Zillow ’ s making headlines recently , but not necessarily in a positive way . As you may have heard by now , the wellknown online real estate company Zillow had a blunder and their algorithm went a little too far . Now , the company is facing $ 569 million or more in debt if they can ’ t offload a few thousand properties .
What began as an algorithmbased way to buy , renovate , and sell a large quantity of homes has become a nightmare scenario for Zillow . But it ’ s not the computer ’ s fault . Rather , it ’ s the unaccountedfor situations that real estate agents see all too often . It is the very act of having a real pair of eyes on a house that lies at the root of the program ’ s downfall .
The good news is that where Zillow fell short , you can take note and learn a thing or two before entering the real estate market yourself . That ’ s true for anyone looking to buy and / or sell a home , as well as budding real estate agents .
So what exactly can you learn from Zillow ’ s downfall ?
Real World vs . Ideal Conditions
Real estate agents will be the first to tell you there ’ s a limit to how much you can ask for your house when selling it . Determining that price range includes identifying the physical aspects of the structure itself including those that can not be identified from a quick glance or through examination of the numbers .
A large part of a home ’ s market value comes from looking at the values of homes in the same area that have sold recently . These are often referred to as “ comps ,” or comparable houses . They ’ re more or less a way to justify the asking price you come up with , because if someone paid a certain price for a comparable house , they should ( in theory ) pay about the same for your house . However , an investor can not judge the value based purely on comps alone .
Real World Ideal Conditions versus
Image by Gerd Altmann from Pixabay
In the beginning , Zillow based their home values on these comparisons . The company hired real estate agents to do all the work behind the scenes . Then , it taught the software what to look for , setting parameters to then buy , flip , and sell houses . It sounded all well and good in the ideal world , but when it comes to real estate , hardly any piece of property meets these impossible standards .
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