How Accurate is Your Zillow Zestimate?
A real example of A Zestimate compared to an actual appraised value.
The Zestimate shows $406,310 with a range of $386,000-$431,000. The actual property appraised for $445,000. This was well above the high end of the range shown in the Zestimate. Had the seller relied on the Zestimate and not an actual valuation, the seller would have priced their home too low and received below fair market value.
On the flip side, we are also finding some Zestimates higher than the settlement price published in the MLS for recently sold homes. Also worth noting that the market conditions currently already have homes selling for over market value, meaning the the MSL sold prices already factor in the current market conditions with many negotiations finishing with the seller receiving over asking price. Click on the “How Accurate is your Zestimate?” headline to read more and send us your Zestimate to run a custom valuation analysis.
This excerpt from a real CMA shows how much sellers received for their recently sold home, compared to the Zillow Zestimate.
Ensuring your home is priced correctly in any market is important to make sure you get the value out of your home. In this example, this home has comps listed in the mid to high $600K range and had the Zestimate off by almost $50K, when looking at the actual sold price compared to the Zestimate. These comps were the only 3 comps that were true comparisons of the home that we were generating the CMA for and would likely be the comps an appraiser would also use.
Over pricing your home often times results in a home sitting on the market and when a buyer sees the DOM are longer than the markets average, buyers think there is something wrong and the home will likely sell below market value, resulting in a lower sales price than actual market value. If the buyer has to secure financing, listing a home too high, even when a buyer is willing to pay will also need to be within the appraised value. All
very important things to consider when determining a list price.
Ensuring your home is priced correctly is extremely important when listing your property. There are different strategies that can be considered based on the market conditions, which include inventory in your area. Some sellers do their own research before consulting a REALTOR® and as part of this research review their Zillow Zestimate. Since this value is done using data, these Zestimates can vary and they may not be accurate. Below are some elements to consider that the Zestimate may not be factoring into the value being reported.
- Improvements and updates to your home
- Improvements and updates to the homes that were recently sold in your area (presumably being compared to your home to determine the Zestimate)
- Home style and condition
- Waterfront, views and/or privacy
- A desirable neighborhood
- School districts
- Community amenities
- Proximity to landmarks/transportation
- Inaccurate MLS listing information
- Notes for settled listings in the MLS detailing why not to use a property as a comp
- New construction sales
- Homes under contract (that could impact your value upon settlement — especially true in a volatile market)
Algorithms and data aggregators can only go so far, trusting a professional that knows what an appraiser will be looking for and can provide reasons for pricing a property and actual comps that can be given to the appraiser will ensure a seller gets peace of mind that they are receiving fair market value when selling a home.
Learn more about how to get the most value out of your home by listing with a Maryland real estate professional and our teams approach to getting the best value for our clients.
Originally published at https://www.mdrealestatespecialist.com on February 25, 2021.
