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Can You Trust Zillow "Zestimates" of Your Home?
A few months ago I posted a blog about the inaccuracies in housing values with certain online real estate web sites. This week the LA Times published similar sentiment and even interviewed the CEO of Zillow, the most popular online source for real estate information.
Here is my original post about Zillow with some extra information at the end:
I hear it all the time: "But Zillow (or Trulia, etc.) says my home is worth $ (fill in the blank), but you're telling me it's worth this?" These nationwide real estate databases are a great starting point, but you need to know the facts before you put all your stock in a "zestimate."
Web sites like these have grown over the years to include millions of listings in thousands of towns. The value that you see listed with any given home is an estimate found from using public data that is only updated every few years. The estimate might also be based on comparing the price of a home with others in the same city, but it basically just offers an average based on those other homes and does not take into account neighborhood, schools, upgrades, lots or any other changes to the home. There is no appraised value (what the bank would actually allow financing for in the purchase of the home), and no one is held accountable for false or misleading information.
According to Fortune, "Zillow has Zestimated the value of 57 percent of U.S. housing stock, but only 65 percent of that could be considered 'accurate'-by its definition, within 10 percent of the actual selling price. And even that accuracy isn't equally distributed."
The best way for you to know the true value of a home is to enlist a real estate agent who is able to pull up comps from homes that are most like the one you're curious about based on size, location, and features. They can also work with other agents to find out what upgrades and other considerations have gone into the price of the home beyond square footage and location.
For instance, a tax record (what Zillow/Trulia uses) might show that the house next door to you sold for $250,000, but it would not show what was included in that price such as closing costs, a washer/dryer, or anything else that the sellers covered. Your agent can ask these questions and help you find homes and prices that are more comparable to the home you're inquiring about.
These sites do have many great uses, though, so I'm not saying you should completely dismiss their many other helpful features such as real estate articles, aerial views of homes and neighborhoods, and local information about schools, etc. If you are searching for the most up-to-date pricing information about homes for sale in the Middle Tennessee area, realtracs.com is very reliable and many agents use it every day.
In response to the accuracy of "zestimates," Zillow's own CEO Spencer Rascoff was quoted in the above-referenced LA Times article as saying, "Look at them as no more than starting points in pricing discussions with the real authorities on local real estate values - experienced agents and appraisers. Zestimates are hardly gospel - often far from it." (To read the entire article, click here.)
That's advice that I can recommend! Give me a call and we'll find the best price for the home you're wanting to buy and/or sell.