There is an old saying in real estate that “your home is worth what someone is willing to pay for it.” This suggests that there are many different factors, some more obvious and some less obvious that go into the valuing of a home.
In today’s internet savvy world, many look to industry leader Zillow for information. But the question is, “Can I Trust Zillow to Determine My House Value in San Antonio?”
Don’t trust Zillow for valuing your home. Here’s why.
Can I Trust Zillow to Determine My House Value in San Antonio
Zillow’s Margin for Error
Zillow has been reported to average anywhere from 18 to 20 percent higher or lower in their home estimates. There are even reports of home values on Zillow climbing in areas where the market is declining.
Let’s think about this for a second. For a $200,000 home, a 20 percent deviation is $40,000. For higher-priced markets like Los Angeles or Miami, a $1 million home could see unrealistic estimations varying from $180,000 to $200,000 or more. That’s a huge difference in pricing. And that is just what Zillow says is their average margin for error.
Zillow estimates could discourage potential buyers who might think a home is well out of their price range while often giving sellers an unrealistic idea of a selling price point. Many times home sellers are misled by the “value” of their home that they see online on sites like Zillow.
In the end, this is the starting point of many disagreements homeowners are having with selling agents regarding properly pricing a home. There are just way too many factors that go into pricing a home that are not being accounted for by Zillow’s computer guess…
Simply put: homeowners see the price on Zillow and think that is the starting point for their home. Yes, Zillow can sometimes get it right…but more often than not, it is just a best guess based on a few factors by a computer that has never seen your home…
How Does Zillow Create Estimates
Zillow calls its proprietary estimating tool a “Zestimate.” Even with all the pricing factors placed into the formula, there is still a high margin of error because Zillow isn’t actually looking at your home. Have you ever invited Zillow over to look at your house??
The proprietary formula looks at the market pricing in the area. It will factor in the size of the house, the lot and all features of the home including the number of bedrooms, bathrooms, pools and highlighted features. However, even Zillow will say this is a starting point for a true valuation of your home and should not be considered an appraisal or true value.
One reason for this is because the information Zillow uses is reliant on accessing public records and user input such as realtor sales. However, Zillow cannot discern if your home needs updating, needs major repairs, or is completely redone and the upgraded home everyone in the neighborhood is envious of.
Additionally, Zillow doesn’t discern community pockets. These are very common in larger cities where you can have a higher-end community just blocks from a mid or lower-end one. These “pockets” can skew or be skewed by larger metro data that Zillow factors in that may or may not apply to your property. These pockets can include things like having a historic area nearby, having new homes near older homes, or just one side of the neighborhood being nicer than the other.
The More Accurate Model
Any real estate professional will tell you that pricing a home to sell requires a full understanding of the home itself, the location of the home, and current market trends in that area. You must look at what comparable homes have sold for in the area.
In fact, most realtors look at Zillow pricing with a bit of disdain because it does make pricing and managing realistic client expectations more difficult.
A real estate professional will take a look at sales in the pertinent area, creating a radius based on your pocket rather than an entire zip code. Then they will compare your home based on size, features, and upgrades to those homes that were recently sold, thus appraised, in the previous 3 to 6 months. This range is contingent on how hot the real estate market is in the area and how many sold properties are in the area.
He will then compare this information to existing homes on the market, looking at how your home compares to what else buyers are seeing on the market. After all, if yours is a well-kept home being sold next to a completely remodeled home, you might not be able to get the same price per square foot as the home that has all the upgrades.
Additionally, you will want to consider whether it is a buyer’s or seller’s market and how fast you would like to sell the home? Do you want to do any repairs to the home or would you rather sell it As-Is? What would an investor pay for my house? Would that be a faster and easier route? Take into consideration what your most pertinent needs are and don’t make the mistake of thinking that the “value” of your home is what Zillow says it is.
If you would like more information regarding Zillow Estimates, you can check out this article that Sell My San Antonio House and others were quoted in by Katie Holmes with Outwit Trade.