Did you know that Zillow is broadcasting an “estimated value” of your house, whether you like it or not, even if it’s not on the market? Did you also know, by Zillow’s own admission, that more times than not this ‘estimate’ is inaccurate? This info coupled with the fact that 95%+ of home buyers start their search online is a SCARY thought!
Zestimates are a point of contention for so many people. Whether you’re a property owner who believes your house is more valuable, an agent trying to accurately price a home, or a potential buyer who puts too much value in a zestimate however misguided it may be. Regardless of how accurate a Zillow “zestimate” is, it is something that you need to acknowledge and be equipped to deal with.
How Zillow get’s it’s “Zestimates”
For something so many consumers put “faith” in, it’s shocking how few actually know where Zillow comes up with it’s Zestimates. Zillow explains, “We use proprietary automated valuation models that apply advanced algorithms to analyze our data to identify relationships within a specific geographic area, between this home-related data and actual sales prices.” In layman’s terms it means a computer program is attempting an educated guess based on a math formula. They have never physically seen your home, let alone been inside it. How much faith would you put in an agent to price your home if they’ve never seen it before?
The only problem with using a set of algorithms to price a home is that no two homes are alike! As someone who looks at homes for a living, I am constantly reminded of this. Even cookie cutter neighborhoods show variations from home to home including wear and tear, location, maintenance, and countless other intangibles that simply can not be factored into an algorithm.
When it comes to pricing a home, everything needs to be taken into consideration. For most people their home is the single biggest investment they will ever make. Doesn’t that deserve the utmost diligence?
How Zestimates affect you
The reason you should care what Zillow is saying about your home is not because it’s an authority on home valuation, but rather because this is where the vast majority of your buyers are looking. Even though Zillow admits it’s Zestimates are not always accurate, it posts them front and center. And if your home is actively listed, this Zestimate will show up directly below your list price. This is not a place you want to cast uncertainty when it comes to your valuation. Especially when the stakes are so high!
Zillow provides a chart explaining the accuracy (or inaccuracy) of their Zestimates in the FAQ’s section of the site. I’ve provided a copy of the chart below and a link to Zillow’s zestimate page here. Zillow explains that, “Nationally, the Zestimate has a median error rate of 7.9%”, which means that half the Zestimates are more than 7.9% off the appropriate value. How much money are you willing to leave on the table?
Let’s take Atlanta for example. Zillow indicates that it’s Atlanta market is one of the more “accurate” markets. Even with that being said, half of all Atlanta Zestimates are more than 5% off, 30% of all Atlanta Zestimates are more than 10% off, and 15% of all Atlanta Zestimates are more than 20% off!! Take a $500,000 home for example. A 5% miss is equal to $25,000, a 10% miss is equal to $50,000 and a 20% miss is equivalent to $100,000! Look at it another way, 30% of Zestimates for homes in the $500,000 range are MORE THAN $50,000 OFF! That’s insane right?
How you can take control – Zillow’s ‘Owner Dashboard’
One of the very best things you can do when marketing your home for sale is to be in control of all the information being broadcast out into the world wide web. With over 95% of buyers starting their search online it’s now more important than ever to make a great first impression. And this means going above and beyond the ‘default’ info.
Zillow has heard the people’s cries and responded with an attempt to create a more customizable Zillow experience. Enter the all new Zillow Owner Dashboard. This Owner Dashboard is intended to offer home sellers a clear window into how their listing is engaging with people online, and what they can do to possibly enhance their presence. Zillow is now allowing owner’s to “update their home facts if they feel they are incorrect or there are missing values, and the updates may affect the Zestimate value.” It’s not unheard of for Zillow to incorrectly list something as simple as the bed/bath count or SqFt. These items can play a big role in the valuation method Zillow uses. Go and double check your homes data right now!
This editing feature is extremely important for anyone who has ever renovated or made improvements to their homes! According to Zillow, “Most upgrade information is not in the public records, and is not easily quantifiable. We do not know about home updates and remodels unless they have been reported to the local tax assessor, so those items are not used in Zestimate calculations. While we do utilize user-submitted data that is measurable, (e.g., additional bedroom count, bath count, and square footage) there is no way for us to systematically gather and verify the type of remodel or build information where the value is based upon how the final product appeals to the buyer.
Moral of the story
It’s extremely important to control all aspects of your marketing when selling your house. The new Zillow Owner Dashboard is one way in which you can take control and should. However, it is not the be all end all, and rather just a starting point. This is why ALL of our listings, regardless of price range, receive a professional and fully-custom marketing suite! And we work to provide All of our buyers with a custom CMA when it comes time to make an offer! Contact us for more information.