Thinking of selling your home and wondering what it’s worth? Be careful about falling in love with home value estimates you see online because many are far above market value. Those home sellers who “anchor” on inaccurately high estimates will overprice their homes for sale and then it’s emotionally hard for them to lower the price Home listings that start out way overpriced can languish unsold and end up selling for less than if they were priced more accurately when they first hit the market and buyer interest was by far the highest. When you’re surfing homes online you often see an estimate of each home’s value. Zillow is probably the most well known for doing this with their prominently displayed “Zestimates” of home values but other real estate websites do it as well. Most of these websites don’t give you an estimated price range, they give you a price down to the dollar and that precision gives their estimates a misleading air of accuracy. Home sellers can get a quick glimpse into the inaccuracy of online home value estimators by comparing the estimates different websites give for the same house. Check out the value estimates for your home on Zillow, Realtor.com, Redfin and Trulia, and you’ll likely be shocked at how much they differ.
Real estate websites could easily say something along the lines of, “They estimate a 50% chance that this home would sell between $X and $Y.” Home buyers and sellers could then get an immediate, intuitive feel for how accurate an individual home value estimate is by how far apart $X and $Y are. Zillow publishes the accuracy of their Zestimates so let’s use their median errors data to turn their Zestimates into estimated sales price ranges for individual homes. Online home value estimators are far better than they were a few years ago but they aren’t comparable to value estimates made by professional appraisers. They’re great data points for home sellers to have as long as they realize that online home value estimates are just ballpark estimates. If you want to have the best possible estimate of your home’s value before you put it up for sale, hire a good appraiser or a real estate agent you trust. It could save you time, money and the heartbreak of slowly realizing that you trusted the wrong estimate and your home sale is going nowhere until you make a change.
Zillow publishes Zestimate home valuations for 97.5 million homes across the country, and uses millions of statistical and machine learning models that can examine hundreds of data points for each individual home. To calculate a Zestimate, Zillow uses a sophisticated and proprietary algorithm that incorporates data from county and tax assessor records and direct feeds from hundreds of multiple listing services and brokerages. The Zestimate also incorporates a home’s facts and features, which homeowners have the ability to update.
The Zestimate accounts for variables like:
• Home characteristics including square footage, location or the number of bathrooms
• Unique features like hardwood floors, granite countertops or a landscaped backyard
• On-market data such as listing price, description, comparable homes in the area and days on the market
• Off-market data — tax assessments, prior sales and other publicly available records
How Accurate Is The Zestimate?
The Zestimate’s accuracy depends on location and the availability of data in an area. Some areas have more detailed home information available such as square footage and number of bedrooms or bathrooms and other areas do not. The more data available, the more accurate the Zestimate value will be.
Can the Zestimate be updated?
Yes. The Zestimate’s accuracy depends on the amount of data we have for the home. Public records can be outdated or lag behind what homeowners and real estate agents know about a property, so it’s best to update your home facts and fix any incorrect or incomplete information this will help make your Zestimate as accurate as possible. You can also add info about the architectural style, roof type, heat source, building amenities and more. Providing as much information as possible about your home will yield the most accurate Zestimate.
How Can Real Estate Professionals Work With The Zestimate?
Millions of consumers visit Zillow every month. Most understand that the Zestimate is an estimate of the value of a home, and that it should be used as a starting point. When combined with the guidance of real estate professionals, the Zestimate can help consumers make more informed financial decisions about their homes. Real estate agents and other professionals gain a basic understanding of how the Zestimate is calculated and how to read the Zestimate data accuracy table. This will help them explain to their clients why the Zestimate is a good starting point and historical reference, but should not be used for the final pricing of a home. Real estate professionals can also help their clients claim their home on Zillow, update the home facts and account for any work they have done on the property. A home’s Zillow listing is often the first impression for prospective buyers, and accurate information helps attract interest.
