Should I use an online estimator (like Zillow) to estimate the value of a home I am considering buying or selling?
We are often asked by homeowners (and potential homeowners) about the information they find on Zillow.com. Zillow provides something they call a “Zestimate” for every property in their database – whether it’s for sale or not. They come up with these estimates of value by aggregating information from various public databases – tax records, value trends, etc and then they use a proprietary formula to make a calculation.
Zillow is very popular with both Home Buyers and Home Sellers. Buyers moving to Northern Virginia often preview listings on Zillow before they come to actually see homes. And they often want to make their offers on homes based upon what they see in Zillow as the “Zestimate”. We also frequently meet with prospective Sellers in Northern Virginia who have looked at Zillow and assume the “Zestimate” is an accurate forecast of what their home will sell for.
Well – this year, The Belt Team decided to track the “Zestimates” for each home we sold so that we could see how they compared to actual sales prices. And while this is by no means a scientific study of all homes in Northern Virginia – we think it’s rather representative. (The Belt Team ranks in the Top Ten most productive Realtors out of 10,000+ Realtors in the Northern Virginia Association of Realtors.)
So . . . what did we find?
A LOT of variation!
- One of our resale listings sold for 41% MORE than the Zestimate – $266,500 additional for this particular Seller. And another sold for 15% less than the Zestimate. In fact, 90% of our listings sold for well over the “Zestimate” and 43% of our listings sold for more than 6% above the “Zestimate”.
- In addition, our new construction listings all sold for huge amounts over the “Zestimate”. This illustrates one of many flaws in their calculations. Since the assessed value of a property is one of the significant factors in the “Zestimate”, this obviously does not make sense when a new home is being built on an existing property.
- On the Buyer side, 29% of the Buyers we represented paid well BELOW the “Zestimate”. One Buyer we represented paid $103,500 below the “Zestimate”. The reverse was true as well, as one Buyer in a particularly popular area bought a “unique” home and paid 25% more than the “Zestimate”.
Now, Zillow does say on its web site: “When it comes to unique homes (e.g., luxury mansions, unusual designs) we are less accurate in our Zestimates.” So the conclusion we draw is that while Zillow might be a good estimator for “cookie-cutter nieghborhoods & tract homes”, those mostly do not exist in Northern Virginia. If you are looking to buy or sell a home here, it’s definitely in your best interest to find a Realtor to represent you – one who is especially familiar with the neighborhood you want to buy or sell in!
And P.S. – This post is not meant to “bash” Zillow. In fact, we are one of Zillow’s Showcase advertisers and have been profiled & participating with Zillow for years. All of our listings are advertised on Zillow and we generate many buyers through our ads there. So Zillow does have value for Buyers and Sellers – we just want you to be clear on how you interpret the information you gather there!
Contact The Belt Team if you would like us to walk through your home with you and discuss market value OR if you are a prospective Buyer who would like The Belt Team to represent you. It would be our pleasure to help make your real estate dreams come true. WE SPECIALIZE IN SUCCESS STORIES!