Pros and Cons of Online Property Valuation Tools

Pros and Cons of Online Property Valuation Tools

Anyone who’s bought or sold a home in the past 10 years will be familiar with some of the online property valuation tools now available. Although each tool is slightly different, most allow you to search for and assess properties without the help of a realtor. So, now can we forgo realtors altogether and save on real estate commissions?

Definitely not. While these tools are useful, they’re certainly no substitute for a qualified, experienced realtor. To see why, let’s take a closer look at a few of these tools.

Zillow

Seattle-based Zillow is the biggest player in the online property valuation tool market. Zillow contains information about properties for sale and rent, such as listing/rent price, number of bedrooms and bathrooms, lot size, year built, etc.

Zillow gets its information from public records and data uploaded by property owners and listing agents. It makes its money through display ads and real estate agent subscribers (for lead generation).

Unique to Zillow are “Zestimates,” which are property value estimates based on individual properties, the neighborhood and other factors.

Trulia

San Francisco-based Trulia provides much of the same information as Zillow. In fact, it’s difficult to find anything that really differentiates the two.

Redfin

Unlike Zillow or Trulia, Redfin is a licensed real estate brokerage with agents who work directly with buyers and sellers. Unlike traditional brokerages, Redfin pays its agents an annual salary, instead of commissions.

Pros and Cons

You don’t have to search far to find negative reviews of these sites, especially Zillow and Trulia. Some people complain they overstate the number of properties for sale to drive more web traffic. Others complain that market value estimates are often wildly inaccurate.

Yet, in spite of these claimed inaccuracies, these tools are still a great way to get an overview of a neighborhood, such as nearby schools, transit services and walk scores. They’re also good at providing general market information, such as market trends and mortgage information.

They can give users a broad sense of neighborhood house values, but with the caveat that individual home values can vary widely.

If you’re looking to buy or sell a home, especially in a new city or neighborhood, then these tools are a great place to start. But after you’ve done some preliminary searching, it’s time to call a broker.

Indeed, that’s what most people seem to do. According to a March 2013 Bloomberg Business-week article, the majority of buyers (89%) still work with a real estate broker to finalize a deal. For most of us, buying or selling a home will be the biggest transaction of our lifetime, so it’s important to get professional guidance and accurate information.

If you’re looking to buy a home, Meridian Home Mortgage offers mortgages in 17 states and can help you with all your home lending needs. Have questions? Give us a call. We’re here to help.