Have you recently sold your house? If so, did you lookup the value using the Zillow Home Values tool prior to setting the price? How accurate was the pricing tool? We would love to hear from you. Let us know what the Zillow Home Values estimate was for your house as well as the sale price and address of the home you sold. Is it possible that this technology will replace the need for a real estate agent to provide sellers with a market analysis? We don’t think so, but let’s have the discussion.
Other home value estimators include the Chase Home Value Estimator, Redfin’s “How Much is My House Worth” and the RE/MAX Home Value Estimator. If you have first-hand experience and feedback on any of these tools, please comment below.
We know from talking with many real estate agents that most home sellers have viewed the Zillow valuation tool prior to contacting a real estate agent. It’s normal for clients to want be armed with accurate information so that they can engage in an intelligent conversation with their real estate agent. We also know from experience that this decision can effect a sellers decision regarding the real estate agent they ultimately decide to hire. The problem with the Zillow tool however, is that it often gives sellers an inaccurate idea (problematic when it’s too high) as to the value of their house.
Consider the following scenario. We looked up a random house that is currently for sale in Fremont, California. 44192 Lupine Place. It is currently listed for sale at $1,680,000. This is about $150,000 less than the Zillow “Zestimate” price of $1,821,317. According to Zillow the house has been on the market for more than 130 days. This is above the average market time for a house in the area. When we dig a little deeper we notice that the house was originally listed for sale more than 130 days ago, in fact it has been on the market for more than nine months. Zillow isn’t reflecting the real number of days on the market because the listings was cancelled and then re-listed, thus resetting the days on the market counter. We noticed that the house was originally listed very close to the current Zillow Zestimate price, $1,820,000. Even more interesting is that at the time of the original listing, the Zillow Zestimate was $2.3M.
So, imagine you are the owner of this house and you look online prior to contacting a local real estate agent. You see that the Zillow estimate is $2.3M. You meet with a couple of real estate agents and hopefully, they all tell you the value isn’t anywhere near $2.3M. But, you’re pushy and you believe that accuracy of the multi-billion dollar corporation that is Zillow! How could they be wrong you think???
Real Estate Agent #1
This agent really wants to get the listing and after hearing you tell him that the values is $2.3M he tries to explain that the value isn’t that high. He shows you recent sales comparables and convinces you that the house is really worth somewhere around $1.8M. At first you think, “this guy is crazy, how can it be worth $500,000 less than Zillow is telling me?”
Real Estate Agent #2
The most realistic of the agents tells you the house is worth $1.6M. You are starting to feel a bit uneasy and now you’re leaning toward using the first agent you met with.
Real Estate Agent #3
This agent thinks the house is worth $1.7M. You’re starting to think that all real estate agents are just interested in making a quick sale so they can earn their commission and move-on to the next deal!
After a lot of thought you realize the Zillow value is probably not accurate, but you want to sell it for as much as you can, so you list the house with the first real estate agent for $1.8M.
The good thing here is that you didn’t try selling the house for $2.3M. You surely wouldn’t have sold the house and you could create the impression that something is wrong with the property by taking a $700,000 price reduction to get down to the more accurate $1.6M market value. Most real estate agents will tell you that it’s best to price the house right in the beginning, because a house that’s on the market for more than a month, doesn’t get nearly as much traffic as a new listing. Your best shot at selling your house comes within the first 30 days and if you price it too high in the beginning, you’ll miss that window. Relying on a faulty valuation from Zillow could influence a sellers decision and ultimately result in both wasted time and potentially money.
In the above example, you probably would have been better off listing with Real Estate Agent #2 or Real Estate Agent #3. The house has been on the market for nine months and even after multiple price reductions it still hasn’t sold. Let’s see what happens with this property. We’ll check back later to see if it has sold and for what price.Published in Tags: zillow home values zillow homes for sale zillow valuation