Zillow is one of the most popular real estate databases online. Founded in 2006 by former Microsoft executives Rich Barton and Lloyd Frink, Seattle-based Zillow lists information about millions of homes for sale and rent across the United States and Canada. Users can search for a home in a particular area using different criteria including but not limited to prices, number of bedrooms and bathrooms, square footage, type of home, and other amenities. One of Zillow’s key features is its Zestimates, a popular consumer tool for seeing how much homes are worth. These estimates are based on information from sources such as comparable sales and public data. Launched in 2011 with information about 90 million homes, Zestimates has expanded its reach, providing users with data about more than 100 million homes across the United States. Whether you’re looking to see how much your home’s value has changed, if your home’s appraised value is high enough to let you refinance, or curious about how much your coworker spent on his new house, Zestimates offers users a starting point in home valuation. Zillow May Be Overestimating the Value of Your Home and the Accuracy of the “Zestimate” Buying and selling a home is arguably one of the biggest decisions you’ll ever make.
Find the right home then sells and hope you gain more at the sale than you paid initially. Most of the time homeowners do a little research on their own to get an idea of what their home could be worth. The problem comes when many of these online websites inaccurately estimate the value. This can create quite a conflict when the listing agent proposes a different amount, usually when it’s far below the online estimate. These inaccuracies are happening more and more with the implementation of Zillow’s “Zestimate”. With the over 105 million people visiting real estate related websites monthly, over half of those visited Zillow.com. Trulia, which was acquired in February by Zillow, attributed an additional 36 million visitors representing nearly 71% of the total visitors in the real estate category. Even though Zillow offers a section on their website explaining how the “estimates” are created, in most visitors don’t bother to learn the details and the factors that can skew the results of these estimates. In this detailed report, Zillow admits that they have an 8% median error rate across the country. With these nearly 100,000,000 homes nationwide, that means about half of these estimates file with 8% of the selling price and about half fall out of that range. The major problem occurs when homeowners assume that the Zillow price is the end-all fair market value. This may cause arguments with real estate agents or refuse to drop an asking price because of the unrealistic estimate they received from these types of sites. This estimate is not designed to take the place of an appraisal. If a real estate agent goes with the Zillow estimate instead of doing the research to find out what home is actually worth for a particular neighborhood, they could find themselves in hot water come appraisal time. Zillow is very useful for a number of things in the real estate world such as looking at properties to buy and pulling up a map of the surrounding area, basic information on the home for buying purposes such as number of rooms square footage and taxes, and a good app for smartphones which is useful upon discovering a home while out and about. As for determining the true fair market value of a home, Zillow falls very short. Only a truly knowledgeable and experienced living breathing agent should be trusted to help when listing a home because an accurate list price is crucial when putting a home on the market. It all comes down to the human touch; using a qualified real estate agent that not only knows the market but individual neighborhoods and towns. Only a qualified real estate agent can offer true estimates on fair market value.
How to Increase Your Home’s Zillow Zestimate
Before listing a home for sale, many sellers ask themselves how they can increase their home’s Zillow Zestimate. The online real estate marketplace is more popular than ever, so whether it is fair or not, most modern buyers are going look at a home’s Zestimate to gauge its true value. Although there are other independent measures of a property’s worth, including valuations by Trulia, Zillow’s rival, Zestimates are considered by many to be the most accurate and reliable expression of a home’s value. What many sellers don’t know is that increasing a home’s Zestimate is not difficult. Zillow often lacks accurate, up-to-date information about a property, which can cause the site to calculate a Zestimate that is lower than it should be. Luckily, it’s easy to add missing information to your Zillow listing and potentially increase your home’s Zestimate.
Ways to Boost Your Home’s Valuation on Zillow
The power to increase your home’s Zillow Zestimate is in your hands. The first thing you need to do is go to zillow.com, create a free account, and look up your address. Once you have found your home on Zillow, claim it as yours. Once you’ve claimed your home, you are free to update the listing with the various amenities within and around it, add a detailed description of what you like about it, and even provide an estimate as to what you believe it is worth. Once you’ve claimed your home, follow these guidelines to ensure your Zestimate is as high as it deserves to be.
• Make Sure You Check Off All of the Relevant Amenities: Read the list of amenities that Zillow provides and carefully and check off all of the boxes that apply to your home. Be sure you do not miss anything, as each amenity will factor into your home’s Zestimate. You can describe the amenities you’ve checked off in more detail in the description of your home. For example, Zillow has a checkbox for attics. If your home has an attic, check this box off and describe the condition of your attic in detail in your home’s description. You could say something like “The insulated attic provides ample storage space and can be accessed easily with a pull-down ladder.”
