What is a Zestimate® and is it Accurate?
March 31, 2019
The first place people look to find out their home’s value is Zillow. Zillow produces their home value estimate called a Zestimate®. Below is the definition from Zillow:
The Zestimate® home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions.
While the Zillow estimate will get you in the ballpark, it has a large margin of error because it doesn’t cover things such as: strength of schools, varying level of interior updates, available local inventory and intangible attributes that directly impact perceived value.
Here’s a great case study that shows why you can’t always rely on online estimates:
I recently met homeowners who had done their research online, and the research indicated that their home was worth about $500K. They went a step further and reached out to some online brokers to get an all cash price. This was appealing to them because they could sign a deal, get the cash, rent back and then take their time to find a new home.
In this particular case, Zillow offered a contract price of $495,000 (close to the Zestimate®) with fees totaling well over $55,000. So they were going to net below $440,000.
This is where a Realtor with local expertise and experience can add value. I was called to assess whether the Zillow offer was a good deal. After visiting the home, seeing the interior attributes and discussing improvements that the homeowners were willing to make, I went back and crunched the numbers. I looked at similar homes nearby both in the neighborhood and outside and quickly saw that Zillow had provided an estimate that was too low. I came back and suggested at list price of $550,000 due to some attributes that Zillow could not factor into its algorithm-based pricing model.
The RESULT: A month later, we hit the market, received multiple offers the first week and we sold ABOVE the list price!
So before you sell out to Zillow, OpenDoor, Knock or OfferPad, contact local REALTOR® to visit your home and do a full comparative assessment and recommend a list price.
If you’re in the Atlanta metro area and looking for a strong REALTOR® to market your home, give me a call. If I don’t cover your part of town, I’ll introduce you someone who does.
Your Marketing Expert in Real Estate
Harry Norman REALTORS®
404-368-4888 | firstname.lastname@example.org