How much stock should you put into Zillow’s Zestimates?
First, let me explain what a Zestimate is. Per Zillow’s website, it’s an automated algorithm to give you a general idea of a home’s value that uses physical attributes, tax assessments, and recent sales data. I call this “surface data.” While this data is important, I think that if you’re looking for true market value, you have to really look under the hood.
The first things you need to look at to evaluate a home’s value are amenities and cosmetic improvements you’ve made to the house like granite countertops, hardwood floors, or structural things like a roof, siding, or new windows. You also need to consider the layout and flow of the home. The location of the bathrooms and the bedrooms impact home value.
You also need to analyze the overall market and its current climate. Is the market a buyer’s or seller’s market? You must also factor in the condition of your home. Showability absolutely matters when it comes to value. Is your house very plain or has it been improved? An automated estimate can’t account for these things.
In fact, Zillow actually says to do more research to find an accurate value for your home. This could be a professional agent performing an analysis or you could have an appraisal done.
Finally, I wanted to give you some examples of Zestimates and how they compare to real home sales.
Recently, we had two cases of Zestimates that were higher than what we sold the house for by about 12% to 16%. If you were to rely on these Zestimates and overprice your home, it would accumulate all these days on market. You might even end up selling for less than you could have if you had just started with a thorough market analysis. We also recently had a home sell for 3% higher than the Zestimate. While 3% doesn’t sound significant, think about the fact that it equated to $12,000.
If you have any other questions about home values or you have a real estate topic you’d like to learn more about, don’t hesitate to reach out. We’d be glad to help.