Yesterday we got a request to purchase a home in Charlotte, and after looking over the submitted information, I called the owner to discuss an offer.

We talked about the usual stuff - the house's condition, the roof's age, the last time the kitchen was updated - that sort of thing.

When we qualify a home for a cash offer, we ask the owner for their "win-win" price; that is, a price at which they are comfortable selling based on the condition of the house and the needed work.

In this case, that number was $296,000.

Not coincidentally, the "Zestimate" from Zillow was $296,000.

This happens often, so I was not surprised when the owner asked if we were paying what Zillow and Redfin listed as the house's value. The owner, however, was stunned by my answer.

Many other owners have been, too.

At times, I've loved Zillow. There was a point at which I was paying them over $100,000 per year for advertising. They're great as an aggregator of information about houses in the United States, the website is continually updated, and it is very user-friendly and easy to navigate.

Plus, I own Zillow stock, so I'm interested in their success.

But.

And this is a BIG BUT.

In terms of valuing houses, they pretty much suck.

Want proof?

Earlier this year, The Wall Street Journal reported that Zillow lost $881,000,000 in a single year trying to flip houses based on their own valuations. (https://www.wsj.com/.../zillows-shuttered-home-flipping...)

THAT'S NEARLY A BILLION DOLLARS! And mind you, that was in 2021 when the market was still overheated. I can't even imagine where they would be had they run the same model through 2022, especially over the last 90-120 days, as rates have shot up and the market has shifted tremendously.

I guess they'd probably be doing what Redfin did last month - laying off staff and shutting down (https://www.businessinsider.com/redfin-layoffs-home...).

So I had to tell the owner, "sorry, but no."

We can't pay what Zillow or Redfin says the house is worth.

And neither can they.