Are Zillow and Internet Estimates Accurate?
September 11, 2018 |
One question that real estate agents encounter more and more often from buyers and sellers alike is “how accurate are the estimates provided online by Zillow?”
Since the dawning of the internet today’s consumers are empowered with information like never before and the real estate industry is no different. There are countless tools available at buyers and sellers finger tips. Gone are the days of having to go
to the local courthouse to pull a plat map, stopping by your local real estate office to pick up a magazine of local inventory, or even having to use a map to find a property. With the advantage of the internet, todays buyers and sellers are accustomed
to having abundant knowledge about a property before even setting their foot in the door.
Zillow, realtor.com, and countless other websites have accrued great tools for buyers and sellers to use. On the flip side, some of these tools have flooded the consumer with information that can be confusing and sometimes information can be unreliable.
The Problem With Online Estimates…..
Although websites, like Zillow in particular, can be a great wealth of information to buyers and sellers. The unsuspecting consumer can sometimes be eluded to have confidence in a number contrived by their online estimates.
Just like any purchase you make nowadays large or small, the internet is a keen tool to ensure you are making a well-educated decision.
For instance, when shopping for a new car many folks will use websites like kbb.com as a resource to give them a better educated opinion of the value of the car they are considering purchasing or their own vehicle to trade. These websites are a great
tool to better educate anyone. All you have to do is give some facts select what type of condition it is in and voila, there ya have it!
Unfortunately, an evaluation of the sales price for your home isn’t that simple, especially in a rural real estate market like Fort Payne Alabama.
Ask any realtor or appraisal and they would advise you to put little confidence into an online estimate or “Zestimate” as Zillow coins them because, they are not always accurate. In fact, there can be a tremendous degree of error, which can put an
unknowing buyer or seller in a bad position.
One of the resources that Zillow relies heavily on is information provided by our local government tax offices. While our local DeKalb County Tax Assessor does a great job at providing great data. Did you know that most of the time they are as much
as a year behind on posting deed transfer and sales data? There are sales and transfers of title everyday within the real estate industry and our local market is no different. Much like the stock market works, the real estate market has ups and downs
that can move up and down rapidly. This is why having valid up to date information is crucial to establish valuations on real property.
Appraisers and realtors alike, use recent sales history on comparable properties to aid in pricing and establishing values respectively. Having access to this information is critical to give the best educated opinion possible as well has thorough
knowledge of the local market.
Would you expect a 1,500 square foot home in Rainsville to sell for the same price per square foot as a 3,000 square foot custom Lakefront home in Scottsboro? I am doubtful. But…If you said yes, and have a lakefront home. Give me a call, I may be
in the market for a lake home. Just kidding.
We live in a world of great diversity and our local real estate market is no different that the world that we live in.
There are many factors that play into the value of real estate. The main ones are: location, quality of construction, condition, and amenities to name a few.
Rural real estate is its own beast within itself. You can drive down any road on Sand Mountain and expect to see mobile homes, brick ranchers, poultry farms, cattle farms, and larger executive homes all on the same street. This can really put a cog
in the wheel on the estimates provided online by Zillow, since their algorithm is based off of average sales prices. Who is to know that their computer compared tremendously different properties to one another to establish an estimate on your home.
For this reason, I would rather place a bet that I would see a unicorn flying over Rainsville this afternoon than an accurate estimate on Zillow.
How does Zillow arrive at their Estimates
As notated earlier, much of the information used in Zillows formula is from public records and the scare information entered by users that would be hard to verify for data accuracy.
Zillow uses past sales history from deeds for instance that can be inaccurate and very old. In fact, it is not uncommon for a deed to state that a property transferred ownership for only $10. (If you know where I can buy a poultry farm or lake
front home for $10 please feel free to call.) Do you now understand how that can drastically effect the averages of an automated estimate?
Another aspect to take into consideration is the accuracy of the tax assessed value of any property and its relationship to its fair market value. Again our tax assessor does a wonderful job here in DeKalb County. However, sometimes the assessed
value of a home can be years old or completed prior to when renovations were made to a home. This can lead to inaccurate data being used.
An experienced and well-trained real estate agent or appraiser doesn’t use the tax assessed value when establishing a sales price. Although they will review this information it is never used when compiling a comparative market analysis or appraisal.
The life of a realtor would be so easy if relying on the tax information were that simple. In fact, it would be more like the fantasy depicted on HGTV, where buyers only look at 3 houses and move in all in a 30 minute episode. (But that’s another
Why do Realtors not drink the Zillow Kool Aid?
Realtors pride themselves in the accuracy of data that they rely on within one of their greatest resources, the MLS. The multiple listing service stores an abundance of information about homes that are sold and are crucial tools they well trained
Although, I fear that real estate agents get a bad rap and are compared by some to used car salesmen. (Fortunately, you aren’t one of those people if you have made it this far into my article.)
One key differentiation about a realtor from my personal opinion, is a realtor is capable to physically walk through a home to see what it has to offer, which is something that a computer is incapable of doing at this point in time. To my knowledge,
I haven’t heard any reports of Zillow looking inside of homes, measuring rooms, recording amenities to arrive at their value. Unless they have a peeping tom that I haven’t heard about or satellites spying on us, for all of the big brother conspiracy
Zillow Can Be Beneficial
Don’t get me wrong, I’m still not a far of their Zestimate.
Zillow has done a great job at compiling information from various other websites and putting them in a user-friendly format for buyers and sellers to access all in one place.
If you are a seller planning to be a pioneer and go the for sale by owner route without consulting with a real estate agent or appraiser, I hope that this was an eye opener. The pricing of a home can be critical in maximizing your sales price
and on the flip side it can be a useful marketing tactic in competitive market conditions.
The number one reason why a home does not sell is because of an unrealistic asking price. Some of the most critical time a home is on the market is within the first few days/weeks, and if you start out with a high asking price you could hurt yourself.
I have seen more than once sellers, ask too much for a home and end up selling it for less money that they wanted too due to a dip in the market. Pricing is critical.
If you are in search of an accurate value of your home remember to always contact a local real estate professional.
I am happy to serve the Greater Northeast Alabama area. I have served as a real estate professional since 2009 and, been fortunate to help hundreds of people establish valuations on their property.
If you are considering selling your home, I would be honored to share my knowledge of real estate.
I have experience selling real estate in the following areas of Northeast Alabama: Fort Payne, Rainsville, Scottsboro, Geraldine, Fyffe, Section, Dutton, Pisgah, Ider, Henagar, Weiss Lake, Lake Guntersville, Mentone, Valley Head, Grove Oak, Gurley,
Paint Rock Valley, Albertville, Boaz, and even Huntsville.
Your local real estate pro,
Mr. Sand Mountain
And remember to “Sell Fast With Pendergrass!”