Written by Tammie White, Principal Broker/Owner of Franklin Homes Realty LLC
The internet has revolutionized the way consumers buy and sell products. Savvy home buyers and sellers want information and the internet is the quickest way for them to gather it.
Home buyers and sellers now have an opportunity to search for information that used to be only accessible to real estate agents. The internet has made it easy to search for properties, learn sales prices and even list your own home.
One of the most widely used internet real estate tools available today is provided by Zillow. It's known as a Zestimate; cleverly named because it's 'Zillow's estimate' of your home's value. Millions of home buyers and sellers view these Zestimates daily in hopes of learning the value of a home they are looking to buy or sell.
The question buyers and sellers should ask themselves is "Are these Zestimates accurate?".
We'll admit--as consumers, we love the convenience Zestimates offer. So much so, that we added a similar valuation tool on our website. However, the value that's provided from our site also shows a Confidence rating and suggests sellers contact a local agent for a more accurate value.
Just Because It's on the Internet Doesn't Mean It's Accurate
As real estate professionals, we are constantly battling with home buyers and sellers over the inaccurate values provided through these Zestimates. In some cases, Zestimates can be tens of thousands of dollars high or low. That's not a mistake you want to make as a seller listing your home or a buyer making an offer on a home.
It's not unusual to hear sellers say, "Zillow valued my home for $25K more than you want to price it." Or buyers argue, "We looked up the Zestimate and the seller has overpriced it $80K." The truth is--we rarely see a Zestimate that comes close to the actual value of your home.
We recently closed on a home located at 403 Letitia Drive in the Villages of Clovercroft. The Zestimate was $445K. It sold for $488K. Even after the recently closed sale was recorded in the tax records, the Zestimate only went up to $453K. This house was in pristine condition with all the bells and whistles. The Zestimate was 7.2% below it's actual value. In our current market, that is a drastic price difference.
Rather than just write about the inaccuracy of Zestimates, we decided to provide the proof. We tracked recent local sales in Franklin, TN that closed between 11/23/2015 and 12/4/2015. There were 44 homes analyzed. They ranged in location, style, square footage, amenities and price point. Let's look at the Zestimate versus the actual closed sales price.
Price Comparison Showed that 27 of the 44 Homes Sold for Significantly More or Less than Zillow's Zestimate:
- 3232 Dark Woods: Zestimate: $279,511. Sales price: $299,900. Zestimate $20,389 low.
- 681 Watson Branch: Zestimate: $278,758. Sales price: $300,000. Zestimate $21,242 low.
- 3135 Southall: Zestimate: $307,585. Sales price: $280,000. Zestimate $27,585 high.
- 411 Orchid: Zestimate: $329,426. Sales price: $290,000. Zestimate $39,416 high.
- 1113 Olde Cameron: Zestimate: $332,013. Sales price: $312,000. Zestimate $20,013 high.
- 510 Hodges: Zestimate: $342,421. Sales price: $324,400. Zestimate $18,021 high.
- 139 Spencer Creek: Zestimate: $378,104. Sales price: $350,000. Zestimate $28,104 high.
- 2002 Barclay: Zestimate: $334,935. Sales price: $365,000. Zestimate $30,055 low.
- 2218 Castlewood: Zestimate: $399,805. Sales price: $335,000. Zestimate $64,805 high.
- 2326 Wimbledon: Zestimate: $335,417. Sales price: $416,000. Zestimate $80,285 low.
- 1203 Kristen: Zestimate: $347,311. Sales price: $420,000. Zestimate $72,689 low.
- 217 Countryside: Zestimate: $420,954. Sales price: $399,900. Zestimate $21,054 high.
- 305 Farrington: Zestimate: $422,910. Sales price: $401,000. Zestimate $21,910 high.
- 1009 Rural Plains: Zestimate: $400,562. Sales price: $465,000. Zestimate $64,438 low.
- 1433 Holly Hill: Zestimate: $470,973. Sales price: $535,000. Zestimate $64,027 low.
- 113 Everbright: Zestimate: $379,243. Sales price: $529,500. Zestimate $150,237 low.
- 605 Pearre Springs: Zestimate: $569,888. Sales price: $537,500. Zestimate $32,388 high.
- 5729 Quest Ridge: Zestimate: $531,459. Sales price: $560,000. Zestimate $28,541 low.
