Zillow's $1,000,000 Mistake
So you’re curious about the value of your home and you begin looking at smartphone real estate apps...ya know...just to see what it’s worth. You open up the Zillow app, maybe create a few search parameters and then start looking at the various listings that are similar to yours. Let’s also assume you own an ocean view condos in the million plus dollar range. You find a your neighborhood and drill down to your home.
Well, just last week I was working with a new client to see about listing HIS ocean view property on the southern California coast. Before we met I did preliminary research to see what similar condos in his neighborhood are selling for. I checked the MLS (Multiple Listing Service) that realtors use and found comparable units in the 1.1 to 1.3 Million dollar range. When I sat down with the client, he said he felt that his place was worth about 1.3 million, with a little bit of wiggle room for negotiation and I agreed with him. He asked me to look at Zillow, which I did and nearly fell off my chair.
Zillow reported that his property had an estimated value of $2.2 Million Dollars and that it had increased in value by 70% in the last 30 days. So Zillow was off by $1 million dollars and reported an unbelievable 70 percent increase. How does this even happen?
Here’s what DOES happen. They use some complicated algorithm to calculate each price based on many factors. However, they never actually step foot in a neighborhood or the house that they so famously claim to know the value of. We also know that the Zestimate can be off by 20 percent but that's 20 percent plus or minus! So the actual spread could be 40 percent. Now, sellers are quick to point out the higher price to me when want to list their home, but they never say that it’s ok to list their home at the lower price when the Zestimate is 20 percent below market value.
So how do you find out what your home is worth? You contact a realtor who works full time in the business that understands all of the micro-markets that exist in any town, follows the markets trends daily, talks to other professional realtors in the market and then prepares an educated value of your home based on reality not on some computer’s guess.
If you’d like to get a free home valuation by a professional, just reach out and I’ll help you get to the real value of your most expensive possession.
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