must want calls on their homes, still looking like they're For Sale. Then the Agents try to bait and switch, "Unfortunately that house already sold, and I have this other home, even nicer, I'm sure you'll like..."
By necessity computer generated estimates favor the data side of the equation. Computer Programs tend to over rate square footage, just like the CMA Wizard at our office. I add my Special Sauce to correct for this.
Can Zillow put our Realtor's Special Sauce in its Zestimate? Not yet. And not for a long time. Not until computers can do it, or we help Zillow do it. Zillow is already way ahead of Realtors in Computer Power, Software and Internet Search. But we Agents know the market and we know our customers. If we don't, then Zillow IS Faster, Cheaper and BETTER. And you better hide your lunch.
As Real Estate Agents, we want to be the last place home buyers and sellers go to buy and sell their houses. Zillow, or whoever becomes "The Google of Real Estate", will be the first place they go. We've lost the battle to be first. Let's not loose the battle to be last.
It's Not Where You Start. It's Where You FINISH.
Happy Searching.
WebHomeUSAblog; The Blog of Real Estate Search Marketing
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