Once again the Zestimate has a home-owner up in arms. In a small town in North Carolina a home just sold for $20,000. It was listed at $55,000, then reduced to $45,000, and finally sold in 2015 for $20,000. Safe to say it needed a little TLC.
It was a shell in need of, well everything. But, we have to remember that automated valuation services don’t know anything about condition or circumstances. Before the house was listed for sale, the owner (from a different state) thought they had inherited a nice little nest egg. Not a fortune, but if it was close to the Zestimate, they would have quite a nice amount to play with.
The Zestimate in this case came in at – $139,973. Yes, you read that right. Almost $140 grand for a house, that even without the bad condition, was never worth anything close to that amount. Even the tax value was at $51,000.
Think this home-owner was unhappy with Zillow? That’s NOT a small error, it is huge and changes people’s hopes and expectations. They had a very hard reality check. And, this is not some rare example but an everyday occurrence.
As far off as most automated valuations are, big banks are still hard at work trying to convince the public (and the government) how accurate these electronic valuations tools are, and that real live appraisers are not needed any longer. It is frightening because they have to know the problems, but they choose to overlook them. Why? Simple answer, profits. The less appraisers are involved in the process, the more liberties they can take with the loans. “It’s all about the people.” I’ve heard that so many times and if they believe so much in the “people” they are loaning money too, why not keep the loans in-house? They don’t care about the home’s value because they are not holding the loan on their books. Same ole pre-crisis problems.
Big banking is at it again and this has been the plan since the HVCC started – get rid of appraisers. At the end of every discussion, it all comes down to money and profits. Banks are looking for new ways to add profits and the appraisal industry is on their radar. Don’t be fooled into thinking banks are pushing E-Valuations because they trust them or think they are good for consumers. E-Valuations are good for one thing – bank profits. Welcome to the new home loan with at least two appraisal charges – both an online service – and both not worth the paper they are printed on. When will the madness stop???
