Should I Use a Zillow “Zestimate” to Calculate Market Value?
- April 6th, 2016
- Matt Frentheway
- No comments
Zillow is a great tool for potential home buyers. You can use it to look up houses for sale in your area by neighborhood, price range, number of bedrooms and several other factors.
It’s also a good tool for homeowners to get a vague preliminary idea of comparables (comps) in their area if used with caution.
Zillow offers information on estimated property value, which they call a “Zestimate.” But how accurate are their numbers?
Homeowners often mistakenly take that number at face value and expect their appraisal to be similar, but the truth is that most of the time, the two are pretty far apart. This can lead to some pretty heavy disappointment and bad planning on the part of the homeowner.
Why a Zestimate Could be Wrong
The information they gather is based on public data, which, for various reasons, is not always accurate. County tax records, for example, are notoriously inaccurate as they often use estimates for square footage estimates and don’t take new additions into consideration. They also rely heavily on user submitted information, which is sometimes no more than what someone thinks the property sold for some time in the past.
Another factor is that there is no way for an online estimate to account for current home conditions or neighborhood changes.
Because of this, a Zestimate is, by the site owners’ own admission, not an appraisal. It cannot be used at a bank or mortgage company and is not considered factual information. You will even notice that some of the market value ranges are extremely large, leaving you guessing as to which end of the spectrum your property falls.
Zillow is a great website, but it’s important to use it as intended. Don’t mistake the Zestimate for an appraised value. Simply use it as an additional tool to help you make decisions.
Remember that an appraisal made by a trained professional is the only completely accurate way to determine the value of a home, and the only number that a lending institution will take seriously.
Don’t risk a huge buying or selling mistake by relying on unofficial data. The hands-on approach to real estate appraisal is always the most reliable.