Zillow Zestimates are controversial at best.
Zestimates are simply values assigned to a property by a computer program that tries to determine your homes current fair market value. The issue with this is that only appraisers are qualified to do this, and real estate agents are qualified to give an assesment of value within in a range with an upper and lower limit. Real estate agents give this information in what is called a CMA or Comparative Market Analysis which is a comprehensive report on homes that have sold, comparing similar homes to yours. Agents apply their knowledge of the homes and market conditions to help you better understand the Fair Market Value.
I recently ran a CMA on a property where my low was $290,000 and my high was $300,000; the Zillow Zestimate was only $281,000 there was no low or high value. Then, an appraiser was called out determine the Fair Market Value, his number was 294,000 [ note, for easy math I am only using the thousands place holder ]
Already, if you are a seller you can see how the Zestimate can and does cause issues when buyers make an offer. Buyers take Zestimates as the gospel, especially if the price is lower than the list price.
Lets look at the scenario using the numbers above. If the sellers where to list their home at $298,000 just above appraisal but below my CMA’s high point a prospective buyer looking at Zillows Zestimate will conculde that the property is “over priced” by $18,000 or almost 7% becuase it is only valuing the property at $281,000. This scenario has resulted in litigation.
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, which may be the first of its kind, was filed in Cook County Circuit Court by a Glenview, Ill., real estate lawyer, Barbara Andersen.
Zestimates values are tools to give a general idea
As a real estate agent, I strongly advise sellers to get a good CMA. Agents provide CMAs free of charge, you receive a comprehensive report and a consultation to reveiw the CMA too! It is like going to the doctor. You wouldn’t rely on WebMD to diagnose your symptoms and treat you. Unlike WebMD, your Doctor will examine you based on your symptoms, study your blood, listen to your heart he will take the whole picture in to account to determine his diagnosis. WebMD doesn’t do this, they give you a very generic idea that may or may not right. The same is true when using Zestimates from Zillow, Zillow can not see the home, the neighborhood, the condition or the upgrades of your home. Zestimates can only rely on sale numbers and does not apply any empirical data, unlike your agent who will!
To get a good idea of the value of your home, in the current market, get a free CMA from a qualified real estate agent. You can use our form below to request and agent contact for a CMA. If you are purchasing a home, consult with your real estate agent, review current sales essentially do a buyers CMA on the property.