I think it’s important to point out that Zillow lost a Billion (that’s not a typo 🤪) relying on their Zestimate tool to purchase homes as an iBuyer. Now that this is well documented I want to encourage you to NOT use the Zestim ate tool unless you enjoy being misguided and throwing away money. You can do far better by reviewing recent sales on your own and comparing those homes to your own. After all, you know what your house looks like. You know what has been updated and what has not. If you need a more accurate number you can have a licensed agent help. For an even more reliable number hire an appraiser.
Zillow Zestimate is fast becoming the preferred down and dirty pricing tool of would-be sellers. Buyers lean on it too before making offers. The Internet has proven its power in revolutionizing real estate. Over the years, many homebuyers switched online to search for prospect properties. And now anyone ready to engage in a real estate transaction is looking to Zillow for answers.
Automated Zillow Home Value
Homeowners and homebuyers are more empowered with the amount of information readily available to them. Sites like Zillow offer what’s called an Automated Valuation Model (AVM). It helps buyers have an idea about the current market value of millions of homes. But should the Zillow home value to be trusted or not?Homeowners and homebuyers are more empowered with the amount of information readily available to them Click To Tweet
📈 How Zillow Home Value Estimates?
Zillow uses a proprietary formula that helps them determine the value of a home. The values are based on information this website has obtained from data entered by users and public records.
For starters, the site knows what the home sold for the last time it was purchased. It also knows this same information about other properties in the nearby areas. As homeowners give information about the particular features of their homes, Zillow home value uses them to come up with a price that a house is worth.
One of the most critical factors in Zillow’s formula is the property’s assessed value. Unfortunately, it’s rare when the assessed home value is reliably related to market value. These two are different things since assessed values are used by cities to collect taxes. In many cases, it trails the actual market value of a property. In addition to this, homeowners can unintentionally or intentionally steer the hame value up or down based on their input.
🔍 What is Zestimates?
Zillow Zestimate knows that no algorithm is sophisticated enough to quantify specific features of a house. That’s why the Zillow home value has to be taken with a grain of salt and should not be considered as a pricing tool.
It can’t pinpoint the value of a kitchen that has been remodeled just before the home was put on the market. There’s also no way for any algorithm no know the value of a yard that has been poorly maintained. That is why having property maintenance is very important. The people behind this site know this is true. They say as much about this on their website.
When you dig deep enough, you can find out that ‘Zestimates’ are not an appraisal. Homebuyers can’t use it in place of an appraisal. The site also says that “it is a computer-generated estimate of the worth of a house today, given the available data. Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction.”
The site also says that their data sources may be incomplete or incorrect. A Zillow home value hasn’t physically inspected a specific home, there’s also no way of knowing the real score for every home. So remember that the Zillow Zestimate is only a starting point and it doesn’t consider all the market intricacies that can point out the actual price a house will sell for.
Pricing Your Home
Contact your favorite local agent to help with pricing. The agent can provide better information than Zillow. Once you have it you can make a better decision. Your agent should provide recommendations for pricing. There are all kinds of crazy real estate pricing myths floating around out there. One of the best things you can do yourself is to follow the market. Study the local housing numbers every month to have a leg up on the competition.
💬 Why Zillow Estimates Often Fail?
The most recent selling price of a home is useful information to have. It’s the most concrete data that Zillow home value can have. This data is also one of the most crucial factors for buyers and sellers. Although this information has inherent importance, they don’t indicate what a home might worth now. Also, the data Zillow receives lags because it is pulled in via tax records rather than via the local Multiple Listing Service which is much more immediate. Tax records can lag behind for weeks if the county is busy.
Markets in Motion
As the market changes every minute, a sale price that’s been there years before is no way applicable to use to estimate the current value of a home.
The recent sale prices of nearby homes are also crucial for the seller and buyers. Also known as comparable sales, these numbers make up a big factor in how real estate agents will price a property.
The problem here is that these comparable sales should be taken for what they actually are and not as indisputable numbers. They need to be viewed as apples to apple situation in particular scenarios. Just remember that a Zillow Zestimate does not walk into your home and evaluate. More importantly, Zillow does not look at the condition of the homes it is comparing yours to. It only knows where the home is, how big it is, and for how much it sold for. So, it is very possible that many of the homes being used to support the Zestimate are far inferior or superior to yours depending on improvements and maintenance.
📌 How Does a Realtor Determine Real Estate Market Value?
The way a Realtor® points out real estate market value differs from how Zillow home value does it. A local real estate agent or an appraiser knows how one comparable sale is related to the next. To get an accurate price on a specific property, a seasoned realtor needs to compare homes in a neighborhood. Then considertions are taken into account for improvements or lack thereof. Zillow doesn’t do this. Zillow can’t. It’s not human. Zillow has no idea what the condition differences are. This is why the Zillow can’t get the job right. How Is a live agent different and superior to the Zillow Zestimate?
How Your Local Real Estate Agent Can Help
Zillow and realtors also differ in their evaluation method. A realtor uses a comparative market analysis (CMA). Geographical wise, Zillow home value sometimes uses a much broader scale than just a neighborhood or town. Often, the site uses all data in a county to estimate values.
How does this affect the estimates in an area? Although there might be no recent sales in the ‘neighborhood,’ a few sales in the nearby area can affect the local housing market.
Reminder: At the end of the day Zillow is merely a bunch of computer data. It cannot walk into your house and see how it is different from the other sales in your neighborhood.
When Pigs (Zillow) Can Fly
How does an agent come up with a price?
- Agents pull recent sales from the MLS. Zillow relies on tax records (those lag)
- Your local Realtor® can see your home improvements. Zillow can’t.
