Can Zillow estimates be trusted?
When Zillow.com launched in 2005, it gave property owners and buyers access to information like never before. The company’s estimated market value (called a Zestimate®) is now available for about 100 million homes around the country. But the question is, can those numbers be trusted?
I share more in this blog post.
By Zillow’s own admission, a Zestimate® is “not an appraisal. It is a starting point in determining a home’s value.”
Zestimate®s are based on a home’s features and location, market conditions, public sources of data, and information submitted by users. However, these are just a few of the factors that go into determining a home’s value. Because the reality is, a home is only worth what a buyer will pay and what a seller will accept.
Therefore, the company encourages “buyers, sellers, and homeowners to supplement Zillow’s information by doing other research.”
The accuracy of some information on Zillow is certainly questionable, including its Zestimate®s.
And then there is the “market temperature” it provides for each area. This refers to the “balance of bargaining power between buyers and sellers in a particular zip code relative to other zip codes in the same metropolitan area.” In Greenville, for example, Zillow lists the temperature for 29615 as “Hot” and 29605 as “Very Hot.” Yet, 29601 and 29611 are considered “Cold,” 29607 is “Neutral” and 29609 is “Warm” – generalizations that I don’t necessarily agree with.
However, there is an incredibly valuable (and accurate) set of information that Zillow provides: past sales history. For any property on its database, homeowners and buyers can see the date a home was sold and at what price. Tax history is also available. And that’s a great starting point when it comes to determining what price you will or won’t pay or accept for a home.
In short, Zillow, Trulia and other online tools are a great way to better familiarize yourself with your local property market. The danger comes when they are considered the “be all end all” – and start to interfere with advice from more credible sources, like a registered realtor or professional appraiser.