Wednesday Thoughts on Real Estate:
The Zillow Factor:
Today I would like to talk a bit about The “Zestimate” is an automated algorithm that gives home owners an instant value on their property. Depending on the recent sales activity in the immediate area and the conformity of the overall homes and topography, Zillow can be accurate to within a few hundred dollars or off by hundreds of thousands of dollars. In areas with conforming tract homes and recent sales, Zillow can be a bit more accurate. But in areas with unique factors, like views, custom homes, redeveloping neighborhoods, or a lack of recent sales, Zillow can have huge discrepancies.
Many sellers will conduct a Zestimate at some point in their research, so it is prudent for your agents, as well-informed real estate professionals, to know what value estimate Zillow is providing. As long as your agents know what information sellers are seeing, overcoming a potential Zillow influence should not be an issue. One simple method is pointing out what Zillow publishes on its own website about its Zestimates: “The Zestimate home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is calculated from public and user submitted data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account.”
Zillow goes on to encourage customers to get a CMA from a real estate professional or a professional appraiser. Zillow also provides statistics about accuracy, stating that nationwide, Zestimates are currently within 5 percent of the final sale price 38.4 percent of the time. Point out the fact to your agents that if they were within 5 percent of the actual sales price only 38.4 percent of the time, you’d be out of business.