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Warning: Are You Relying on Zestimates Only in your Home Search?
Sometimes, when calling on one of my listings, a buyer will ask, “why is the asking price so different from Zillows Zestimate?” (Of course they generally only ask this when the Zestimate value is higher, not lower. 🙂 ).
I worry about any buyer who is significantly letting a Zestimate influence their shopping. Zestimates are not an assurance of the actual value of a home because they do not factor many of the criteria that is most influential to buyers.
As stated in a previous post written for Sellers who may lean too heavily on Zillow, “Warning: Are You Relying on a Zestimate to Price Your Home”, you don’t have to take the lack of completion, and hence inaccuracy, of a “Zestimate” from me, take it from Zillow. The following statements were taken directly off their site:
- Our data sources may be incomplete or incorrect.
- 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.
- Margin of error nationwide is approximately 9% (on AVERAGE)
- Zillow does not offer the Zestimate as the basis of any specific real-estate-related financial transaction.
- A Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.
While Zillows algorithm is “secret”, we know that it is derived from public on-line records and closed sales data only. Since they never go into the house, some of the characteristics that usually matter most to buyers are not even factored into a Zestimate. Factors like:
- the type of street
- the floor plan/layout
- the amount of light/views/orientation on lot and to neighboring properties
- level of renovation & condition/age of major systems
- architectural character and interest
- distance from public transportation, local schools, etc.
Having sold real estate for 20 years now, I can’t think of any buyer that would not have a strong opinion about most, if not all of the factors above. More importantly, many of these things could affect what price they were willing to pay for the house, or even whether they wanted to buy the house at all! Sure, statistics, algorithms and comparable sale data matter and affect value. But in the end, how a house makes you feel will affect how much it is really worth to you and others (when you resale) and determine any homes true value.
So when buyers ask about the Zestimate before actually seeing the particular house, I encourage them to come and see and “feel” it first! Without doing so, they could be missing out on a home that could really be everything they ever wanted and worth every penny (and perhaps worth more to them than) the seller is asking!
I’d love to hear your opinion, if you have used Zestimates to rule a house in or out. Please write me below.
