Zillow pulled the plug on its instant home buying program last month and the lawsuits are starting... Did this program fail because Zillow overpaid for too many of the homes it acquired? Did Zillow overpay deliberately to gain market share, or were there errors in data and assumptions? Were Zillow's Zestimates inaccurate?
The Zestimate was a marketing idea that attempted to compete with real estate agents' message of, "Do you know what your home is worth?" Zillow instantly computed a home's value without human contact. Brilliant, and the program was a huge success with consumers. But seriously flawed.
For years, we have been hearing about Zestimate inaccuracies. We know that pricing and valuations are complex and nuanced, and predicting future pricing is an art, not a science. Technology cannot possibly replace human contact in the real estate advisory equation. The process of pricing a home, and then selling it, can be simplified and systemized, but the subtle, complex, unique and emotional elements of pricing and coordinating a transaction require a sophisticated, savvy and delicate human touch. Technology is a tool to be used to enhance human efficiency, not as a replacement. To those real estate consumers who rely heavily on Zestimates and automated transactions, let Zillow's failure be a warning. The human touch cannot be wholly replaced.