One of my past clients, Dawn, recently asked me how close her home’s Zestimate was to its real value, so I pulled the numbers to find out.
Her property’s Zestimate came in at $351,833. The home’s real value, however, is $453,000—a difference of $101,167. This means if she were to sell her home for its Zestimate value, she would’ve incurred a loss of 22%.
How can a Zillow Zestimate be this far off of a home’s real value? There are three reasons.
First, they use outdated information. Dawn’s Zestimate didn’t account for the fact that she added a pool to her home and added $100,000 worth of upgrades since she bought it in 2017.
Second, Zillow doesn’t know the details of your particular neighborhood. Dawn’s neighborhood, for example, is about 50 years old, and most of the houses are fitted with cast iron pipes that need to be replaced. This is one of the tasks Dawn tackled when she bought the house, and this improvement alone is worth about $20,000.
Third, Zillow lacks the human factor. In other words, they can’t physically walk into your home and compare it to the other homes in the neighborhood. Not only do they not account for any upgrades you’ve made to your home, but they could also lump in another newer neighborhood next to yours when making their valuation, which would increase the value instead of decreasing it.
The CEO of Zillow himself famously sold his home for 40% less than what its Zestimate said it was worth. What does this mean for you? It means you should contact a real estate agent to know what your home is really worth. If you’d like a free home evaluation, don’t hesitate to give me a call.
Since Dawn sent me a question that I used in one of my videos, she’ll receive a $25 gift card in the mail. If you’d like to be the next lucky winner of a $25 gift card, send me your real estate questions.
If you have any other real estate needs or you’re thinking of buying or selling a home soon, feel free to give me a call or send me an email. I’d love to help you.