One of the challenges with AVMs is that the analytical profile used to determine the market value of a property is buried in the data. Many AVMs only provide a dollar amount for the home price, and nothing else. As a result, the agent has no opportunity to explain to his or her client how the AVM pricing was achieved. Distrust of the AVM property valuation turns into distrust of the real estate agent and you lose the client. Trouble is, anyone trusting Zestimate, or another AVM, is likely to take this with them into the next transaction with the next agent. The people that believe these AVMs are the issue, and they need to be brought back down to earth.
Why do we distrust these AVMs so much? Because AVMs cheat in order to say they are closer than they actually are. We have nearly 200, and growing, examples of Zestimate changing all the pricing once the house is put on the market.
- Zestimate is $800,000, backed up by the supposed pricing history.
- True and accurate price on market is $640,000
- 6 Hours Later: Zestimate is $606,080.00, with totally new pricing history. How is a pricing history changed? It’s history! Right?
- House sold at 100% of list price, far and above the standard 94.7% sales to list price.
In this case, the seller’s goal was to sell immediately. They believed if they wanted out now was the time based on market conditions. The house sells in 14 days at asking price. They were able to sell fast using an agent, not an iBuyer. Everyone else? Still sitting in the market, not sold. Looks like their agents used the CMA/RPR/AVMs averaged magic to price their homes. Good luck!
Wonder if an iBuyer will end up getting those properties? It’s a shame that Zillow screws up the pricing and then, because nothing moves, they sweep in and iBuy it all. Crazy.
Where are the tools for agents? APC Residential is the full-service pricing solution agents need, because it was built by agents for agents.