We get this questions all the time from Homeowners: “why was zillows estimate so low, or so off the appraisal?” The way I explain it to home owner is this. Zillows takes all the sales in a zip code or area and runs your property address through complicated logarithms and then comes up with an estimate.
First Zillows does not go into your home. You could have completely updated your home, added square footage and so could your neighbors, and they have no way of verifying it.
Second I use La Jolla as an example. La Jolla has beach front properties, it has multimillion dollar estates, small cottages with no views, homes with no parking etc. You could go 10 blocks from the ocean which more than likely will have a whole different value range from beach front. Well Zillows basically takes all the sales data runs it through some “fancy” math and comes up with an estimate. The computer cannot quantify what a lot of humans find valuable.
This is why real estate appraisers and real estate agents are so important. Not only can appraisers use the same complicated math that zillows does they also inspect your property, your neighbor’s property and the neighborhood. Appraisers and Agents are very familiar with the local market and when it comes to home value, selling, and buying it is a very personal, human activity.
Article: Seattle-based Zillow is the most popular online real-estate information site, with 73 million unique visitors in December.
Along with active listings of properties for sale, it also provides information on houses that are not on the market.
You can enter the address or general location in a database of millions of homes and likely pull up key information — square footage, lot size, number of bedrooms and baths, photos, taxes — plus a Zestimate.
Shoppers, sellers and buyers routinely quote Zestimates to real-estate agents — and to one another — as gauges of market value.
If a house for sale has a Zestimate of $350,000, a buyer might challenge the sellers’ list price of $425,000. Or a seller might demand to know from potential listing agents why they say a property should sell for just $595,000 when Zillow has it at $685,000.
Disparities like these are daily occurrences and, in the words of one real-estate agent who posted on the industry blog ActiveRain, they are “the bane of my existence.”
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