Why Depending on Zillow’s ‘Zestimate’ May not be Wise for Buyers or SellersTerry Riffe | November 16, 2015
Depending on Zillow’s ‘Zestimate’ may not be wise; here’s why…
Zillow’s ‘Zestimate’ is the automated property value estimates provided by online real estate powerhouse website Zillow. The strong influence and power of the internet has 90% of future homeowners searching the internet for homes, leading many to Zillow’s ‘Zestimate’. Buyers are more educated than ever before, but we must ask – Is it always in their best interest?
Some buyers will rely purely on the values that are set on websites like Zillow, the so called Zestimate. More often than not, these estimates of value of a home are inaccurate. What people don’t realize is that these are automated systems and even though they may work perfectly for some areas, can be totally incorrect on others.
Zillow uses a system called automated valuation model (AVM), this system evaluates millions of homes automatically for their current market value. This technology is amazing and provides an enormous amount of information for the consumer. The nicest thing about it is that it will condense the multiple resources to provide everything in one place. The sophisticated algorithms to predict value are very valuable. Nevertheless, Zillow has done an extraordinary job in providing real estate information to consumers. However, this information should never be the rule of thumb and should never override an actual appraisal or CMA (comparative market analysis). It is inconsistent and inaccurate.
Any information on a particular property will be consolidated and used. How often are properties listed with the wrong square footage, missing bedrooms or incorrect tax records? If we look at what has been sold in a radius and compare homes from different neighborhoods, you may be comparing apples to oranges and coming up with very skewed results.
It is very important for interested buyers to understand that websites such as Zillow are a good tool, nonetheless, it is not always correct and cannot be used to base market value on a home.