Location, location, location

In the past few weeks there has been a lost of buzz about zillow.com, a website that ostensibly will replace real estate agents by giving sellers and consumers a realistic valuation of a home. I tested it own on our own home, and thought that the estimate was probably betwenn $40k to $80k low, based on sales prices in our neighborhood, particular location details that make our neighborhood desirable, etc.

Well, now the Washington Post has come out with an article pointing out the various faults in the underlying assumptions that Zillow.com's valuations are derived from. Interesting read, although those of us who obsess about home prices and valuations probably already knew some of it.

I think that the biggest danger is that consumers don't question something like this. A formula, no matter how complex, cannot account for the various emotional and subjective factors that go into the pricing of a house. For example, it could never recognize that the house behind us - which zillow.com values at about $30k more valuable because of its location on a cul de sac - is poorly placed on its lot, such that they have a miniscule front yard and a ginormous backyard, and that the cul de sac itself is very tight, making parking on the street near impossible and making the houses look a lot closer together than they might actually be. No computer program can properly account for this type of detail, yet it is exactly those types of details that make one house more desirable, i.e. more $$$, than another.