The Zillow Zestimate and Home Values

The Zillow Zestimate and Home Values

When you are buying a home, Zillow is a great place to see properties. Everything displays in the first page of a search. The school ratings, the house history, tax information and even a list of lenders and real estate agents who can help you buy the home.

 

The question is, how accurate is the information on Zillow? Who are the real estate agents and lenders next to the picture of the house? 

According to Wikipedia, Zillow has stated that they are a media company that generates money by selling advertising on their website. 

As an Exclusive Buyer Agent,  we frequently work with home buyers who love gathering information from home search sites.

As a home buyer, it's good to use Zillow or other home search sites in addition to working with a Realtor. A Realtor will have access to the Multiple Listing Service which is the source of listing information.  By cross-referencing houses of interest with the MLS information, you can determine if a house is actually for sale. 

The Zillow Zestimate is only an estimate. It does not accurately determine the value of a home. Why? 

  1. A computer algorithm with automated valuation models has no real way to take the condition of the inside of the property into consideration

  2. Pricing algorithms generate a range or prices, not a specific sales price. Zillow's sampling error is + or - 7.5% 

  3. To ovecome, the Zestimate, show your seller other AVM's and the prices they generate. Inman News suggests HomeSnap. You take a picture of a home, using GPS on your phone, and HomeSnap generates a price

  4. CoreLogics ePropertyWatch is a service you sign up for to generate a home price. You must verify you are the owner of a property. You will then get foreclosure and auction information, via email, about properties in your neighborhood. 

  5. Finally, Moveup.com lets you see the properties being considered as comps. You can adjust their algorithm's to allow changes for property condition and other value conditions. 

Inman News offers an excellent example of how the Zestimate works. The author selected a house in a neighborhood where she used to live. The Zestimate of that house $443.000. EProperty Watch gave the value $332,000 and HomeSnap $422,000. Moveup put the price of $494,000 on the property. 

That's a $162,000 difference for the value of a specific home!

You can have success by doing your research and working with an experienced Exclusive Buyer Agent. Exclusive Buyer Agents work for Brokerages that do not list homes for sale. This means there is no "in-house" inventory to "sell you". Exclusive Buyer Agents will show you all the houses of interest with no incentive or reason to push you toward one house or another. If you are in the Greater Washington D.C. area, we can help you find your home. If you are elsewhere in the country, go to NAEBA.org to find an Exclusive Buyer Agent near you. 

Enjoy your house hunting adventure this Spring!