Why sellers are shooting themselves in the foot if they use the Zillow “zestimate” to price their home

I’ve written about the Zillow “zestimate” in the past and how inaccurate it can be. It amazes me how Zillow can get away with publishing home value ‘zestimates” that are so far off they couldn’t hit the broad side of a barn. Once again I am reminded of the old adage “garbage in, garbage out” and how important it is to have accurate information when pricing your home for sale.

zillow "zestimates" are not accurate

Because of a recent requirement by my local multiple listing service that requires accurate square footage calculations to be included in listings I have been in more regular conversation with real estate agents and home owners because I provide a measuring service to help determine ANSI standard calculations for them. These discussions include questions about how inaccurate county records are and how inaccurate Zillow is when they use faulty data to come up with their “zestimates” of property values.

The majority of my measuring assignments have revealed (to no ones surprise) that county record data is way off. These inaccuracies are being carried forward to Zillow and are being used to arrive at their “zestimates”, which some people are taking as the gospel for what their home is worth and for what they should ask for it when selling. This is not a good idea because you will not be working with a value estimate that is realistic and which could hinder you from selling your home within a reasonable time period. As I mentioned previously, if you start with garbage in (inaccurate square footage data) then you will end up with garbage out (wrong value conclusion) and you will either sell your home for less than it is worth, and leave money on the table, or you will price it too high and it will taken longer to sell if you are able to sell it at all, because an asking price that is too high is the number one reason for homes not selling. The best answer to getting accurate square foot measurements AND an accurate asking price is to get a pre-listing appraisal.

I recently wrote an article for real estate agents about where to get accurate square footage information from, however this information is good for home owners as well. This is a good place to start when pricing your home for sale because it will allow you to price your home to the market with the most accurate information. If you have any questions please feel free to contact me as I am always eager to help.

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Comments

  1. A value is only as good as the data and the interpretation of that data. It’ll be interesting to see how Zillow evolves if it does for sure acquire Trulia.

  2. Great post Tom. With the Zillow-Tulia merger we can be sure that Zestimates are going to be with us for a long time. Consumers love Zillow and Zestimates. But they need to realize that Zestimates are more of an entertainment factor and cannot be relied upon for determining the real market value of their home. There should be a disclaimer (there probably is one somewhere on the Zillow site) stating that Zestimates are for entertainment purposes and should not be relied upon for valuation purposes.

    Many, if not most, Realtors hate Zillow because of its inaccuracies and for not being up to date on current property statuses. But appraisers and Realtors should seize the opportunities presented in Zillow’s shortcomings to demonstrate their first hand knowledge of the local markets and their professional expertise. Zestimates are a golden opportunity for appraisers and Realtors to demonstrate to consumers why they need the professional services of someone with experience and expertise in the local market area.

    • Very good point Tom. I have taken an opportunity as you suggest with owners and agents to show them that county records can be very misleading. I think most agents realize this and appreciate the support from appraisers when trying to convince homeowners that Zillow is not the authority on home values.

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