Should I Trust Zillow to Determine the Price of My Home?
Buying and selling a home today is very much different compared to how things were done a decade ago. Today, there are several tools that the average person can use to search for homes and to sell a property. There are online resources for anything and everything related to real estate. From viewing homes, listing houses to locating the best deals, and calculating the right price tag, the internet has it all. And among the different websites that offer these things, Zillow is one of the most popular today.
However, Zillow sometimes provides incorrect information that may affect your home buying or home hunting exploits. Here are some reasons why you should not give Zillow your 100% trust:
Zillow’s Problem with Estimates
Zillow and other similar sites empower average home buyers and sellers. They provide vital details and information that affect market decisions. Through Zillow, people no longer need to hire a real estate agent to kick-start their home buying or selling efforts. However, Zillow has some issues regarding the home value estimates or “Zestimates,” as the website likes to call them.
Some of their estimates end up being inaccurate to the point that they are far off the actual value of individual properties. In turn, it worsens the situation for both the buyers and the sellers. Despite all the valuable information Zillow offers, the website still runs on an automated system that has no capabilities of thinking independently.
Zillow cannot account for any variations in the numbers. These variations, regardless of how small they may seem, may have a substantial impact on the prices of houses. But this doesn’t mean that the people behind Zillow will not be able to address this concern. Perhaps soon, they can improve the site’s programming.
How Does It Estimate Value?
If you are wondering how Zillow estimates the value of homes, it uses a proprietary formula based on valuable information. This information comes from key sources like public records. They may also come from users who entered the information on the Zillow website.
Thus, the site will know the homes that sold based on the last time it was bought. Zillow considers the data of sold homes in nearby areas (comparables). Through these details, the company comes up with its own valuation of the properties. But the important value factor Zillow uses in its computation is the properties’ assessed value.
The problem with this is that the assessed value of homes rarely has any correlation with the market value of the properties. The assessed value and market value differ in so many ways. Towns use the assessed value for tax collection. Usually, this value lags behind the actual market value of houses.
Hence, you will see homes selling for over $100,000 more than their assessed value. In some cases, the selling prices can go lower.
The Silver Lining
It is a sad truth that Zillow often fails when it comes to its valuation of homes. But studies show that Zillow can increase its valuation accuracy and reach 80% to 90% accuracy levels. But for first-time home buyers and sellers, you should not rely solely on Zillow. Instead, consider consulting real estate experts like New Again, who are knowledgeable of the local market.
But all these arguments do not mean that Zillow is useless. You can use Zillow’s market analysis as you make your decision. Zillow tells you the areas where prices of homes are going up or down. Though it is not 100% accurate, you can still use it as a starting point in your home buying and selling.