There aren’t a lot of things that drive me crazy, but that line about Zillow is probably one of them. Almost everyone uses the Internet for information, so why not depend on it to help us estimate one of our most valuable personal assets?
Well, there are a few good reasons. First of all, do you really think that Zillow knows what your home looks like on the inside? Do they do some kind of Google-like drive-by that gives them the knowledge that’s needed to correctly value a property? No, they aren’t that technologically advanced, yet. There are lots of things that they can’t include in their “Zestimate®” – updates and upgrades, floorplans, remodels, views, and so much more.
Zestimates® are arrived at by using lots of statistical data that feeds into their database. Local tax data and recent sales are the main factors, and they use algorithms to factor in what the market has been doing in the region. But the fact is, real estate value is based on a number of things, not the least of which is the “emotion factor,” which includes the dramatic features that, as of now anyway, can only be interpreted by a human brain, and not a collection of databases.
More importantly, and I don’t have a percentage on the accuracy of county-by-county tax data, but I can tell you that in general, it’s not very dependable. Property tax records are only as accurate as the poor underpaid, overworked municipal employee who is entering the data. So if county tax assessor data is a large influencer on Zillow’s estimate, well, you know what they say: “Garbage, in, garbage out.”
By Zillow’s own admission, their estimate is only a “starting point in determining a home’s value,” and they suggest that anyone looking for accuracy should consult a local real estate agent for a comparative market analysis (CMA). And the more unique or volatile a local market is, the less accurate that Zestimate® is. It’s not a coincidence that by Zillow’s own in-house ranking, their SF Bay Area estimates only earn a two-out-of-four-star rating for accuracy.
They also confess that, in our area, about 4 out of 5 of their estimates come within 82% of actual value. Let’s play that out a bit. If a property sells at the current Bay Area median price, $675,000, then the Zillow estimate would be somewhere within a $243,000 range of accuracy. On a $1,000,000 home the range would be $360,000. Would you really find that helpful in trying to decide what your home is worth?
The most accurate tool for discovering your home’s value is by putting it on the market and seeing what a buyer might be willing to pay. But that’s not always feasible, or even ethical, unless you truly intend to sell it. The next most accurate tool is with the assistance of a local REALTOR® – a professional who will give you the benefit of expertise, a careful and in-person examination of your property and the local statistics, and who won’t be at all reluctant to give you that value without the attachment of costs or other strings.
I’m a huge fan of the Internet, and the tools that are available on it. But let’s be sure that you are giving your property the scrutiny and accuracy that it deserves.
A Bay Area native, Mark Penn has been a REALTOR® with Coldwell Banker since 2004. He is also active in animal welfare, and is a former educator, facilitator, and air traffic controller. Mark can be reached at mark@MyHomeInSonoma.com.