In the competitive world of real estate, online
home appraisals can be a very tempting offer. One of the leading real estate and rental
marketplace websites in the nation, Zillow.com, offers this method in the form of what they
call a “Zestimate.” However convenient this feature might seem, “Zestimates”
have caused quite a lot of commotion in recent real estate statistics.
More and more homeowners and buyers have realized shockingly large discrepancies in the market
value of homes between Zillow’s “Zestimate” and the actual market value.
The most recent figures show Zillow’s values are off by 10 to 30 percent for sold homes,
and off by 20 to 60 percent on active listings. This means that a home sold at one million
dollars is appraised on Zillow for $700,000. Zillow’s disclaimer about the system is
mostly overlooked, and this disparity misleads buyers into believing they are able to buy
a home at up to 30 percent below the actual market value. A buyer who relies on Zillow’s
value will often completely miss out on the chance to buy a prospective property.
Sellers also end up thinking their home is worth a large percentage more or less than
what the market value of the home truly is. Sellers will then assume the value of their
house is the number Zillow offered them, and will enter the market with a misinformed mindset.
The reason behind this disparity has to do with the method by which Zillow creates their
estimate. According to their website, the Zestimate is computed using a digitized proprietary
formula and that the accuracy depends on the home data they receive.
There are many factors in the evaluation a house, such as its condition and location,
which only a physical inspection can judge successfully. A computer-automated system
does not take these things into consideration the way a professional can by visiting the
house themself. Even more importantly, a digitized system such as Zestimate does not account
for supply and demand – which is one of the single most important components.
Zillow.com does not aggregate their data from MLS systems, and as a result the website’s
information on individual homes is often not updated to the current market’s standings.
This creates confusion surrounding prices when homebuyers and sellers refer to out-of-date
information displayed on Zillow.com. Most importantly, Zillow’s Zestimate eliminates
one of the most significant aspects of real estate: opportunity. Its inaccuracies lead
buyers into missing great opportunities and sellers into missing information that is necessary
in order to reach the best result. In the long run, the significant drawbacks
of using Zillow’s inaccurate estimates trump the convenience of their system.
To avoid missing out on the most important information, it is best to contact a local
Realtor who can use their expertise to provide you with the most accurate comparative market