Zillow Says Your House Is Worth What?!

Zillow says your house is worth what?! When did they come and see it? If you’re thinking about making a move and going off of Zillow’s estimated value or Zestimate, you could be throwing a whole lot of money, energy, or both out the window. In this blog, I’m going to walk you through what a Zestimate is, why it’s really tough to base a list price off of, and the proper way to evaluate home value to hopefully put a lot of extra money in your pockets.

Ok let’s start with what a Zestimate is...

According to Zillow’s website, they incorporate public information, MLS info, and user-submitted data into their proprietary formula. How many Zillow users are actually taking the time to go online and submit their info? I have no idea... Supposedly they also take into account home facts, location, and market trends.

Beyond the obvious MAJOR issue that no one from Zillow has stepped foot in your house, in your neighborhood, or likely in your town…

let’s geek out for a minute and look at the stats on their accuracy…

Again according to the Zillow website, there are 22,000 homes with a Zestimate in Indiana. Do you know approximately how many houses are in our state? Almost 3,000,000. That means Zillow has given value to less than 1% of the total homes in our state. What do you think their accuracy rate is if they’ve identified less than 1% of our homes?

Well funny I should mention that, because they claim that nationally their off-market homes have an error rate of 7%. If I read that correctly, that means you could be automatically losing out on 7% of purchase price by selling your home yourself according to the Zestimate. Again, that is, if your home even has one on the website. Keep in mind that this amount is more than commission that you would pay a realtor to help you sell your home.

Now, let’s talk about the proper way to evaluate your home value and land on list price...

Proper list pricing

It is a combination of an art and science for sure! The way that I like to start, is to use the parameters that a typical Appraiser would use.

First, we want to look for homes that are within +/- 20% of the square footage of your home. For instance, if your house is 2,500 square feet we would look at homes that are 2,000 - 3,000 square feet.

Next, we would want to look at homes within a 1 mile radius of yours. Here’s where some of the art comes in… if you live in a neighborhood we really want to try and use only homes in your hood. Conversely, if you’re out in the country but there is a neighborhood a few blocks away from yours, we’d likely want to stick with country homes. Of course, it totally depends on your house and the ones around it. We would look for similarities…again, this is where it can be less of a science. If we cannot find homes within that 1 mile radius, we’ll start to go out further and further away until we find good comps.

Finally, we ideally want homes that have sold within the past 6 months, but can use homes up to 1 year if they’re similar. With this ever-changing market, the newest sold homes are better pointers to what your home will sell for.

All of this to say, Zillow does not have access to all of this information. This information comes from the MLS and although Zillow does get a lot of it, they do not always get sent all of this information. Sometimes Zillow is only off by a little, or sometimes they’re off by a giant crater.

The only way to know for certain is to have a home evaluation done by a real person to see what it is really worth.

Now, if you’re getting ready to list and sell your home, I’ve done a whole series on some tips and tricks of actions to take prior to getting your home on the market. Go back and watch some of them, and let me know if you found them helpful.

If you have any questions about the Northwest Indiana housing market, or want to get your home prepped to sell–give me a shout. I’m happy to help.