One of Zillow’s key features is its Zestimates, a estimate for sellers, buyers and agents of how much a home is worth. Although inaccurate at times, Zestimates provide a good starting point in determining a home’s market value.
Zillow’s unique algorithms update property values on a recurring basis using information from both public data and user-submitted data. Zillow has stated that their Zestimates are “within 10 percent of the selling price of the home.”
However, if Zillow uses inaccurate data (e.g., number of bedrooms, number of bathroom, square footage, lot size, special features, updates, upgrades, etc.), then the Zestimate may be way off.
Did you know that savvy real estate agents can correct mistakes in property details which in turn might change that home’s Zestimate? I recently listed a home in Rose Hill in the $430s, while the Zillow Zestimate was in the $380s.
Zillow did not know that the house had a new roof, new HVAC system, and many other upgrades and updates. After I shared that information with Zillow, the Zestimate increased to the $420s – and the home sold for $420,000.
Zillow Zestimates also consider comparable sold prices, assessed values, property taxes and other publicly available property tax data. But assessed values can be inaccurate as they do not keep up with changing market conditions. In Bluffton, inventory is low, and demand is high – resulting in a seller’s market with higher home prices.
While homeowner improvements affect the value of a home, so do local market conditions (and probably more so). In a buyer’s market your improvements are worth less; in a seller’s market they are worth more.
So if you just added a brand new dream kitchen to your home (or some other major renovations), price your home higher than the Zillow Zestimate and have your agent re-work the Zestimate accordingly.
While Zillow Zestimates are far from perfect, the Zestimate range is closer to perfect. It gives the seller a high level of assurance that the house will sell somewhere in that price range. If you want to zero in on a more accurate sales price, I would suggest that you obtain a comparable market analysis from a local real estate agent.
If the Zillow Zestimate is lower than your agent’s estimate, make sure that you agent adds some “zest” to that Zestimate. If they don’t, buyers might rely on the lower Zestimate, and any offers that come in could be much lower than your home’s true value.
Larry Stoller is a broker and Realtor with Real Estate Five of the Lowcountry. Larry@RealEstateFive.com, RealEstateFive.com, SunCityOpenHouses247.com