Zillow, what a funny word, who would have thought that a word like that would become part of our everyday language!? Well, I guess Google is a household name, so why not Zillow... Anyway, I thought it would be good for us to take a look at the difference between a Zillow zestimate and a CMA. You’re probably asking yourself, what is this crazy woman talking about – what is a CMA? Well, I would love to say it stands for “CORA’S MARKET ANALYSIS” but that wouldn’t be accurate. CMA actually stands for Current Market Analysis or Comparative Market Analysis. This is what realtors use to gage the value of your home or property. So, what is the difference? Zillow uses the tax record to estimate and create their zestimates. We live in a non-disclosure state, meaning that the price you pay for your home is not made public. Therefore, our assessor’s office, must appraise the properties themselves in order to calculate your property tax. They do the best they can with the tools they have but we as realtors, actually have access to more information than the tax appraisers. We have the Multiple Listing Service, or MLS. The MLS is a real estate data base that all real estate license holders are members of. We do pay a fee for this service, but the data is invaluable to us. Unlike Zillow who has to guess at the price of your property’s value, we can access data that tells us exactly what it sold for, how long it was on the market and many other wonderful particulars!
Zillow has to use the sterile, fruitless information that is provided by a government agency and other various nondescript places. As realtors, we can isolate your home and look at similar homes around your area that have sold in the last year – or 5, or 2.367 years! We can glean all kinds of information, for example: a new roof was put on 3 years ago, that house underwent a major renovation, this house was moved there from another location…. all kinds of valuable material to help us pinpoint value and make sure that we get as much for your home as possible.
Zillow does, in fact, explain how they get their information. They say they combine it with information from tax records, the MLS and other calculations. However, when the state doesn’t share that information, and the MLS is closed to nonmembers, how can Zillow actually get it’s zestimates? Truth is, it can’t. Here are some disclaimers right off their web page:
“The Zestimate home valuation model is Zillow’s estimate of a home’s market value. A Zestimate incorporates public, MLS and user-submitted data into Zillow’s proprietary formula, also taking into account home facts, location and market trends. It is not an appraisal and can’t be used in place of an appraisal.” This is true, a zestimate uses data and electronic calculations, it does not necessarily compare other properties to yours.
Here’s another one:
“The Zestimate was created to give customers more information about homes and the housing market. It is intended to provide user-friendly data to promote transparent real estate markets and allow people to make more informed decisions — it should not be used to drive up the price of a home. Zestimates are designed to track the market, not drive it.” This is a responsible clause, but when you are dealing with inaccurate information, it can actually drive up or drag down a market. Truthful, accurate accounting of value is the very best way to gain value info.
And this one:
“The Zestimate is an automated valuation model calculated by a software process. It’s not possible to manually alter the Zestimate for a specific property.” So, this kind of tells you that “it’s a calculation based on the information that they can actually get and use, then other algorithms are added – just for fun!
A CMA uses data from the MLS to “compare” your home, with other homes that have actually sold, not just homes that are for sale. The data that the MLS collects is accurate, directly from the agent that sold the home who is bound ethically, morally and every other ….ly to provide correct statistics.
A CMA also only uses “closed” information. So, a home must be sold and closed, not just under contract. When a home is just for sale, and the price is set at say $450,000 it doesn’t mean it will sell for $450,000. It might actually sell for $430,000 or $475,000! On a CMA, we only use homes that have sold, and title has transferred to the new buyer’s name.
We also try and find homes that are very similar to yours. Let’s just say you have a lovely ranch style (meaning on one level) home on 1 acre, with a 3-car garage. Your home has 4 bedrooms, 2100 square feet, and it’s in Palmer. It would be foolish of us to compare it to a 3-bedroom split entry with no garage with 2800 square feet on ¼ acre in Anchorage! Two completely different floor plans, room counts, square footages, garage count - everything is wrong. With the “automated valuation”, which no one really knows what that means, there is no way for you to know if they were actually using SOLD and CLOSED properties.
Do we think that Zillow “robots” could possibly know how to zestimate value with all this different info? Well, I tried it on my own house, and it was wrong – it was probably high by about $50,000, that’s a lot! So, my point in all this…. if you want to sell your home, get a CMA don’t use a zestimate as the chances of it being correct are slim. Let me know if you would like me to do a CMA for you, I can usually do one in just a day or two. Also, if you would like to go ahead and call it Cora’s Market Analysis, I am cool with that!
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