Zestimates have caused lots of home sellers headaches in the past when trying to find out their home value.
Buyers & sellers are confused by the amount this online home valuation site says the home is worth.
So, let’s get to the bottom of how Zestimate home values are calculated…
Zestimates – How Do They Work?
(and why they can be really wrong!)
Think about it. How can a Zestimate give you your true home value?
Zestimates are created by an algorithm and can have a large margin of error. That algorithm pulls public information about your home, compares it to public information about other sold homes near you and assigns a value. That’s it.
The public information includes county tax records and MLS information. But details of homes sold that are not included in the MLS aren’t found there.
Can’t See ________
Additionally, the algorithm can’t see inside your home. It doesn’t know you recently remodeled your master bathroom or kitchen, you added a huge paver patio to the back or that the flooring is all brand new LVP throughout the home.
It doesn’t know the county records have incorrectly reported your lot size, your livable square footage or that you just had a new roof and third bathroom added.
If a permit wasn’t needed for a renovation, the renovation is not part of a public record. (You should always check with your local government to see if a permit is needed for any improvements.)
The algorithm also doesn’t always have the ability to include localized factors; things like local buying and selling trends in your city, town or area. Or, economic impacts like storm damage, environmental accidents or a huge growth burst (demand from buyers) in the area you live. It may not take into account your neighborhood versus another neighborhood in the same zip code where prices can vary.
If your home hasn’t sold in the last 7 to 10 years, the Zestimate could be way off. Too much or not enough value and either way, it’s not good.
If your home is a new build, recently sold or is in a neighborhood with lots of comparable sold homes available, the Zestimate has a better chance of being in the ballpark because home sales are reported as public information and the algorithm will have access to that.
About Zestimates
On the website, Zillow states:
“The Zestimate is not an appraisal and can’t be used in place of an appraisal. It is a computer-generated estimate of the value of a home today, given the available data.
We encourage buyers, sellers and homeowners to supplement the Zestimate with other research, such as visiting the home, getting a professional appraisal of the home, or requesting a comparative market analysis (CMA) from a real estate agent.”
Skip the Zestimate and go to the Realtor. Once they tour your home and do their research, their report will be much more accurate and akin to what an appraiser will value your home at for a Lender.
You can also get an appraisal but they do cost money and are very subjective – appraiser to appraiser. A lender may not be able to use an appraisal supplied by a seller because it is supposed to be completed by an unbiased, third party.
If a seller hires an appraiser directly, it may not be considered “unbiased.”
Your Home Value Guide
What’s the best way to get an estimate of your home value in your current, area like the Central Indiana Real Estate Market? Hire a local Realtor.
Why a Realtor?
The simple answer is because it’s their job to know the local market.
If they don’t, find another one.
Most good Realtors are monitoring the market, talking with lenders and talking with buyers and sellers in the area. That valuable information, coupled with a physical tour of your home, gives you a more accurate idea of your home value.
If you have a roof leak, you call a roofer.
If you need glasses, you go to the eye doctor.
If you want to know the value of your home, go to a local professional – a Realtor.
Remember, it’s FREE and no obligation!
You need accurate information so you can make the best decision for yourself/your family.
What are you waiting for? Call me.
