Here’s why you shouldn’t trust Zillow’s estimation of your home’s value.
Something I commonly hear when I’m doing a market evaluation for clients is, “That’s not the price I saw on Zillow.” So today I’m sharing why Zillow’s price estimates are often incorrect.
First, you should know that there are three valuations for your home, and they’re all used for different things. The tax-assessed value is used for taxation purposes but has little to do with what you could sell your home for; it can be high or low depending on your municipality’s need for money. The appraised value is a little closer to what you might sell your home for, but an appraiser can only use sold properties from the past 180 days to compare. They can’t use pending or active homes, which better show how the market’s trending.
Finally, the market evaluation takes where the market’s trending, the updates to your home, the neighborhood, and your home’s marketability into account. The market evaluation is the most accurate value you can use to price your home.
Zillow is just an aggregator that uses algorithms and its collection of property values (including the tax-assessed value) to come up with a value for your house. Did you notice that during the last recession, your tax dollars didn’t decrease even though your assessed value declined? Zillow also uses pending properties, but those don’t have the sold price established yet, so they’re likely behind in a real estate market that’s rapidly rising like ours is.
Zillow does consider sold properties, but they don’t use any specialization for neighborhoods. For example, I live on a small lake, and Zillow doesn’t account for the lake and that other comparable properties aren’t on a lake. So you can see why Zillow’s prices are probably incorrect.
They admit that their prices could vary from 2% to 7% depending on the neighborhood, but I’ve seen prices swing much higher and lower than that. That’s why their website has a disclaimer: “All calculations are estimates and provided for informational purposes only. Actual amounts may vary.”
Long story short, online property evaluations are a great place to start, but you need an experienced real estate agent to come out and look at your property, its upgrades, its marketability, and your neighborhood. If you need a price evaluation, please give us a call; it’s free. If you have further questions about price evaluations or real estate in general, don’t hesitate to call, text, or email us anytime. There’s no cost for our advice.