How Not to Lose Money from Zestimates®

In real estate, hearing this phrase is not at all uncommon:

“But that’s not what it says on Zillow…”

When you search for a home on Zillow, every property displays something called a Zestimate®, which is Zillow’s estimated market value for the home. These estimates have increasingly come under fire for being inaccurate, sometimes to a substantial degree, and this past May, a homeowner took action and sued Zillow.

From the Washington Post:

“It was bound to happen: A homeowner has filed suit against online realty giant Zillow, claiming the company’s controversial ‘Zestimate’ tool repeatedly undervalued her house, creating a ‘tremendous road block’ to its sale.

The suit alleges that despite Zillow’s denial that Zestimates constitute ‘appraisals,’ the fact that they offer market-value estimates and ‘are promoted as a tool for potential buyers to use in assessing [the] market value of a given property,’ shows that they meet the definition of an appraisal under state law. Not only should Zillow be licensed to perform appraisals before offering such estimates, the suit argues, but it should obtain ‘the consent of the homeowner’ before posting them online for everyone to see.”

Zestimates are still readily available on Zillow.com and, despite a small disclaimer that they are not to be considered an appraisal, continue to put home sellers in a position to lose money by selling their home far below what they might have otherwise received. Knowing this, how can you avoid losing money due to Zestimates?

Use Zestimates—and other online valuation tools—to check your real estate agent.

The decision of a real estate agent is an important one. Don’t make it lightly by hiring the first agent you speak to. Check your prospective agent’s work by looking at comparable sales provided by Zestimate and other home valuation tools. Does the price seem too low or too high? Now you have a starting point for a discussion and to request more explanation. Don’t be too easily enticed by a real estate agent who says that your home is worth a high dollar amount—the reality is that saying this doesn’t guarantee a top dollar sale.

Don’t make a decision to sell based solely on a high Zestimate of your home.

Knowing that Zestimates can be wrong way beyond a reasonable margin of error, don’t let an online estimate prompt a decision to sell your home. You might start daydreaming about how you will spend the money you make from the sale, but first you need to speak with a real estate agent to determine if there is real equity in your home.

Think of Zestimates as a way to keep a pulse on the real estate market.

Rather than paying close attention to the estimated value of your home, pay attention to the trend. For example, is your home’s value estimated higher in 2017 than it was in 2016 or 2015? Your home may indeed be worth more now than it would’ve been if you’d sold it last year.

Still confused about Zestimates® or need a real estate agent to provide an estimated value of your home? Contact O’Reilly Team today.