Luxury Real Estate

By Michael Edlund

We frequently get asked why we haven’t implemented Zillow’s Zestimates on LuxuryRealEstate.com. A Zestimate is Zillow’s estimate of a home’s current value. Some may think that we want to withhold information from consumers for whatever reason. This is not the case. We are somewhat interested in using Zillow’s services as we think that the database they have built contains a fair amount of interesting information.

However, my personal opinion, as I expressed it to Rich Barton in a meeting recently, is that Zestimates currently don’t work so great for luxury homes.

For a moment, toy with the thought of Zillow providing a formula for determining the value for restaurant food instead of homes. There are surely a number of variables that would be relevant for a food-value equation. Factors could include portion size, service speed and background noise level, just to name a few. But how do you put a price tag on the individual experience of taking the first bite of a perfectly cooked meal? The perfect taste that makes you drop your hands to the table, close your eyes to savor the full taste? The taste that sends your mind into blissful orbit even for a fraction of a second?

When it comes to luxury homes, there are, for sure, a number of hard data that are relevant for determining the value. But, like food, what makes a home unique isn’t just based on hard data. There is a unique, intangible dimension to every home value that could be based on ambiance, a spectacular view or something else. This holds true for any home, but it is extremely clear in the luxury market.

It’s my belief that a home’s intangible value can never be expressed in a formula.

I do think and hope that Zillow will become better at estimating values of luxury homes. Luxury buyers and sellers will surely benefit a great deal when that day comes. But until then, a living, breathing, skilled and experienced luxury real estate agent who can experience and appreciate the intangible values of a home is your safest bet to help determine the correct value of your home.


Editor’s Note:
Michael Edlund is the Director of Technology with LuxuryRealEstate.com. He is in charge of all of LuxuryRealEstate.com’s Web projects, including Web site creation, software updates and implementation, and much more. I think Michael is on to something here. Algorithms are fine for trying to get a general idea of the worth of a property that one knows nothing about, but the more you learn about a home’s characteristics and nuances, the better you can put cold facts into context and understand the property’s true worth.