- 719 Azalea: Zestimate: $686,603. Sales price: $643,000. Zestimate $43,603 high.
- 405 Winchester: Zestimate: $733,230. Sales price: $670,000. Zestimate $63,230 high.
- 445 Wild Elm: Zestimate: $905,321. Sales price: $825,000. Zestimate $80,321 high.
- 1118 Harpeth Ridge: Zestimate: $886,820. Sales price: $817,500. Zestimate $69,320 high.
- 3106 Del Rio: Zestimate: $882,357. Sales price: $1,050,000. Zestimate $167,643 low.
- 307 Ledgelawn: Zestimate: $383,888. Sales price: $1,193,897. Zestimate $810,009 low.
- 102 Church: Zestimate was $1,153,901. Sales price was $1,250,000. Zestimate $96,099 low.
- 206 Emily: Zestimate: $1,269,638. Sales price: $1,330,000. Zestimate $60,362 low.
- 2027 Wilson: Zestimate: $957,677. Sales price: $3,150,000. Zestimate $2,192,323 low.
Price Comparison Showed that 2 of the 44 Homes Sold for Reasonably More or Less than Zillow's Zestimate:
- 4245 N. Chapel: Zestimate: $246,764. Sales price: $235,000. Zestimate $11,764 high.
- 208 Calgary: Zestimate: $312,206. Sales price: $323,000. Zestimate $10,794 low.
Price Comparison Showed 15 of the 44 Homes Sold Close to Zillow's Zestimate:
- 901 Brink: Zestimate: $217,477. Sales price: $220,000. Zestimate $2,523 low.
- 2226 Falcon Creek: Zestimate: $245,267. Sales price: $250,000. Zestimate $4,733 low.
- 148 Stanwick: Zestimate: $294,189. Sales price: $292,000. Zestimate $2,189 high.
- 936 Lawn View: Zestimate: $289,296. Sales price: $289,900. Zestimate $604 low.
- 202 Julia: Zestimate: $281,102. Sales price: $280,000. $1,102 high.
- 2232 Winder: Zestimate: $299,905. Sales price: $299,900. Zestimate $5 high.
- 231 Baltusrol: Zestimate: $338,715. Sales price: $333,000. Zestimate $5,715 high.
- 713 Wadestone: Zestimate: $403,126. Sales price: $402,000. Zestimate $1,126 high.
- 512 Crofton Park: Zestimate: $427,142. Sales price: $430,000. Zestimate $2,858 low.
- 1410 Chantilly: Zestimate: $437,157. Sales price: $450,000. Zestimate $12,843 low.
- 1612 Ash Grove: Zestimate: $515,634. Sales price: $515,000. Zestimate $634 high.
- 1086 Watkins Creek: Zestimate: $525,527. Sales price: $530,000. Zestimate $4,473 low.
- 6050 Stags Leap: Zestimate: $560,236. Sales price: $565,000. Zestimate $4,764 low.
- 209 Bobby: Zestimate: $341,202. Sales price: $350,000. Zestimate $8,798 low.
- 151 Bluebell: Zestimate: $391,671. Sales price: $400,000. Zestimate $8,329 low.
Based upon this analysis, 61% of the homes sold for significantly more or less than Zillow's Zestimate. That might suggest that 6 out of 10 Zestimates are inaccurate. We wouldn't be in business very long if we priced 61% of our listings significantly lower or higher than their actual sales price.
Some properties sold for tens of thousands of dollars higher or lower than their Zestimate. We were shocked to see that two Zestimates were almost 70% lower than the actual sales price.
What Accounts for the Inaccuracy in a Zestimate?
Real estate is local. It's not unusual for home values to be different from county to county, city to city or, even, neighborhood to neighborhood. Zillow doesn't take the neighborhood differences into account. They often pull from a large geographic area such as an entire county. Our sales data varies greatly from one portion of the county to the other. It doesn't make sense to use comparable home sales from Spring Hill to determine a home value on a home in Franklin.
Zillow also uses property tax assessments in their calculations. Rarely, do these assessments mirror the actual value of a home. They are two different things. Assessed value is merely used by towns to calculate your property taxes and lags behind the current market value. It shouldn't be used to determine fair market value.
