People often ask me about Zillow, Trulia, Redfin, Homesnap.. It seems like there’s a new real estate internet tool coming off the line every week. Zillow is definitely the most popular – but it’s also very, very inaccurate. Don’t get burned by Zestimates!
I understand the appeal of online sites like Zillow: in the deep dark days before the Don’t get burned by Zestimates!internet (ha!), it used to be that real estate data only came from an agent or brokerage. Consumers didn’t have independent sources of information; a third party source like Zillow must have seemed like a great way to level the playing field and empower the home owner.
Zillow doesn’t exist to empower you.
Ever wonder why you don’t have to pay to use Zillow’s search features? Because you are their paycheck. You help them generate ad revenue.
How Does Zillow Know How Much a House is Worth?
The truth is, they don’t. Zillow might try to give you an accurate idea of a home’s value. But most of those estimates are generated through old tax assessments, tax assessments which are notoriously un-aligned with actual market value. And Zillow knows that. Furthermore, those assessments don’t come with justifications. Lots of little adjustments go into the proper pricing of a home for sale, things like size, features, age, or changes to the surrounding area.
A skilled agent or appraiser can navigate those adjustments, but Zillow cannot. Zillow won’t know that your roof is leaking, you installed a hot tub, you have an easement, or that you’re considering a short sale. Don’t get burned by Zestimates when you’re trying to buy or sell.
Real Estate agents as a whole have a difficult time as it is being trusted by some people. In some circles we are only regarded just above a car salesmen. When a home seller sits down to interview an agent on many occasions a homeowner will already have visited Zillow and taken a look at their ‘Zestimate of value’ for their home.
Along comes a Realtor who presents their comparative market analysis of all the homes in the area that have recently sold, gone under contract and are currently for sale. The Realtor carefully takes the homeowner through all the data until they finally arrive at the suggested list price and probable sale price. The sellers jaw hits the floor. The local real estate expert has just come to the table with a value that is $50,000 less than what Zillow says the home is worth.
This is where the real estate agent has to go on the defensive because ‘Mr. & Mrs I don’t trust Realtors’ is now looking at you like have three heads. How could Zillow be wrong after all they are a really well run organization and we see them advertising on television?
What most sellers don’t understand is that Zillow estimates values of over 100 million homes across the country. It would be impossible for them to accurately predict the value of every home in America.”