Often in the real estate industry, we hear clients discussing the fabled “Zestimate”, an automated tool used by Zillow to give someone an estimated price on their property. Great, so if a website will give you a price just like that on your home, what do you need Realtors for?
Unfortunately, it’s not that simple. Zestimate uses an algorithm with several factors to determine the cost of your home, but there are still things that humans can do that computers just aren’t capable of.
When someone comes to us interested in selling their home or knowing the value of their home, the first thing we do is look for comparable properties, or comps, with similar features as the client’s home. The most important comparable feature is typically location and size, such as square footage, acreage, garage space and bedrooms/bathrooms, with other qualities such as flooring and countertops factored in as well. Zestimates also gather this data; however, they only factor in raw data, such as square footage, bedrooms and bathrooms. A machine can’t really determine whether or not your home has laminate or hardwood flooring, and certainly doesn’t adjust its estimate based off of that. You may find that the “comps” Zestimates pulls up really resemble nothing of your property, aside from perhaps the size and number of full bathrooms. This is where that special, human Realtor touch comes in handy.
Zestimates rely on this information; however, it can only be as accurate as the information behind it is. Often, Zillow listings contain inaccurate or occasionally just plain wrong information, and as an agent, fixing that information often requires calling Zillow and waiting on hold to try to get through to an actual human at customer support (you can just imagine how fun that is). The majority of Zillow’s data is sourced from other listing websites, primarily the MLS (Multiple Listing Service), a Realtor’s Association certified listing site used by all licensed agents. But even when the data comes straight from the horse’s, or, the MLS’ mouth, it can still get lost in translation on Zillow. Thankfully, humans have better reading comprehension and can easily spot mistakes and discrepancies when valuing a home.
While the location of your home does affect its value, it may not matter nearly as much as the Zestimate thinks it does. The majority of houses appreciate over time, but if you have a neighbor who has lived in their home for over a decade, Zestimate doesn’t exactly know what to do with that data. For properties that haven’t been sold recently, Zestimate relies on tax data for appreciation value. However, taxes often are way off when it comes to the value of your home, and don’t account for luxuries or improvements made. Additionally, if the home beside yours was sold for a relatively low price, Zestimate will take that figure and lower the price of your home as well. A lower-priced neighboring home can have some effect on the value of your property, but not nearly to the effect that Zestimate thinks it does.
Overall, the very best way to get an idea of what your home is worth is to have an appraiser complete an appraisal, analyzing everything from chipping paint to deck maintenance. Appraisals aren’t cheap, though. So the very best FREE way to get an idea of the worth of your home is to contact our team at Community Real Estate Group, Keller Williams for a custom market analysis or property valuation report, where we look at all available data for your property and your market area and come up with a relatively close range. Of course, we aren’t 100% perfect, but we guarantee we’ll be better than a computer! So contact us today for your free property valuation report!