Tuesday, April 24, 2007

Who's Zestimating the value of your home?

After reports were disclosed that the state board of appraisal was ordering Zillow to cease publishing their online home values, state representative Michele Reagan wrote an amendment, specifically senate bill 1291, which states that Zillow’s service is an opinion of value, not an appraisal. Because it is considered an opinion, state lawmakers expect to see ZERO cases brought before judges regarding the stated value of a home by Zillow.  (Click here to read this article).

With the immense availability of information on the internet, I appreciate being able to look up information on my own. In the case of home values, however, I would caution you to use sites such as Zillow as a starting place. Don’t look up the value of your home and expect it to be the “going price.” My home’s Zestimate exceeds $413,000 even though area sales show the value at $310,000. Zillow does not seem able to take into account recent sales in the area (aka. market value).

What concerns me regarding Zillow, are the various industries which use the value of homes to determine the rates you receive… you might ask your insurance agent exactly how they verify or determine the value of your home when you request home-owners insurance. A recent inquiry of insurance on my own home made me aware that Zillow’s opinions, might be regarded by others as a true representation of value. In another case, a homeowner shared with me that when they were approved for a cash-out refinance, the lender required only a “drive-by” appraisal. Who’s to say that their drive-by was not assisted by Zillow? This grossly, over-valued estimate by the lender became a horror story when the homeowners were forced to move and were unable to sell the home to cover the newly mortgaged amount.

So, home-owners beware. You are the one who will be paying the premium for whatever value is placed on your home. Make sure that the value is an accurate representation. You never want to owe more than your home is worth, and you don’t want to pay for more insurance than you need