August 25, 2017
Use Caution with Online Home Value Estimates
If you have bought or sold a house in the last decade, you have probably used Zillow.com. The real estate website compiles listings of all homes for sale complete with photos, property information, and price/tax history. But it is a computerized home value estimate, a ‘Zestimate’ on the website, that is getting a lot of attention lately.
This week, a federal lawsuit that challenged the accuracy of the Zestimates was dismissed in Illinois. Many have accused Zestimates, and other online tools, of being inaccurate, often drastically under-valuing or over-valuing homes. The fear is that these estimates make it more difficult to sell or purchase a property.
As agents, we see this all too frequently, and it is not just with Zillow. Online home valuations should always be taken with a grain of salt. There are simply too many factors that aren’t considered, and cannot be considered by a computer when creating an estimate.
Many clients are quick to point to a “Zestimate”, or other online tools, when we discuss what price we should list their home for. And it seems the higher the estimate, the harder it is to convince people of what a property list price should be.
A better way to estimate your home’s value is to find a comparable home in your neighborhood that recently sold. Use that home’s sale price as a starting point when pricing your house to sell.
As much as we may want to believe a high online home evaluation, it is important to not price your property out of the market.
If an identical rowhome located seven doors down from you just went for $200,000, it is safe to ignore a $350,000 valuation of your home…from any website.
This is not to say that there is not value in real estate websites. The internet has completely changed the real estate industry, in many ways for the better, and a site like Zillow is out the forefront of that shift. However, when it comes to setting home values, we suggest leaving it to those trained to do so.