- Your real estate professional can walk through your house. Zillow doesn’t do that. Not yet, anyhow.
💡 How is Zillow Useful?
Although Zillow Zestimate home value can be off when it comes to its numbers, the site still shows a substantial amount of information that can be really useful when you are buying or selling a property. Below are the things Zillow serves its purpose:
✅ You can just quickly look up homes when you’re ready to buy one. The data about each house provide a clear picture for each property.
✅ The integrated Bing maps come in handy. They are useful in helping buyers know what’s around a particular property.
✅ Zillow has a ton of information you would want to know when buying a home. The square footage, age, lot size, bedroom and bath count, and taxes are there. Another thing that’s best about their information gathering is that the site shows past ownership of the home and what the owner has paid.
✅ From a seller’s perspective, it’s an excellent platform for them. If the property looks excellent online, there’s a greater chance that the buyer will be contacting their real estate agent about the property.
✅ Zillow has an app for smartphones. If you catch yourself hunting for a property, you can easily fiddle through your phone and pull up information while standing in front of a home. Just remember that often times what Zillow says is “available” may actually be under contract or sold. Data lag is the reason for this.
✅ Zillow shows the way prices are trending. You can look up particular locations and now have the trend help you decide where you really want to buy and when.
💁 What to Do if you Don’t Agree with your Property’s Zestimate?
If you’re selling your home and want Zillow home value to have a proper estimate of your home you have to claim your house first. Once you claimed it, you can now edit the details about your home features. Make sure to do the following:
✅ Post excellent pictures of your home. Highlight the features you want to get noticed.
✅ Write proper descriptions of your house. Talk about the features. Describe how it’s like living here and what your favorite aspect of the property is.
If you’re thinking about selling your property and you want an alternative aside from Zillow home value, you can choose between to have For Sale By Owner (FSBO) or contact a real estate agent to help you through the process. If you want to sell your home fast and for top dollar, it’s best to work with a local professional.
👍 What are the Benefits of FSBO?
For Sale By Owner is when a homeowner lists his/her home without the assistance of a professional real estate agent. This process is for people who are willing to get through the whole experience on their own. From pricing, staging to listing, it’s all by the owner. If you’re thinking about FSBO, you’ll also have to go through negotiating, drawing up paperwork and the closing on your own. You can have the following benefits of FSBO:
✅ You can avoid paying the listing agent commission.
✅ You can have complete control of your listing price.
✅ You can manage the schedule of showing an open house.
✅ You’re the neighborhood expert.
When listing FSBO, remember to set aside your attachment to your home. Note that you need to focus on the selling process. Objectivity and acceptance of feedback are of utmost importance. For you to quickly move forward with the selling process, identify your bottom line price. It’s also important to point out what concessions you’re willing to make. All these can help you have less emotional and more logical negotiation.
One mistake many FSBO sellers make is “testing the market” to see if someone is willing to pay more than top market price. Another giant error FSBO’s make is using the Zillow Zestimate to determine their home value.
📦 What are the Benefits of Hiring a Real Estate Agent?
✅ They have a proper understanding of pricing strategy and fair market value.
✅ They’re expertly objective when it comes to the listing.
✅ They have extensive market exposure.
✅ Buyer’s agents will more likely show your listing to their clients.
✅ They’re trained to negotiate professionally.
✅ They’re seasoned with all the paperwork.
When hiring a real estate agent, it’s essential to have someone who understands both your timeline and your motivation for selling your home. You need to be clear when speaking about your preferences. Your agent should also know how involved you want to be in the process. You’ll pay your agent a commission for the job, so it’s essential that your satisfaction is met. It’s not a bad idea to run a Zillow Zestimate up front. Do that, and share it with your agent when you begin working on your selling strategy so that you don’t get stuck.
✨ The Bottom Line
Zillow home value generated by the Zillow Zestimate is only a starting point to get you moving in the right direction. Like other listing sites, Zillow has given an opportunity for homebuyers and sellers to find and list properties. The site can be a tricky spot for people unfamiliar with the intricacies of the real estate market. If you’re a homebuyer who just wants to have a glance of the highs and lows of properties in a specific neighborhood or area, the site might be of help. If you’re a seller and wants to claim your home listed on the website, you might still need to dig dipper into the whole plethora of how proper selling works.
Now that you’re aware of how Zillow works to arrive with its Zestimates, you might know now whether or not you can trust or not trust Zillow home values. Keep the advantages and respect the limitations of the site.
Your Selling Plan
If you’re onto finding or selling your home, you have to maximize the use of information. Do you think you can go through the process of FSBO yourself? Then commit to it. FSBO is a whole new experience if you’re not familiar with it. According to Zillow Research, about 36% of sellers go for selling their properties on their own. As they encountered difficulties along the way, many of them switched to calling a real estate agent for help. In the end, only 11% made it through the whole process of FSBO. Data also concludes that on average FSBO’s end up selling for far less than properties that are professionally digitally marketed online by a savvy local pro.
When it comes to finding or selling a property, it’s better to turn to someone who knows the market in your area best. Have someone whom you can speak your preferences and apprehensions. Are you looking for a home in Phoenix, AZ? Do you want to appraise your property? Feel free to drop a message here and let’s see where your search leads you.
Homeowners – Are You Unhappy with Your Zestimate? – by Karen Highland
Home Selling Mistakes to Avoid – by Bill Gassett
How to Analyze a Home Purchase Offer – by Debbie Drummond
How to Prep Your Home For a Quick Sale This Spring – by Sharon Paxson
Critical Steps to Prepare for a Real Estate Photoshoot – by Eileen Anderson
How Can I Sell My Home When I Have (Fill In The Blank)? – by Lynn Pineda
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