I am sure by now we have all been to the Zillow home search website and while browsing around you may have noticed under the actual purchase price of the home is Zillow’s estimate of the actual value of the property. Now this may seem fantastic if your dream home is actually overpriced according to this “zestimate.” The problem is how inaccurate these estimates can be, and usually are. These estimates are a nightmare for real estate professionals especially when over 90% of home buyers begin their search online. I have had to experience it plenty of times and I know it is a common issue among other professionals. We must explain to our clients why the Zestimate is so far off from the purchase price. I’ll tell you why this zestimate can be a nightmare if you are in my profession.
Zillow is a fantastic website for home buyers to begin their search. It allows you to pull up a map and view all the available homes in the area and even see the price of homes that have recently sold. The problem comes in with Zillow’s estimate of the current value of the home when this estimate has not been properly done. Zillow simply takes the average of homes available and sold in the area and slaps an estimate on that home, that’s it! No further research goes into the property before this estimate is put up for the world to see, that’s why at times you can see a huge discrepancy in the estimate and the actual purchase price.
When a home is having a proper estimate put on the property we conduct a BPO (Brokers Price Opinion). This is where you actually send a real estate professional to the property to see the condition, land, upgrades, etc. We then pull comps of all the current homes on the market, homes currently in escrow, and homes sold in the previous few months. We use these comps to compare the subject property to and from there we can make an educated guess on the value of the property in question. Is it a similar process? Sure, but it is much more in depth and thorough. Not to mention it is done by a real estate professional that is familiar with the area.
I read an article recently that mentioned replacing the zestimate with these types of BPO’s. Zillow will have a local real estate professional run a BPO on the property in order to get a more accurate idea and provide a much more informative estimate of the home. I do hope this is the case and we can stop giving buyers a false idea of the market with these “zestimates.” I got to experience how terrible these can be with one of my listings. The Zillow estimate was around $850,000 but after a couple BPOs the property was valued around $450,000. That’s a $400k price difference!! I hope Zillow will realize this as they have received plenty of backlash about this feature since it was created.
What do you think about Zillow and their Zestimate? Do you have a favorite home search website you like to use?
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