You see a home on Zillow or the like (we’ll call them portals) and inquire about its availability with me or another agent only to find out that it’s not for sale. You’re looking to sell your home and you LOVE the Zestimate so you’re thinking, “I don’t need to talk to anyone to find out how much my home is worth, awesome!” and even better “my home magically increased in value by $50K in the last two weeks according to Zillow” (even more awesome) …. yet the number is completely wrong when you talk to a Realtor.
So, why the disparity? First, online real estate operates on the premise of you being a lead. Portals like Zillow and local real estate brokerages engage in a battle for your contact information. Some brokerages even withhold their listings from portals and are in no rush to update that home to sold on their site, hoping you’ll visit their website directly over and over again. The result? An online real estate landscape that’s inaccurate and untrustworthy, with portals prioritizing lead generation over data accuracy.
Moving on to home value estimates, Zillow’s “Zestimate” isn’t as reliable as it sounds. Zillow openly acknowledges its estimates are just that – estimates. I mean if they were accurate perhaps they would have called them “Zaccurates” instead! In many cases, these estimates can be significantly off, with a $100,000 swing on a $500,000 home. The CEO himself suggests using Zestimates as a starting point for pricing discussions, not as factual representations. Zillow draws data from public sources, the information is often outdated and inaccurate. Applying algorithms to flawed data leads to inaccurate estimates yet many are taking these estimates as more than just that, an estimate. How can an accurate price be determined for a home when the data it is based on is out of date, is incomplete and is incorrect? It can’t.
One of the many roles of Realtors is to provide you with a more realistic price range. Some of the tools we use include:
- Sold home data – hard dollars spent – in a recent time period on homes that compare to each other is the most important way to determine the current market value of your home. Appraisers only use comps that have sold within the last three months which have a similar number of bedrooms, baths, square footage and features and are located within a one-mile radius of the subject property. This is the reason why that the beautiful new construction three-bedroom single family home that sold a year ago on your street doesn’t help the value of your 100-year-old two bedroom four-flat condo. Only real estate professionals and appraisers have access to this sold data; portals do not. Appraisers might even reach out to other realtors sold homes to understand any outliners values.
- The condition as well as the quality of construction of your home is a huge factor. All things being equal, an updated, high quality home will be of more value than an identical home in bedroom, bath and square footage count no matter how much you love your “charming” 50-year-old kitchen and asbestos filled basement.
- Whether a neighborhood is appreciating or depreciating in value will affect the price of your home. The market shift and condition are also a big consideration when determining the sales price of your home.
- Often a seller’s perceived value of their home and the actual market price are very different numbers (insert emotion). You might be willing to overlook that your home has no AC and that the third bedroom is the size of a storage closet because you think the home has a ton of character which makes it worth the same as a home with Central AC and three large bedrooms, but these issues affect the price whether a seller wants to admit it or not. This is why determining the fair market value of a home is a mixture of art and MLS data. Our jobs as REALTORS is to help you determine where the actual market price of your home is based on the accurate information we have at my disposal, not the perceived price based on your emotions or the love you put into your home.
Without the assistance of a Realtor, you need to find every home in your general area (remember that one mile radius) and neighborhood which matches your home’s bedroom, bath, square footage, parking, etc which has sold in the last three to six months since that is the time frame appraisers like to use (that time frame and radius used will depend on hoe many similar homes sold). Then you need to go inside of them (or find recent photos of the interior) to make sure they match your home in terms of quality, condition and finishes to determine a somewhat accurate value. Or you can pay for an appraisal every year until you’re ready to sell. Or I can generate an MLS report of sold homes in your neighborhood for you whenever you’d like, which is free. One tip I do recommend for sellers is to claim your home on Zillow so you can make the data as accurate as possible. Here’s a blog post on how to claim your home
The bottom line is that while portals like Zillow serve as advertising platforms, they may not prioritize accuracy. Next time you log on to a portal such as Zillow and Trulia, look for an ad for a bank, or three-plus agents, or a mortgage person or any of the myriad of advertising partners these companies have. Every time you look up a home as a buyer or try to ascertain value of a home as a seller, you’re selling an ad for these people and companies to the tune of multiple millions of dollars every year. They aren’t in the business of accuracy, only your eyes on an ad. Want accuracy? Want to know the market value of your home? Tired of wasting your time online? Give me a shout.