While Zillow may pull the comparable sales in your neighborhood, it does not take into account the many upgrades you may have in your home versus your neighbor's. Or other contributing features that may impact home value. They expect that all the homes have similar features. That isn't always the case, especially, if a home has been significantly renovated or upgraded.
Although, Zillow gives sellers the option of adding information to increase the value of their Zestimate, it doesn't necessarily translate to actual value. Such was the case with the listing we had at 403 Letitia Drive. Even after we added all the features this home had, the Zestimate didn't adjust upwards to it's actual value. In reality, home buyers determine value. A home is only worth what a buyer is willing to pay for it. Zillow can't predict the behavior of buyers.
Location and condition impact price as well. If a home is on a busy road, it's going to effect the value. If your roof is 40 years old and the rest of your neighbors have replaced their roof, then your home will be valued for less. Zillow doesn't have that information to adjust your home value accordingly.
Don't take our word on the inaccuracy of Zestimates. Zillow readily admits their Zestimates may not be accurate. Unfortunately, most home buyers and sellers don't take the time to find this information.
Can I Trust Any of the Info Found on Zillow?
Zestimates aren't the only inaccuracy you'll find on Zillow's site. Multiple listing services do not provide a direct feed to Zillow. Much of the information is derived from third party syndicators. That information isn't always accurate as they pull from several different sources.
In Franklin, some brokerages may not want their listings to appear on Zillow. As a result, agents must enter their listings manually. Many agents choose not to do this. Therefore, not all the homes currently available can be seen on Zillow. For example, there are currently 540 single-family homes for sale in Franklin TN. Upon running a search on Zillow, they showed 392 results. We suspect the other 148 homes weren't added to Zillow by their agent. If you are a buyer using Zillow as your primary search tool, you may not see a large portion of the homes available.
Plus, Zillow may show homes for sale that have already sold. We often receive calls from buyers inquiring about a home they saw on Zillow that closed months earlier. And let's not forget, Zillow sells your information to real estate agents.
Did You Know Zillow Sells Your Contact Information?
That's right. Zillow takes the information you provided to them when you signed up for listing updates and sells it to real estate agents who are eager to make a sale. You decided to use Zillow because you didn't want to be pestered by a real estate agent, only to learn that Zillow takes that information and sells it to many real estate agents making a pretty hefty profit from the information you've provided.
What's the Best Way to Get an Accurate Home Valuation?
Our motto is: GET REAL. GET LOCAL. The only place to get an accurate value of your home is to contact a local real estate agent. He will be able to provide you with the most recent sales data for your neighborhood or area and price your home much more accurately than any Zestimate you see on Zillow. Besides, Zillow doesn't view your home. A local real estate agent is in hundreds of homes in your area. He will quickly be able to tell you how you measure up against the competition.
If you're thinking of selling your home without the assistance of a real estate agent, Zillow may not be the best source for accurately pricing your home. It's possible you'll cheat yourself out of tens of thousands of dollars by basing your listing price on a Zillow Zestimate. An overpriced listing is the number one reason why homeowners can't successfully sell their home. You don't want to find you used a Zestimate only to learn it was significantly higher than the homes in your neighborhood.
If you are a buyer who has stumbled upon this post, do yourself a favor and enlist the help of a local real estate agent. Not only will he be able to provide you with an entire list of homes for sale, he'll also be able to provide you with an accurate value when it comes time to submit an offer. Multiple offers are still quite common in our area and using a Zestimate to submit an offer may mean you offer too much or too little.
Whether you are a home buyer or a home seller, hire a local real estate agent to help you determine the true value of a home you are hoping to buy or sell. Call Franklin Homes Realty LLC to schedule a free consultation at (615) 495-0752.
Photos courtesy of freedigitalphotos.net.
About Tammie White, Franklin TN REALTOR®
Tammie White is a REALTOR® and Principal Broker/Owner of Franklin Homes Realty LLC in Franklin TN. Tammie works with relocation buyers looking to purchase a home in Franklin and the surrounding Williamson County area. She understands the way buyers search for homes making her an invaluable asset to Franklin home sellers. Tammie's website, www.FranklinHomesRealty.com, has become the premiere search tool for buyers relocating to Franklin TN. She has been writing a real estate blog since 2009 and quoted in various publications including the LA Times, Skype.com, The Tennessean and Williamson Source.