Breaking Down the Zestimate

When it comes to purchasing a new home, or selling the one in which you currently reside, the initial process can be confusing and overwhelming until you get the assistance of a good real estate professional.  So, it stands to reason that when beginning the process, buyers and sellers might do some preliminary research using a third-party site like Zillow.

Zillow is known for price estimates, both for buyers and renters, as well as providing limited community information for those who have never visited the neighborhood. On the outside, it seems like a handy resource when dipping a toe into the waters of real estate.  However, the property information and price estimates are often inaccurate, which can create major issues for buyers and sellers.  In other words, if you decide to use these big third-party websites, proceed with caution or forgo them altogether and get accurate data from a trusted, local real estate website and resource.

When you need assistance in your pursuit of the perfect home, there are several reasons to turn to an established agency with local knowledge and experienced real estate agents on its side. Otherwise, you may find yourself relying on the Zestimate, a computer-generated estimate that is not always the best measure of a home’s value.  Zillow knows this, and discloses this in small print on their site.

How is the Zestimate made?

As Zillow states, the Zestimate is meant only as an expression of the estimated market value, not an actual appraisal. The site is actually a computer program that automatically generates its report based on what is available to anyone: data and statistics that can be accessed with relative ease by the general public. As such, the program doesn’t take into account the additions you or its previous owner might have added while in residence. This can affect the Zestimate, putting the home at a lower or higher value depending on the extent of repairs or damage.

In Southeastern NC, we’ve seen Zestimates on some properties be off by as much as 45%.  For illustration purposes, evan a 15% margin of error on a $400,000 home results in a difference of $60,000 in value!  Further, the same algorithm to estimate the value of a home in a Detroit suburb is used to estimate the value of a home on the water in our region.  That’s pretty telling, isn’t it?

Even more telling is this article, which features information about the home of Zillow’s founder and CEO.  The day before his home sold for $1.05 million, the Zestimate for his property showed $1.75 million.  Need we say more?

How can your agency help clear the air?

When it comes time to sell or buy a home, don’t always trust that the Zestimate has given your house enough credit for what it’s worth.  Instead, broach the subject with a trusted real estate agent.  He or she can walk you through the criteria in further detail, help you get a professional appraisal and, for sellers, pull a list of comparable properties that have recently sold.  And while Zillow does have access to area information to prep you and your family for relocation, a local real estate agent has the insider knowledge that can never be replaced by statistics alone.

When it comes to your home, whether you’re buying or selling one, it’s important to have all the information available to you. With the help of well-established agencies like Intracoastal Realty, you can be sure you’ll have all you need to get settled. Contact us today to help you with the process!

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