Warning: Are You Relying on a Zestimate to Price Your Home?

said on August 17th, 2011 filed under: Seller Information

housevaluesMany times when I go to meet with a seller to talk about the value of their home I hear, “well Zillow says my house is worth…”

Zillow is a wonderful resource.  The Zestimates they provide are extremely interesting. But if you are selling, or buying, it is important that you recognize that relying solely on a Zestimate to place value can cost you.

Don’t take it from me, take it from them.  The following statements are direct quotes, taken right off the Zillow site:

  • The Zestimate is not an appraisal. It is a starting point in determining a home’s value.
  • Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction.
  • Our data sources may be incomplete or incorrect.
  • Margin of error nationwide is approximately 9% (on AVERAGE)
  • The Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.  We have not physically inspected a specific home.
  • your real estate agent (or appraiser) physically inspects the home and takes special features, location, and market conditions into account.

Zillow’s algorithim is based on public record and on line data points only.  This means things like tax data, square footage (which can often be inaccurate in public records), and recent sales within a radius of a property (even if the sales fall in neighboring towns where property values are higher or lower).

When pricing, the Realtor on the other hand, considers other special features, as a buyer will, like:

  • condition (particularly of baths & kitchen & major systems)
  • amount of light & views out windows
  • layout and floorplan
  • location (type of street, neighborhood) 
  • market conditions & market timing when selling 

I have worked with buyers for 18 years and I don’t know any that have purchased a house without considering how it makes them feel, in relation to the special features above.  How a person “feels” about a property doesn’t just influence what a person will offer, but whether they will want to make an offer at all.  While people do want to make logical and wise decisions based on comparable data they are not likely going to even consider those points until they view the house and make a judgement on how it makes them feel. 

Additionally, how a buyer feels about the real estate market, where the market is headed, future economic conditions and how these things could impact their investment in a home, will also impact your homes value.

This is why it is important for you not to rely just on a Zestimate.  Buyers will consider ALL of the market intricacies that Zillow cannot factor in and does now know about (because they havn’t been inside the home).

A good Realtor considers all factors and also understands buyer behavior in the current market climate and how that will affect the value of your home.  A comprehensive and thorough evaluation is the best way to price your home.

I’d love to hear your comments and experiences with zestimates and pricing.  Feel free to comment below.

posted by Lisa Johnson

  1. Harold Wilion


    How true! I sold a property on High Rock Rd in Wayland in 2009 that I was lucky to get $510,000 for, and at the time Zillow had it valued at close to 1 million. They have since dropped their “zestimate” to $830,000. Either I am the worst real estate investor alive, or Zillow is the worse place to find the real value of a home! It is still worth about $510,000.

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