I recently listed a Raleigh NC luxury home for sale that had a Zestimate of about $936,000. I contacted Zillow and offered details about the unique features of the home and corrected the square footage. As a result, the new Zestimate is about $1,100,000. The original Zestimate was off by about 18%. Zillow cannot get inside your home. Zillow can't know the features of your home that add value. Zillow can't know about improvements that you have made that add value. Zillow does not hire an appraiser to accurately measure the home. Zillow cannot advise you about simple things you can do to add value to your home. Zillow doesn't know that your home is in a location that is booming due to a new commercial hub.
Why Zestimates can be Misleading
There are aspects of a Zestimate that can mislead:
- Zestimates lack of accuracy in listing information. The listings many times do not reflect important details that are valuable, and the
- Zestimates are very often off by a significant percentage.
[In a Washington Post article, a Washington D.C. brokerage was quoted for documenting that Zestimates are getting worse. Of 500 estimates, the values ranged from 62% under, to 150% over the actual sold figures.]
Zestimates Are Calculated Based on a Rough Estimate of Value
Zestimates have been wrong more than they’ve been right. Why? They use an algorithm to formulate values across the country. The same methodology is used in every location. It’s not possible that a “one-size-fits-all” approach could be accurate when the value of your home depends on so many local and subjective variables.
A complicated formula can come up with a rough estimate, but this approach can be misleading because your home is unique. Home values in your neighborhood can vary dramatically compared to another neighborhood. There are many reasons. Neighborhood amenities and proximity to power lines, highways, and commercial hubs affect the value of your home.
All real estate is local, even micro-local. Values for similar homes in one neighborhood can be completely different in a neighborhood only blocks away. Zillow can’t get inside a home and see the features that add value to your home…like an updated kitchen, gorgeous hardwoods, quartz countertops, custom cabinets and high-end appliances; compared to a similar home with basic builder grade finishes and 15-year-old carpet.
All online algorithms like Zestimates and valuations from other platforms are inaccurate. They are machine computations. Estimates are just that, estimates. In addition, a lot of the appraisals that are conducted by licensed appraisers are also inaccurate and often come in lower or higher than what they should. And remember, appraisals are static and do not reflect constantly changing housing market.
If you are planning to list your home for sale in the Raleigh NC area, nothing is better than local market knowledge.
You can trust Raleigh NC Realtor ®, Laura Huntley to give you the most accurate data for your home in today's market. Contact me or Download my Free Monthly Housing Report to see what is happening in our market.