Why Did Zillow Leave the iBuying Game?
Here’s how Zillow’s own inaccurate home valuations led to its demise.
You might have heard the news in recent months that Zillow, the widely used real estate website, left the iBuying market. But do you know why? Today we’ll quickly run through the details.
Previously, Zillow provided free online home valuation estimates called Zestimates. They’d give these evaluations without physically sending a person to the properties they were looking at before offering to purchase them. The goal was to buy properties for cheap and flip them.
The issue was that Zestimates aren’t a true valuation of your property. They’ll take into account the square footage of your home as well as the number of bedrooms and bathrooms, and then they’ll compare that to similar homes within a certain radius. However, their software can’t account for your home’s location and whether you made any improvements to it. For example, they don’t know if your home has been loaded with Miele appliances or if you’ve put in all-new flooring, both of which would boost your home’s value.
"Their software can’t account for your home’s location and whether you made any improvements to it."
They used their own inaccurate Zestimates to gauge the value of the homes they bought and found that they weren’t able to recoup their losses in an environment where home prices were rapidly rising. In total, Zillow lost around $3 billion. The moral of this story is that if you’re selling your home, you need a real estate professional to come and look at your property so that you can get an accurate estimate of its value and sell it.
If you’re interested in selling your property and would like to know what you could get for it in today’s market, or if you have any questions, don’t hesitate to give us a call or send us an email. We’d love to help you.