Barely a day goes by that a client brings up the ‘Zestimate’ or ‘Redfin Estimate’ of their home and my word is it a pet peeve of mine…
Made popular by sites such as Zillow, Redfin, and Trulia, online estimates seek to provide the client with what their home is worth. The convenience is undeniable, but the same can’t be said about the accuracy.
These estimates are particularly popular with homeowners who have just begun to contemplate selling. They want to check the market and are curious what their prize possession is worth before making the decision if now is the time to sell.
The problem is, all of these estimates are based on an algorithm which evaluates the price of your home based on the price per square foot in the area. Sounds like the correct way, right? Not exactly and here’s why…
It’s Automated
The data used by these systems is uniform and isn’t actually based on anything “tangible.”
The software responsible for these estimates isn’t taking in to consideration future market movements, anything happening off market, intricacies of the area and so much more. It’s based on nothing more than patterns.
A professional agent is always going to be the best source of knowledge for homeowners wanting to know the ins and outs of the market in question.
If anything, estimating services like this have a tendency to result in clients having inflated numbers in their head which can set them up for disappointment down the line when an agent says that number isn’t realistic.
They Look for Patterns
All these services rely heavily on algorithms that have been pre-programmed to look only for patterns but it’s important to keep in mind that real estate isn’t simply a system of patterns and fluctuations.
While yes there are certain patterns and (somewhat) predictable fluctuation, these are as a result of aspects of the market which generally aren’t perceptible by a piece of software.
To make it even more complicated, these estimates invariably take one zip code and average out the price per square foot for the entire zip code. There are so many more intricacies to house price than simply the zip code but a computer system simply canon take these into consideration and it results in buyers and sellers having very confused valuations for homes.
They Can’t Account for Unique Property Value
Homes have emotional value and a computer system doesn’t know this - often a buyer or seller doesn’t know this either.
A lot of people are of the understanding that a house with the same number of bedrooms and bathrooms, and the house next door has the same, they’re worth the same amount. Simply not true. Houses have so many other qualities that impact on the value other than bed, bath and square footage.
Estimating softwares are unable to take into account special amenities, features, views etc.
Zillow, the online estimate leader, even goes so far as to explain this on their website (albeit in the fine print) where they say: “ We do not know about home values and remodels, unless they have been reported to the local tax assessor, so those values are not used in Zestimate calculations.”
Zillow, Redfin etc are all great for searching for homes that are available on the market, but that’s where it ends.
Curious about what the value is of your home? It’s simple - just make a call to a great real estate agent. They’ll do all of the hard, intricate work and provide you with an accurate valuation - and there’s no obligation to sell with them, or at all!