How many of you regularly monitor the value of your home on real estate sites like Zillow? This month I want to share my perspective on these values measures or “Zestimate” and what they mean to the market value of your home. In my view these estimates of your home are like the weatherman telling us that it will be in the 70’s tomorrow. I generally know it will be a nice day but I would certainly like to know if it will be 79° so I can wear shorts and a T-shirt or 70° so I bring a sweater.
While sellers start with Zillow when considering if it makes financial sense to sell, very rarely does Zillow agree with my pricing feedback. In my experience more often than not Zillow over estimates the value of a home and sellers are shocked when my pricing feedback does not match up with their Zestimate.
Los Angeles Times writer, Kenneth R. Harney, interviewed the CEO of Zillow, Spencer Rascoff in February of 2015 and asked the question how accurate is Zillow? Spencer Rascoff answered that they're "a good starting point, but that nationwide Zestimates have a "median error rate" of about 8%. In some rural counties in California, error rates range as high as 26%. In San Francisco it's 11.6%.” I found this large margin of error shocking. If my pricing feedback was off the mark by 8-26% I would have very few clients.
With the median home price of $1,375,000 year to date in Lafayette, the error rate can range from $110,000 to $357,500. There are endless reasons why Zillow has such a large margin of error. For example, Zillow never inspects a home nor do they hear freeway noise, see curb-appeal or lack thereof, check out busy roads, see an undesirable home next door nor does Zillow consider the other endless factors that go into determining market value.
Pricing is make-it or break-it when it comes to buying or selling Real Estate. In other words, if my pricing feedback to a buyer is off the mark – the buyer either loses the house to another or overpays. When it comes to listing, a home that is overpriced sits on the market and all momentum and leverage is lost.
So the next time you look at Zillow and daydream about packing up, cashing in and moving to Oregon, remember Zillow is only in the ballpark and if you still decide to move after getting more accurate feedback from your realtor or an appraiser keep in mind then you won’t live in Lafayette.
Please feel free to call or email me your real estate questions. I would love to hear from you. I can be reached at (925) 951-3817 or by email at firstname.lastname@example.org.