by Steve Heard
A few years ago I wanted to sell my car, and to avoid the hassle of having strangers coming to my home to see it, I went to a dealer.
The dealer offered me $3300. When I told him that Kelly Blue Book put the value at closer to $5000, he asked me why I hadn’t sold it to them. I replied that Kelly Blue Book doesn’t buy cars, and he said, ‘I do, and to me it’s worth $3300!’
I often use that example when people tell me what a home is worth according to Zillow ‘Zestimates’. Zillow doesn’t buy homes.
Millions of hopeful home buyers and curious home owners visit Zillow each month, seeking home values and information. Zillow is rich with community information, market data, maps and more, but please don’t rely on it to tell you what your home is worth.
Their ‘Zestimates’, by their own admission, are terribly inaccurate in many cases. These inaccuracies can cost you money. Big money.
The difference between what their Zestimates said properties were worth and what they actually sold for can be vastly different. Take a look at the chart. In Sacramento County for example, they rate themselves 2 out of 4 stars for accuracy. They state that they were within 5% of actual sales price on only 14.9% of homes, and their average margin of error is 15.4%.
That means that if they show your home’s value to be $500,000, they could be off high or low at 15%. There are too many market and property variations that Zillow can’t see or calculate, and it’s just not a reliable source for property values.
This is why when want to take out a loan, whether it be a purchase or a refinance, lenders require you to pay for a professional appraisal costing $400 to $500, and it is why before a bank lists a foreclosed property or accepts a short-sale offer they hire a real estate broker to give them a market value based on sales, condition and other market information.
Consider this example: I recently received a call from a homeowner who, along with her husband, had purchased a large home on a golf course, with a pool and spa, and had upgraded their counters, appliances and had an expensive custom paint job.
The attorney’s on both sides agreed to use Zillow’s Zestimate as $488,000, and with them owing just under $400K, Mr. owner was going to buy out Mrs. for $45,000.
I looked up the comparable sales for the area and found that the most recent sale on their street was at $480,000, but it was a smaller home, had no pool and was not on the golf course. All of these variables could put the value between $560K to $600K. Even then, that’s quite a difference.
I told her I’d need to see the property in person to get a better picture, but unless they were going to sell it and let the consumers decide its value, the best thing to do would be to get it professionally appraised.
Zillow touts itself as a ‘real estate marketplace’ and that it is ‘transforming the way consumers make home-related decisions and connect with professionals’.
To me, it’s a website offering consumers another opinion and some community information, and in each market there are agents who pay to get their contact information listed, so they get buyer and seller leads, but it should not be anyone’s ‘go to’ site for home values.
So, if you are considering selling your home, you should be checking Zillow to see what consumers are seeing but do get a professional opinion, either from a Realtor or an appraiser before you list, and remember that ultimately, it is the consumer that determines the value.
Zillow doesn’t buy homes.
Talk about it. What does zillow say your home is worth? http://www.tomatopages.com/folsomforum/index.php?app=forums&module=post§ion=post&do=new_post&f=80