When searching for a home, you may come across many different ideas of how to determine the market value of a house. Of course, a seller’s asking price is telling of how he/she values the home, but buyers often seek to understand how a home is actually valued in the market. This is why Zillow, a popular online real estate database, created what is known as a “Zestimate.” According to Zillow.com,
"The Zestimate® home valuation is Zillow's estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home's value. The Zestimate is calculated from public and user-submitted data, taking into account special features, location, and market conditions."
This tool from Zillow along with the site’s endless data about available homes can be helpful. However, it is important to know the accuracy with which such estimations are made and to keep that in mind when searching for a home. While the Zestimate is one idea of a home’s worth, this calculation might actually be very far from a true market value. Because the values are determined by a formula, applied in the exact same way to every single home, the outcomes may end up being wrong by gross amounts. This could be important for a potential home buyer: the unique qualities and seemingly trivial details of each home require a human touch to determine their true values. Every home cannot be judged on the exact same scale.
Despite the apparent convenience of trusting Zestimates, home buyers should search for more accurate estimations of homes’ market values by asking trusted Realtors. Realtors with experience and expertise can determine estimated market values that are much more realistic. Realtors use research about homes, understanding about neighborhoods, and consideration of specific amenities in order to determine market value—they do not use a constant formula.
Inaccurate estimations about a home’s value can be harmful to both buyers and sellers, and sometimes even discourages home sellers from listing their houses. Whether the Zestimate is far too low or far too high, improper expectations from either side of a home purchase scenario can lead to dissatisfaction.
If you want to look more closely at the accuracy of Zillow Zestimates, check out their table here which details each Zillow city and how the Zestimates compare to the sale prices. The large margin of error with which this Zillow tool estimates a home’s value suggests that Zestimates should be used, at most, as an idea of a home’s ballpark value, and not of its accurate market value.
While you may find Zillow a valuable tool in browsing for a home, your best method when actually taking the steps toward purchasing a home is to get a trusted, local Realtor on your side. Not only are Realtors able to consider the unique characteristics of a home when determining its value, but they are also great at making recommendations and helping both buyers and sellers through the process of a home sale. Having a knowledgable, experiences Realtor on your side can make all the difference.
Check out this helpful video on Zillow Zestimates:
Here are some excellent resources that will help you choose a knowledgable Realtor:
6 Reasons to Never Buy or Sell Without a Real Estate Agent by Ryan Fitzgerald for Raleigh Realty
Choosing the Right Realtor by Anita Clark
Why Picking the Right Real Estate Agent is Critical by Bill Gassett
Top 10 Mistakes Made by Sellers When Choosing a Realtor by Kyle Hiscock
If you’re looking for homes in the Indianapolis, Indiana area, let us help! Ferris Property Group can help you search, discover, and purchase confidently. Let one of our passionate Realtors help you find your new home.