The Zillow Mistake and how not to repeat it!
When you first start your real estate search I’d bet money that you pull up google and check your home value, those in your neighborhood or a neighborhood you’re interested in, on one of a few sites – Zillow definitely being one of them! Zillow put a lot of faith in their algorithm getting the market value correct and unfortunately when they launched their iBuying business (buying properties to fix up and resell) in 2019 they used those “zestimates” as initial offers.
Needless to say those zestimates did not work in their favor and they shuttered their iBuying business in 2021. Now, many factors went into why this endeavor failed. First, the pandemic coupled with record low interest rates drove home sale prices sky high in areas and the algorithm simply couldn’t keep up with a fast, sporadic and ever changing market. Second, they overbought and overpaid for properties on such a large scale and when the algorithm couldn’t accurately predict the volatility of the market 3-6 months out so they lost millions upon millions of dollars.
Let this be a lesson, while tech and algorithms are here to stay, never underestimate a real live real estate agent! Invest in a good relationship with a great broker! A good real estate agent will never rely on a zestimate or any other type of algorithm. They will do their due diligence, run the comps, and recommend an appraisal (which are required by lenders anyways if you have a mortgage contingency).
We’re here to help with your Chicago real estate purchase and will always provide market analysis, run comps and recommend accordingly. We can’t wait to hear from you!