Zillow is a popular website that provides "z-estimates" that purport to calculate the value of every home in the United States. Zillow tries to accomplish this task by using a sophisticated logarithm which compares factors which affect home values, but here's a typical story I have heard from home sellers in Northern Virginia:
Our home was recently appraised for 650K. Zillow estimates the value at 521K. The estimate makes us one of the lowest priced homes in the subdivision. We have all upgrades in our home and it is the largest of the homes that were originally built in this subdivision. It was appraised at 750K before 2009. Our home has a basement. Neighbors do not have basement on one side and you appraised higher. Really? -- James E. - Fort Hunt
If you search the web for the phrase "Can I trust Zillow?" or "Can I trust Z-Estimates" you'll find countless testimonials by angry homeowners and skeptical home-shoppers who have discovered the hard way just out inaccurate Zillow's pricing can be. Many people report that Zillow's estimates have a margin of error of about 20%. Even if we assume the margin of error is only 10%, in Northern Virginia that means a "z-estimate" is only within $50,000 of the actually market value. If the margin of error is an astounding and impressive 5% that means that a z-estimate is within $25,000 of the asking price.
Yet Zillow (for now) remains wildly popular with some people. Home sellers and home buyers should know that there is not a single local municipality, county, or mortgage lender that uses Zillow for tax assessment or appraisals. Our advice is to take estimates from any online site at arm’s length. Putting too much stock into a computer logarithm can cause you inflate your sense of worth or irk you for how little it believes your property is worth.
Contact us today for a free comparative market analysis of your properties worth. We promise that a computer won't set the value. Instead your friendly neighborhood Nesbitt Realty agent will measure the many variables which make your home's value.
7 Reasons Why Zillow Estimates Are Inaccurate
In the past, homeowners not represented by a real estate agent, could list their home for sale on Zillow and set a ridiculous price called a Make Me Move Price. Make Me Move is a function that allows homeowners the ability to “test” a market price without a homeowner having to use a Realtor or real estate agent. Zillow's actual calculation is proprietary, so I don't know if the Make Me Move prices are factored into the Z-estimate calculation. However, I know that if you search a particular address on Zillow and glance at the results, it's possible to find a number of overpriced homes. In reality true market value is based on what a real life buyer is willing to pay for your home at the time when your home is advertised for sale. Value has nothing to do with "Make Me Move".
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