Real estate value Web sites good but not perfect
Talk about letting your fingers do the walking!
The Internet is certainly the information highway,
but just because information comes to you over
the Web doesn't mean it's accurate or reliable
enough for you to bet your hard-earned savings
Take real estate valuation Web
sites, for example.
Web sites such as Zillow,
pull together data from a variety of sources
to give consumers information about properties,
including such details as the square footage,
number of bedrooms and bathrooms, construction,
sales history, property taxes, comparable sales
and estimated property values.
They're great starting points
for research, the experts say, but anyone who
relies on these sites to set a sales price for
his or her home or to decide on how much to
offer for a house is making a drastic mistake.
Ask Pennsylvania banker Frank
Baldassarre. One of his clients bought a house
to remodel and resell based on the information
he had found on an online real estate valuation
site. The site said the average sales price
of a house in the neighborhood was $600,000.
He bought the house for $150,000, spent another
$150,000 to upgrade it and put it on the market
for $600,000. He got no offers.
By the time the client called Baldassarre, who is senior
vice president of Fox Chase Bank in Hatboro,
Pa., the house had been sitting on the market
for months and the client was running out of
money to make the payments. After meeting with
a real estate agent, driving through the area
and seeing the competition at that price point,
he realized he had overpriced the house.
"These Web sites are a useful
tool and can give you starting points,"
Baldassarre says. "But don't make decisions
worth hundreds of thousands of dollars based
on a click of a mouse with information from
Consumers flock to Web sites
Nearly 80 percent of home buyers reportedly
start their searches on the Web these days,
so it's natural that consumers would look online
for this kind of information, says Ted C. Jones,
senior vice president and chief economist at
Houston-based Stewart Title Guaranty Co., who
also is a former real estate appraiser and chairman
of the Houston Association of Realtors.
"Would I criticize anyone
for going to those sites? Not at all,"
he says. "But recognize their view is very
Also, recognize that the site probably has a motive for providing the information.
"There's an economic theory
called 'no such thing as a free lunch,'"
Jones says. "What's their motive? They're
giving you information. What are you giving
them? Are they trying to steer you to specific
One of the most common complaints is not that the sites have an ulterior motive, but that the valuations can be dramatically different from site to site -- and wildly inaccurate.