I’ve gotten a lot of questions recently about Zestimates, and I’m going to address them today. A Zestimate is just what its name implies - an estimate of your home’s value. An estimate is a reasonable approach to value in regard to real estate, but an estimate is, by definition, inexact. Enjoy using a Zestimate as a tool, but don’t be surprised by the inaccurate information that you receive from it.
Why are Zillow’s Zestimates so inaccurate? There are a few reasons. First off, Zillow doesn’t look at supply and demand. They look at recent comps, but not recent appraisals. They also pull from tax records, which can be extremely inaccurate as well. If you use that data, you could be misrepresenting your home’s value by as much as $60,000 or $70,000. Tax records aren’t a good tool for estimating a home’s value.
Another thing Zillow’s Zestimate doesn’t take into account is location. Your home may have five or six different good comparables, but Zillow won’t be able to determine whether you live in a location that would boost your home’s value. If you live on a golf course, cul-de-sac, or a wooded lot, Zillow would not factor that in.
Finally, Zestimates don’t take upgrades and updates into account. Your home’s value will be determined in the same way whether you have a fully remodeled kitchen, bathroom, or basement. Assigning a list price to your home based on a Zestimate could be hugely detrimental to your sale.
I have a rental property that Zillow recently told me is worth $80,000 more than it really is. If anyone out there would like to buy the home for the Zestimate price, let me know and we’ll get a contract written up. Otherwise, if you have any other questions or want to know what the true market value of your home is, give us a call. We would be happy to do an equity evaluation for you and give you a professional opinion on how much your home should sell for.