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Zillow and their Zestimate
Dear Phyllis,
I am a long-time reader of your real estate column and don’t believe you have discussed Zillow and their “Zestimates”. I often check our La Canada home’s value on Zillow and don’t understand the wild fluctuations in value. Last week, my “Zestimate” dropped $50,000. As we aren’t selling anytime in the near future, I suppose it doesn’t matter. But I am hoping you can bring some clarity to Zillow and their “Zestimate”. Confused
Dear Confused,
Zillow is very popular with homeowners as values escalate because it’s great fun to dream about our ever-increasing equity. As a Realtor, I spend a lot of time explaining these different online pricing valuations to clients. Zillow Zestimates do not reflect the actual value of your home and are only an estimated valuation.
Zillow generates Zestimates using public data, including square footage, lot size, year built, and the number of bedrooms and bathrooms. However, the algorithm cannot see recent renovations, such as a $150,000 remodel. It also cannot recognize features like tandem bedrooms or a location across from high-voltage power lines. Most importantly, Zillow never visits your home. Instead, it relies entirely on computer-generated data.
Today’s real estate market moves quickly. Many homes receive multiple offers and sell above the asking price. However, online home valuations rely on past sales. As prices rise, those older sales become less reliable indicators of current market value. Zillow also cannot account for a nearby home that is in escrow for $50,000 over the asking price. When I determine a home’s value, I evaluate recent sales, active listings, and pending sales to provide a more accurate estimate.
A comparable market analysis from a local real estate agent is the best way to determine your home’s market value (what a buyer would be willing to pay).
So continue to enjoy Zillow and other online valuations but just don’t take them too seriously.
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