An old saying in real estate sales is “your home is worth what someone is willing to buy it for.” This suggests that there are many different factors, some arbitrary that go into the valuing of a home.
The first time you think about selling your house, one of the first questions that come to mind is: how much is my house worth today? So as everyone else, we go to Zillow and look for that information, as they’re the industry leader in real estate listings. But the questions is, Should I trust Zillow’s “Zestimate”? Is Zestimate accurate?
Don’t trust Zillow for valuing your home. Here’s why.
Should I trust Zillow’s Zestimate?
Zillow’s Margin for Error
The name says for itself. Zillow’s Zestimate is that. Just an estimate. It’s been reported to average around 20% higher or lower in home estimates. For a $300k house, that could be anywhere between $250k to $350k! There are even reports of home values on Zillow climbing in declining market areas. That’s a huge difference in pricing!
This is a matter of disagreement between homeowners and selling agents regarding the price of a home. Usually the agent will come up with a much more realistic price point, because his numbers are based on recently sold properties that have a lot of similarities with your house, and not in some algorithm that Zillow created. Trusting Zillow’s zestimate could even hurt your listing if you list your house to sell for a much higher price than you should.
How Does Zillow Create Estimates
Zillow calls its proprietary estimating tool a “Zestimate.” Simply put, it’s an algorithm, a mathematical formula that takes some different factors in it as market pricing in the are, size of the house and the lot, number of bedrooms, bathrooms, pools, etc. So it’s sound like a pretty darn accurate formula doesn’t it? NO!
Even with all the pricing factors placed into the formula, there is still a high margin of error because Zillow isn’t actually looking at your home.
Even Zillow disclaim the fact that the Zestimate is just an estimate, and that you should not trust it as an appraisal or decision making.
The issue with Zillow’s formula is that it doesn’t take into consideration the current condition of a house. Has it been remodeled? How bad it looks? Does it have a lot of clutter? Does it have fire damage? Are the appliances and fixtures new? Does it need a new roof?
These are all extremely important factors when pricing a house correctly!
Additionally, Zillow doesn’t discern community pockets. These are very common in larger cities where you can have higher end community just blocks from a mid or lower-end one. These “pockets” can skew or be skewed by larger metro data that Zillow factors in that aren’t pertinent.
The More Accurate Model
Any serious and professional realtor will tell you that pricing a home to sell (again, TO SELL), requires a full understanding of the current market trends in the region, understanding the home condition and the location.
A realtor will look at recently (usually within the past 6 months) sold houses in the same region as yours. He will then compare your home based on size, lot, features, condition of the house, and upgrades. After that, he will then compare your house with the current competition in the market, to see where your price point stands versus other nearby listings. After all, if yours is a well-kept home being sold next to a completely remodeled home, you might not be able to get the same price per square foot at the other.
Additionally, realtors will consider whether it is a buyer’s or seller’s market. If you want to create a frenzy with a lot of eyes on your property in a seller’s market, you can underprice the home and let the bidding begin. This tactic works in many markets including New Jersey.
The Easy Way!
If you’re facing foreclosure, divorce, being relocated, inherited a property, is tired of being a landlord, or simply want to sell your house fast in New Jersey, but don’t want to go through the hassle of listing your house the traditional way, we can help!
We buy houses in New Jersey, in any condition, as-is, and we pay cash and at your own timing! We are legitimate cash home buyers in New Jersey, and we can close on your house in as little as 10 days!