Homes for Sale

Monday, April 3, 2017

Don’t Trust Your Home Value Estimate – Could Be Off by $50,000 or More!

Zestimate®: $969,249 
Zestimate Range  $853,000 - $1.05M

Zillow Says They've Improved - Now Only 6% Wrong

Ed Jones (not a real person) was ready to move to a nicer home. Like millions of homeowners, he went to Zillow to see what their Zestimate of his home’s value would show. He was pleased to see that his house was worth $750,000.  After expenses, he figured he’d have $200,000 to invest in his dream home. 

Zillow showed homes like the one he was hoping to purchase to sell for around $1,000,000.

Ed called a real estate agent. The agent did some serious research on the value of Ed’s property, and recommended setting a price of $695,000. Ed wasn’t happy. His entire plan was based on getting $750,000 like Zillow showed. He insisted on listing at that price.

Much to the agent’s surprise, a buyer made an offer right at $750,000, and Ed eagerly accepted. They began the escrow process and Ed quickly found a great house and signed the contract. Ten days later, Ed’s excitement turned to despair. The appraisal came in at $705,000. The buyer said he couldn’t afford the $45k increase in the down payment, and Ed didn’t want to come down to the appraised price, which wasn’t enough to fund his plan. The deal fell apart and Ed had to back out of his contract.

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Zillow actually states that their Zestimates are off, on average, by 6%. That is 6% in either direction. That means that on average your $750,000 Zillow Zestimate could really mean your home is worth $705,000 to $795,000. Of course, it could be off by more than that, since Zillow says that this is how much they are off, “on average.” 

There is no intent in this post to disparage Zillow. They are providing a fine service, and they are constantly working to improve their methods. They compare final sale prices with the presale Zestimate to determine their average error, and they have improved their system from an average of 8% off down to just 6% off at this time.

The real point of this post is that you don’t want to rely on Zillow or any other system that is deriving an estimated value on your home using algorithms. You need to have the advice of a seasoned professional to determine the current market price of your home. Getting this number right will dramatically effect how much traffic you generate to look at your home, which will correlate directly with how many offers you get. The more competition, the higher the final deal.

Whit Prouty has the kind of experience that will help you arrive at the best offering price for your home. There is no cost involved when you meet with Whit to go over the options and approaches that Whit uses to sell a home. Whit only gets paid when your home sells, and the higher the price, the greater the commission. So Whit has only your best interest at heart when he helps you market your home. Call Whit today at 310-962-6942.

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