Before Your Head Hits the ZILLOW: why your online estimate may be wrong.
As an actor, the most common question is “How do you memorize all those lines?” As a Realtor© it goes something like this… “How come your comps say my house is worth X when Zillow says Y? “
I’ll tell you why. Real estate websites have transformed the consumer experience when buying or selling, bringing to the public the listing and sales info that used to be private and difficult to get to. Some of this consumer info sharing has been good for all. A buyer, for example, can reduce our power-shopping trips by searching for homes that suit their needs, send a list of what they want to see and off we go. Well… after I double check the listing information, as much of it is out of date; homes sold but still listed as active, short sales if my client has a move in time frame, homes that have been on the market for a year… these get scratched from the shopping list. But for sellers it can be a different story.
These sites appeal to the savvy seller, empowered by access to the information provided, They try hard to do a lot of the work for you, grabbing recent sales, public record and homes listed in your neighborhood, then running them through a computer program and, in some cases, going so far as to create an estimated value on your property. Here’s where it gets tricky. Computer programs have no discernment.
I recently got on Zillow to double check one of my listings to make sure the information was correct. What I found was a massive error stating that according to public record the home had sold in 1997 for $150,000, a “fact” I cannot find anywhere. With a price point over $600,000, this is a costly mistake and one my sellers were understandably unhappy about. I’ve contacted them numerous times to correct, but so far nothing. I checked back yesterday and the website’s value of the property had gone up $17k in one week for no apparent reason. In my own neighborhood, Zillow has deemed my home worth nearly 40k less than what I can sell it for, largely due to a few foreclosures nearby, and this is happening all over the city.
A computer takes the description of your home from the public records, or from a recent listing, determines the number of bedrooms, bathrooms and square footage, and pulls out the closest homes to yours that have sold recently that have similar data on record. The computer can’t necessarily distinguish nuances in a property’s condition or aesthetics, nor does it always correct for whether the house two blocks over was a short sale or a foreclosure. Depending on where you live, how similar homes are to each other in your area, the level of sales activity near your home and the level of accuracy found in the public records for your house and nearby homes, these sites can offer very comparable “comps” — or comparables that aren’t really comparable at all. If you live in a fairly cookie-cutter subdivision where several homes just like yours have sold very recently, you’re likely to get a good set of comparables, and a value estimate that’s at least in the ballpark. But in many areas, lots of fairly common scenarios can come between you and a good comp/bad comp:
Your home is older and has had a lot of improvements and even additions that are not in the county records.
Homes in your area are very different from each other.
You live in a neighborhood very nearby another neighborhood where homes have a much higher or lower value than your area , say, because they belong in a better school district or even on the other side of the city limits.
Your home is in an area where homes are dense, the algorithm might jump over many very nearby properties to get to a relatively dissimilar one even a half-mile away, and that can give you bad comps.
The listings provided by the sites can be very useful for homeowners trying to stay on top of what homes around theirs are selling for — not listed for, but actually selling for. They are less useful, in my opinion, at placing values on properties; the sites that do this usually have their accuracy rates listed somewhere on the site, and I haven’t yet seen one that’s impressive.
But when it’s time to actually list your home, or figure out what it is worth, no computer — no algorithm — is as accurate as a living, breathing local real estate professional who sees and sells all the different specimens of homes in your neighborhood and sees firsthand what ready, willing, qualified buyers actually pay for them, day in and day out.
I think it’s important for sellers interviewing listing agents to discuss the online comparables with prospective listing agents, but not as a counterargument to what the listing agents recommends you list your home for. Rather, it’s a smart way to see some of what the agents know, and what you can learn about the other properties in your area. If you’d like a detailed estimate of home values in your neighborhood or a comparative market analysis of your home, give me a ring, I’d be glad to help.