• Tailor Your Description to Your Buyer’s Needs: In the description of your home, think like a buyer and tailor your description to suit a buyer’s needs. For example, if you assume most of your potential buyers will need easy access to commuting options to get to work, then emphasize how convenient your home is for commuters. You could say something along the lines of “The house is only five minutes from the local train station, and a commuter bus has a stop approximately one-quarter mile away.” Other than that, the description should emphasize things that buyers look for in a home, such as remodeled bathrooms, stainless steel appliances, stone countertops, and a fenced-in yard. It’s also a good idea to use terms like “move-in ready” or “in a great area for families” if these statements are applicable.
• Get Creative With What You Like About Your Home: In the “what you like about your home” section on Zillow, describe amenities and other things about your home that may not be readily apparent to potential buyers. For example, if there is a park half a block away or a beautiful view from your home, make sure you emphasize it when describing what you like. Buyers with children may like the fact that there is a park within walking distance. Other buyers may be looking for a home that has a nice view instead of a window that faces the back of someone else’s house. Get creative and mention any useful resources in your area. Proximity to things like shopping and entertainment centers can help sell prospective buyers on a home they are considering.
• Be Realistic About What Your Home Is Worth: If you are going to put a value on Zillow in the “what you believe your home is worth” section, make sure it aligns with your asking price. You do not want to list your home for sale at a price that is higher than what you publicly state it is worth. Be realistic, many people naturally tend to think their home is worth more than it actually is. Take a few moments to see what homes of similar style, condition, and size have sold for in your area recently and formulate a fair and realistic value.
• Avoid Exaggerations: Be honest when updating your home’s Zillow information. While it is tempting to exaggerate certain amenities, any untruths could turn off potential buyers (or even lead to a lawsuit if someone purchases your home and finds the information you provided to be inaccurate). If you have a nice house, describing its advantages accurately should be all you need to do to attract buyers. Keep in mind that Zillow’s Zestimates are not updated instantly, so it could take some time before the changes you have made are reflected in your home’s Zestimate.
Why Is It Important to Update Your Home’s Zillow Information?
While there are no guarantees that adding additional information to your home’s Zillow page will result in an increase to its Zestimate, it certainly cannot hurt. If features that exist in your home, such as a fenced-in yard or hardwood floors, are not selected in Zillow, the site will assume you do not have them, and your Zestimate will suffer. You’ll also want potential buyers to be able to see all of the amenities your home has to offer. While the description of your home and what you like about it may not directly affect its Zestimate, they will certainly impact potential buyers’ decisions about whether to consider your listing in their home-buying process. It is also important to list your home as “for sale” on Zillow once you have updated the listing information. Many people in the market to buy a home will “fly over” a neighborhood they are interested in moving to. When you list your home as “for sale” with Zillow, a red house symbol appears over your property on their map to alert buyers that it is available. Buyers can then click on the red home symbol to see the Zillow page that includes the detailed information that you’ve provided. By keeping your listing up-to-date and thorough, you increase the likelihood that prospective buyers will form a positive opinion of your home and contact their realtors to view it in person. Zillow’s unique algorithms update its collection of property values three times a week, based on information from both public data and user-submitted data. According to Zillow, “the vast majority of Zestimates are within 10 percent of the selling price of the home.”
But Zestimates are only as accurate as the data behind them, so if the number of bedrooms or bathrooms in a home, its square footage, or its lot size is inaccurate on Zillow, the Zestimate will be off. Users can correct these mistakes, However, Zillow cautions that updating a property’s details won’t result in an immediate change in the home’s Zestimate, and sometimes won’t result in any change at all. For example, having a fourth bathroom may not necessarily do much for home values in your town. So, inputting this information may not have any effect at all. Along with accepting user-submitted data, Zillow deals with problems of inaccuracy by reporting estimated value ranges for individual properties. The smaller the range, the more reliable the Zestimate because it means Zillow has more data available on that property. Looking at the high and low end of the range will give you a better sense of what a home is worth. Zillow calls its Zestimates a starting point to determine home values, so users should not consider them to be appraisals in any way.