We get a lot of calls from people who have seen Zillow's "Zestimate" of their property’s value, and they’re already spending the money they’re going to rake in from their property sale. Now don’t get us wrong, the Zestimate is a great tool that gives you a quick estimate of a home's value. But before you take that number to the bank, let's get one thing straight. Zestimates are NOT the same as actual property values. Here's the scoop:
Zillow creates its Zestimates using a very cool algorithm. This impressive program compiles data from sources like property tax assessments, the selling prices of similar properties, and the physical characteristics of the property. It really is a work of mathematical art! However, as powerful as it is, it isn't perfect. For instance, it won't know if you've just replaced the roof or put in fancy wood flooring, which might boost your property's value. And it also won’t know if you haven’t updated anything since you bought the place 30 years ago, which will lower your property’s value.
Zestimates don't have their finger on the pulse of your local market. The value of properties in your area might be on the rise because of factors like great school districts, fun local events, or new developments. Or the value of properties in your area might be on the decline due to zoning changes or business closures. Or what about that neighbor with the car on blocks in his yard?! Your friendly Zestimate, unfortunately, isn't aware of these local nuances. This can lead you to overprice or underprice your property, and both can lead to big losses in the long run.
The reliability of a Zestimate depends on how much good-quality data it can get its virtual hands on. In areas where property data is rare or where homes sell infrequently, Zestimates might not be your best bet.
In the world of real estate, the only constant is change. Whether it's shifting interest rates, new economic trends, or even the changing seasons, home prices can shift faster than a cat chasing a laser pointer. Zestimates, while updated regularly, might not always keep up with these rapid changes.
Remember, a Zestimate isn't the same as an official appraisal. It's an educated guess made by a computer, while an appraisal is a professional evaluator's opinion of a home's value. Appraisers consider lots more factors and often have a good look at the property in person.
Zestimates are super useful for getting a rough idea about a home's worth, but they're not the final word in property value. If you overprice your property, you run the risk of dragging out the sale and missing good potential buyers. And if you underprice it, you’ll sell fast and could lose big.
If you're thinking of buying or selling, it's worth considering shelling out the money for an official appraisal. Or better yet, reach out to us today to get the real scoop from a real estate pro! We know the local market inside and out, and have the experience and know-how to help you ascertain all of your options.