Just how accurate are consumer sites like Zillow and Trulia?
The truth about Zillow zestimates
Do you know how much your home is really worth?
Homeowners and buyers across the country often answer this question by turning to a figure known as a Zestimate, produced by Zillow (which purchased Trulia in February of 2015.) Zillow’s intention is to create an accurate estimate for the over 100 million homes indexed by the site. Although it's a cookie-cutter estimate, it can provide a price range to start with as you begin your quest.
Wait, What’s a Zestimate?
A Zestimate is Zillow’s attempt to use algorithms and publicly available data points that influence housing prices to estimate a home’s value at any given time. While this is a good idea in concept, it’s important for buyers and sellers to realize there’s a bit more to predicting prices than the cold, hard facts.
Often, real estate becomes a very personal and emotional buy. Two houses with the same floor plan, but different colors, or trees in the front yard, can have different values in the eye of the beholder. And, that’s really what matters since a home is only worth what the market will bear and what a buyer will pay.
Perception Versus Reality of Zestimates
Zestimates became popular because outside of an appraisal or Comparative Market Analysis (CMA) generated by an experienced Realtor, it can be really hard to judge whether your home is gaining or losing value. Selling your home is an emotional affair full of doubt and fear. So, having accurate data is crucial.
Unfortunately, Zestimates have been responsible for a great deal of confusion because Zillow started using the original algorithm in 2006. Even though the algorithm has been upgraded several times since its inception, it’s far from perfect. Unfortunately, people deeply enveloped in the stressful process of buying or selling a house sometimes fixate on the number Zestimate provides rather than treating it as broad, flexible guide.
Even before Zillow, many homeowners based the value of their home on the tax assessment figure. That value is determined during the initial construction and updated based on average inflation. No consideration is given to updates and improvements unless an assessor has visited the home. And, even then, it's scaled.
Then...Why Bother with a Zestimate? While Zestimates don't consider the difference between a home with avocado formica counters versus white marble, they can provide a ballpark figure based on public data like tax assessments and homeowner corrections of the basic information. But, for an accurate assessment, you need me! Seriously, if you, or someone you know, is considering selling your home, I would be happy to prepare a Current Market Analysis for you - complimentary.
As always, thank you for taking the time to read my newsletter. And, if anyone you know is considering a move, I would sincerely appreciate an introduction - earning their business is up to me.