Relying on a Zillow Zestimate Could Lead Texas Homeowners Astray
Zillow last updated their Zestimate Accuracy Table in June 2014.
As Texas Realtors, we advise our clients and customers not to rely on third-party website estimates of value. Zillow openly displays their data coverage and Zestimate accuracy chart, and explains that accuracy for Texas properties is not reliable due to the lack of available data.
Texas, as a non-disclosure state, does not publish sales prices for sold homes. Sold pirces are one of the key variables in the Zestimate algorithm. In fact, Zillow publishes accuracy rates by Texas Counties. The overwhelming majority of Texas counties fall in the 0-1 star rating.
How Relying on a Website Estimate Could Harm a Texas Homeowner
Greg Nino posted an article in 2013 describing how he was wrongly declined for homeowner's insurance by a carrier who inappropriately relied on Zillow's Zestimate for replacement value. The Zestimate for his address reflected a value that far exceeded the fair market value, thus making it appear to be an undesirable risk for the carrier.
Prospective Texas home sellers and home buyers who reference website estimates (Zillow, Trulia, etc...) can also fall into the same trap of believing an inaccurate value is reflective of a property's worth. On either side of the equation (buying or selling), believing in a distorted number could cause costly decision errors relating to overpricing or underpricing.
A Better Option for Texas Consumers
A more reliable estimate for real property can be obtained by working with a licensed Realtor to obtain a Comparable Market Analysis (CMA). A CMA typically looks at for-sale, pending, and recently sold properties in a given area (most commonly limited to the subdivision or within a specific radius of the subject property), to compare normalizing values (like the price per square foot for homes of similar size and condition -- or the price per acre for lots and land). A sharp Realtor will be able to help advise on other comparable factors which could help capture key advantage points in price negotitions, such as upgrades, improvements, and environmental factors that could affect the value of a given property. CMAs are typically complimentary, and provided in conjunction with a listing appointment, or as part of service delivery for a Buyer engaged in a representation agreement with a licensed Realtor.
Two additional options could also include retaining the services of a Realtor / Broker for the benefit of a Broker's Price Opinion, or hiring an appraiser to perform an appraisal of a property. Keep in mind, however, that as a Seller, an appraisal secured directly will have no value or use to a Buyer's lender, and an independent appraisal would still need to be ordered.
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