Is the Zestimate Accurate??
There are many websites out there that claim to provide you with the value of your home at the click of a button. And while this is an easy, user-friendly way to look up the current value of your home, there are a number of reasons why it should not be used when determining what price to list your home on the housing market when it comes time to sell.
Zillow self proclaims that it should NOT be used in place of an appraisal. In fact, it self proclaims that it can have a margin of error of 5%, 10%, and even 20% of the sales price in certain cities.
Zillow lost 881 Million Dollars in 2021, Trusting its own Zestimate. By following its own pricing model, Zillow managed to purchase homes in large amounts using its iBuyer program only to watch their newly acquired properties sit on the market at sky-high prices. Eventually having to sell at a price lower than their Zestimate and thus lose money. Zillow decided to end the program near the end of 2021 due to what they called “an unpredictability in forecasting home prices.” This certainly doesn’t instill confidence if you ask me.
And the point I always like to bring up is that Zillow has never been inside your house or any other homes for that manner. It does not take into account the condition of your home. Any remodeling, updates, large repairs, or floor plans are not taken into account when coming up with the Zestimate. Bottom line, the Zestimate doesn’t mean much, it is a basic number crunch on sq. ft. and lot size.
While I mostly consider Zillow a thorn in my side when it comes to doing my job, I do think it provides some value with its ability to give you a ballpark range of the value of your home. The Zestimate algorithm uses public data from tax records and the MLS such as bed, bath count, square footage, lot size, and neighborhood to provide an estimate of value. This is helpful for you to keep track of your home's value over time. But when it comes to pricing your home to go on the market, there is no substitute for a professional Real Estate agent. Besides the basic stats, a Realtor is going to consider the temperature of the housing market, buyer’s current motivation, economic factors, specific neighborhood characteristics, and the value of any updates, remodels, and repairs. Pricing a home is much of an art and it is a science.
If you want to sell your home (now or in the future) and be assured that your asking price is the best it can be, reach out to a local, trusted Realtor. Unlike mega corporations, Realtors have a fiduciary duty to put their client’s interests above their own. Here at TD Realty Group, we offer free home assessments along with a complimentary walk-thru of your home to provide ideas on ways to increase your home's value before listing on the market.
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I look forward to hearing from you.