Here's my admittedly late opinion on Zillow’s house-flipping failure.

Back in November, Zillow closed their house-flipping business, and I’ve been wanting to cover it for a while. It may seem like an old topic, but the principle it illustrates is as timely as ever. Zillow, as you may know, got into the home-flipping business. They would actually purchase properties on a massive scale from their main website. They epically failed in November, having lost $425 million.

“The unpredictability of home prices far exceeded what they anticipated.”

Why did they lose that money? Basically, they didn’t know what the house was worth when they bought it, and they didn’t know what it was worth when they sold it. The CEO himself said the unpredictability of home prices far exceeded what they anticipated. In other words, the Zillow estimate that they relied on is crap, and you shouldn’t rely on it either.

I work with four or five people who rehab homes. We’ve become good friends over the years, so they ask me what a home is worth and what it will be worth when they get done fixing it. I know how to do this accurately, and let me assure you that there are too many variables to program a computer to do the same. An algorithm can’t walk through a house and smell the cat urine.

It takes experience and judgment to account for these things. Zillow, by their own admission, should only be used as a starting point to sate your curiosity. If you want an accurate home valuation, call me or an appraiser you trust.

I hope you enjoyed my rant. If you have any questions about the Zillow news or real estate in general, feel free to call or email me. I look forward to hearing from you.