The Boston Globe reported March 4, 2007 that Web sites that estimate the value of homes have widely differing figures and questionable accuracy.
One of the most well know of such Web sites is Zillow.com, "which uses proprietary algorithms to calculate an individual property's valuation." Zillow.com and at least one other site allow property owner's to update their own home's information on the site. The sites also provide tools that show how much different types of improvements would boost a home's value.
Once the property owner's get involved is providing the information you can rest assured the quality of the information these sites provide is substantially diminished. That unheated basement with a rug and a couple of lighting fixtures is not "finished."
"For all their sophisticated presentation, the new websites are still struggling with a common problem: how to get accurate property information, beyond what's publicly available from common sources."
An article on CNNMoney.com discusses the accuracy of Zillow.com.
"Overall, Zillow has Zestimated the value of 57 percent of U.S. housing stock, but only 65 percent of that could be considered "accurate" - by its definition, within 10 percent of the actual selling price. And even that accuracy isn't equally distributed."
Sure, it's fun to look up what your home or your childhood home and see how it is "Zestimated," but these sites are not reliable sources to use when making decisions about what to pay for a home.
The graphic on the right from the CNNMoney.com article shows the percentage of Zestimates that are within 10 percent of the selling price.
Figuring out what to offer takes research. What kind of research? What I do for my clients is provide them with actual sales data from the communities they are looking in. Depending on the circumstances, I typically provide general sales data and specific data about similar homes in the same or similar neighborhoods. A price per square foot analysis usually is part of the research.
What somebody paid for their home in 2003 may be important to know when negotiating a sales price, but it's meaningless when making a determination about what price to offer today.