If you know me and my background, you know I love technology. Technology is an important tool for today’s real estate industry. BUT I also know that technology has its flaws and is not the end all, be all.
So, let’s talk about Zestimates! If we had a dollar for every listing appointment that started out with “Well Zillow said my home is worth…
Zillow uses an algorithm to determine the value of a home based on other homes with similar characteristics such as number of bedrooms, baths, square footage, etc. It is very objective and not entirely wrong. This is similar to what an agent would do to complete a market analysis to determine a list price, however there could be many other factors that are not included in the calculation that affects the value of your home. Here are some examples:
- Zillow may know that you have a two acre lot, but may not. know that the lot is sloped and unusable.
- Zillow may know that you have a 12×10 kitchen, but may not know that you just recently purchased top of the line appliances.
- Zillow may know that you are on a corner lot, but may not know the traffic back up that occurs right in front of your home at rush hour.
- Zillow may know that you have 3 bedrooms, but may not know that one of those bedrooms is captive.
- Zillow knows what neighborhood homes have sold for, but may not know that a new factory is going to be built 1 mile away and the demand for homes may increase (or decrease) as a result.
Zillow, in its definition of a Zestimate, will tell you it is a starting point, not an appraisal, and to see a real estate agent to get a Competitive Market Analysis (CMA). There is data showing that there is a pretty big margin of error if relying solely on a Zestimate. Check out the information for yourself at https://www.zillow.com/zestimate/.
As an agent we are not appraisers, but a knowledgeable agent can give you a more accurate estimate of what your home is worth, taking into consideration ALL of the factors that affect price. An appraiser is the expert, but remember an appraisal is still an opinion of value. As a seller, you can surely purchase an appraisal before selling, BUT the buyer will most likely have to have another one as a result of the lender conditions for a mortgage. The buyer will have to pay for that appraisal report and whatever it says goes (for the most part) despite what your former report states.
The point: Spend your money on hiring a Realtor® that will give you an accurate price analysis of your home. That is why you are hiring them in the first place, right? Be leery of agents that are willing to list your home for whatever YOU want or whatever the Zestimate says your home is worth. They aren’t doing their job by sugar coating the truth. The end result could be a transaction falling apart near closing because the appraisal came back too low.
For sellers, my job is to sell your home at a price that fits into the fair market value range based on location, condition, and the current market. For buyers, my job is to help you purchase a home that also fits into the fair market value range according to location, condition, and the current market. If you sell or buy a home at a price that meets appraisal and market value, you are winning! Get rid of the idea that the goal is to get a “deal” or that the Zestimate value is 100% accurate.
The first steps to buying/selling:
- Hire a professional Realtor®
- Take their professional advise (Don’t do step 1 if you aren’t going to do step 2!)
*Informational purposes only and to be conceived as mortgage or legal information.