By Raquel Fernandez
“Zillow says my house is worth…” I’ve heard this so many times and the truth is that Zillow estimates have never been accurate because they are based on algorithms programmed by someone at a specific time and as we all know, the real estate market is changing constantly. My job is to predict the sales price of your home based on the demand using pricing strategies that will yield the best result. Not all realtors have the same price strategies.
Zillow as well as OpenDoor and others have been buying homes virtually via a process called iBuying. The process consists of a homeowner entering their address on the iBuying platform, selecting to receive an offer and stipulating their terms. Usually fast escrows, no repairs, no inspections. When iBuying first started, the offers were under market prices, but the homeowners were still agreeing to the sale because it was a hassle-free transaction. Zillow then sold the property at market price on the open market (the MLS) making a profit. This is due to the property being bought under market price with little cost of buying and selling as Zillow owns the escrow and title companies, the lender, the contractors that work on the homes, and pay discounted realtor fees to their listing agents.
However, as the iBuying process gained ground and other platforms emerged, Zillow changed their algorithm to make more aggressive offers to sellers causing it to overpay for homes that later sold for less than Zillow bought them for. This was beneficial to sellers and at that time I would advise sellers to accept the Zillow offer. But this business model is unsustainable. Zillow has become a victim of their own process, losing more than $380 million in flipping operations in the third quarter of this year. Zillow has not only stopped buying houses as of October of 2021, but it is getting out of the iBuying market all together.
This doesn’t come as a surprise to me. Nothing will ever replace the work that realtors can do for our clients. We are experts on the market and we can analyze the supply and demand using different sources to arrive at an estimated sales price more accurately than any computer program can ever be. And this is coming from a computer programmer.
All of this to say, that finding the right realtor to help you buy or sell your home is the key. Interview several and hire someone that can represent you well in the biggest investment you will ever make. And remember Zillow estimates are not accurate.
I can talk about this all day. Feel free to call/text or comment. (619) 453-4513
Raquel Fernandez (DRE #01945891), Broker Associate at Coronado Shores Co. She has a wide range of experience in the Real Estate industry from holding a notary license, to developing land in Big Bear, co-owning a mortgage brokerage in Los Angeles to buying and selling property domestic and internationally. She has been selling real estate in California since 2013 and is excited to continue helping families with their real estate needs.
The Coronado Shores Co. (DRE #00658736) is a boutique real estate brokerage that originally built the 10 towers at the Coronado Shores, now we sell & lease them! Our bread and butter are the Shores, but our sales and leasing agents have years of experience with Real Estate transactions throughout San Diego County.