ShortchangedbyShortcuts?

Shortchanged by Shortcuts?

I’ve seen this come up for people after they lost out on a house they loved. Now every other house is compared to that one – it became an anchor of sorts. Not only does every other house not quite measure up, but now every new house needs to represent the same price-to-size ratio as the one they lost.

The single biggest contributor to upsets and frustrations from Anchoring is brought to you courtesy of Zillow. Unless you’ve started your home search because you’ve been living in a cave, you know what Zillow is. It’s also likely you’ve seen their algorithm-driven home valuation called the Zestimate. It looks very slick on their very slick website. But don’t let looks fool you. The Zestimate is trash. It’s dangerous, damaging, trash. By Zillow’s own accounting, the Zestimate has a median margin of error of five percent. This means half their guesses are more than five percent off and half are less. Of course, you don’t know which half your home falls in, so it’s as practical as throwing darts at a board.

By way of illustrating the absurdity of thinking the Zestimate is somehow connected to reality, when Spencer Raskoff, the CEO of Zillow, listed his home for sale, the Zestimate turned out to be 40 percent higher than the sale price he received. If Zillow is off by 40 percent of their CEO’s home, how accurate do you think it’s going to be for you?

As we know by now, the accuracy and validity of an anchor has nothing to do with its impact. Virtually every client I talk with understands, intellectually at least, that the Zestimate is functionally useless when shopping. Yet, it’s out there for everyone to see and is, without a doubt, creating an anchor.

I’ll discuss this further when it comes to selling your home, but it applies to buyers as well. Buyers consider it when looking at the amount they are willing to offer on a home they’re interested in. It’s a shortcut-driven mistake, but people do it.

I don’t have any illusions about you avoiding the Redfin or Zillow sites and their algorithmically generated values. That’s The “Pre’s” | 85