Zillow: What You Need to Know
July 19, 2017 - By Rachel Deckman
Zillow has been a popular tool in assisting home buyers and sellers in the recent years. We have the truth about why Zillow doesn’t work for the home buying and selling process.
The internet is a funny place.
Online businesses are often not the companies that they are known for.
Google is a search engine to most, but they are an advertising business.
Facebook is a social media hub to most, but they are an advertising business.
Zillow is home listing website to most, but once again, Zillow is an advertising business.
Yes, that’s right. Their customer is not people looking for homes.
Their customer is the person that many assume that Zillow is trying to put out of business – the real estate agent. And that is why Zillow will a.) Never replace the need of a real estate agent b.) Never replace the need for an appraiser.
Many times, buyers contact their agents after looking on Zillow, saying they want to look at a home for sale. Quite often, the home is already under contract, sold, or not even on the market anymore.
Zillow pulls it’s information from hundred’s of Multiple Listing Services (MLS) nationwide and those MLS’s don’t all translate the same.
Why would Zillow not try harder to get their information correct??
Remember who the customer is here – The agents that pay for the ad space next to listings are the ones who pick up clients who get excited over Zillow’s listings. Browsers either believe that the person is in fact a “neighborhood specialist” (when in fact all they had to do was pay Zillow to put them there or in many cases, buyers contact the advertising agent because they mistakenly believe they are contacting the listing agent.
Remember, by using an agent, you gain access to the local MLS that has every house that is available on the market in real time. Agents pay good money annually for this tool that serves their clients.
So what’s the deal with Zestimates, the thing Zillow originally was known for and helped it rise above other home search websites?
Let’s be honest – Zillow’s Zestimate is inaccurate. They have a computer generated algorithm that creates a “value” for your home.
The real question is: how can they possibly know what your home is worth if they have never been inside?
Two homes with the same floor plan in the same neighborhood could be similar on the outside. On the inside, one has brand new quartz countertops, stainless steel appliances, new bathrooms, and floors. The other one hasn’t been renovated or touched since it was built decades ago. Zillow would say that these two homes are the same in value because they have the same amount of square footage, bedrooms and bathrooms. Only an agent, appraiser or real estate professional with the knowledge of the market could know the value of your home AFTER they have inspected it and have taken a look at comparable in the market. Don’t trust Zillow to give you an accurate estimate. Trust the local MLS comparables properly and professional adjusted for accurate information.
If you scroll to the bottom of Zillow’s homepage and click on “Zestimate,” and then scroll down to “Data Coverage and Estimate Accuracy Table,” it should look something like the picture on the left. It describes how accurate their estimates are. In most cases, only around 40-50% of their estimates are within 5% of what the homes are actually worth.
Many times, their estimates are not even within 20% of their actual worth. With buyers and sellers thinking their Zillow Zestimate is an accurate representation of their home’s worth, it’s scary to think that more often times than not, their estimate is way off.
Considering that five percent may not seem like much, but that adds up to a $300,000 home selling for $15k less than it could have! Or flip the scenario, paying an extra $15k for a home.
Using a local real estate agent is always the best way to home in on the accurate value of your home’s worth. Feel free to reach out to us anytime. We would love help help guide you in the home buying or selling process!