By Jade Goodhue Are you relying on Zillow's Zestimate to gauge your home's worth? Buckle up, because you're in for a rollercoaster ride of surprises! Zestimates, often seen as the North Star in
How Much Is My House (NOT) Worth?
Dated: January 22 2024
By Jade Goodhue
Are you relying on Zillow's Zestimate to gauge your home's worth? Buckle up, because you're in for a rollercoaster ride of surprises! Zestimates, often seen as the North Star in home valuation, might just be leading you on a wild goose chase.
The Illusion of Precision
Zillow's Zestimate presents itself as the pinnacle of real estate valuation. But here's the catch - it's often as accurate as a weather forecast in a hurricane. Zestimates are generated through a complex algorithm that crunches public and user-submitted data. While this might sound impressive, it's akin to comparing a microwavable cake mix to something made by the Lake Geneva Pie Company; the two are completely incomparable in looks, taste, and quality. Why would you do that?
The Margin of Error Mayhem
Let's talk numbers. Zillow openly admits to a median error rate in their Zestimates. In layman's terms, this means that half the time, the actual selling price of a home is more than a few percentage points off the Zestimate. This might not sound alarming until you realize that in the high-stakes world of real estate, a few percentage points can equal a small fortune.
A Tale of Two Houses
Consider two identical houses on the same street. One has a newly renovated kitchen, and the other hasn't been updated since the disco era. Zillow's algorithms, lacking human discernment, might value these homes similarly. It's a classic case of apples being compared to oranges – or in this case, renovated homes to fixer-uppers. And that’s just ONE piece of the puzzle!!
The Perplexing Property Puzzle
Are you taking into account newer construction, newly renovated homes in the area, water rights/access, having a boat slip, acreage, or a pole barn? Is it a condo or a single family home? Is your basement finished, partially finished, or unfinished? Is your home in a subdivision or near one? What kind of upgrades have you done? What’s the condition of your property? What's going on in the real estate market overall? All these nuances contribute to Zillow’s inaccuracy and inconsistency. In areas with less real estate activity or in neighborhoods where homes are as diverse as a bag of mixed nuts, Zestimates can swing wildly. They can either inflate a home's worth to the realms of fantasy or undervalue it like a rare gem in a yard sale.
Errors in Zestimate Accuracy
The errors in Zestimate accuracy can be startling. From overestimating the true value of a home by tens of thousands to undervaluing it significantly, Zestimates can create a real estate mirage that's hard to navigate. Homeowners might be led to overprice and languish on the market, or worse, undervalue and lose out on their investment.
As you can see below, the median error in Zestimates in Wisconsin is 8.74%. Only 31.34% of Zestimates are within 5% of their sale price. In fact, 78.85% of homes are within 20% of their sale price. That means you can be 20% overvalued which means your home won’t sell, or you could be 20% undervalued which is a lot of money to leave on the table.
Pricing is just the first step of many steps between getting your home ready to list and walking away after a successful closing. There’s multi-channel marketing, negotiating prices, negotiating contract terms, navigating contingencies in the contract, negotiating those contingencies to satisfaction, and meeting contingency deadlines. Do you have the time to coordinate with the lender, the various inspectors, the title company, and the other realtor on various issues? What are your options if the other side breaches the contract? What are your duties and rights as a seller per Wisconsin statutes? And some people who use this think they can sell their home themselves and save on Realtor’s fees? Really?
Beyond the Zestimate: A Realistic Approach
So, what should a savvy homeowner do? First, breathe. Then, remember that Zestimates are starting points, not endpoints. Contact us for a no-obligation consultation and comparative market analysis, and to help you understand your local market dynamics on a deeper level. Real estate is an art as much as it is a science, and the human element – understanding the unique aspects of your home and neighborhood – is invaluable.
The Bottom Line
Zestimates, for all their convenience, are not the be-all and end-all in home valuation. They are but one tool in a vast arsenal. A blend of technology, professional insight, and common sense is key in the complex and ever-evolving real estate market. Your home's true worth? That's a story better told with a full picture in view, not just a snapshot. When you’re ready, contact us for a complimentary comparative market analysis, or email me at firstname.lastname@example.org.
Jade and Chris co-founded Legendary Real Estates Services during the start of the 2020 pandemic. With Chris’s background as a real estate agent and broker since 1990, and Jade’s background....
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