How Accurate is the “Zestimate” On Your Home?

Are you prepping to sell your home in Georgia, and you’ve been stuck for weeks deciding how much you’re going to sell it for? The preparation process for buying and selling a home is in itself a journey that takes time, patience, diligence, and focus. If you are planning to sell FSBO or haven’t found the right real estate agent to work with yet, the preparation process alone can be overwhelming, especially when deciding how much.

But do you know what’s going to help you? The Zestimate. 

What is the Zestimate?

In 2006, online real estate marketplace Zillow launched the Zestimate, giving consumers an idea of a property’s market value.  It uses its proprietary algorithm to calculate the value based on:

  • Home’s location, square footage, and number of bedrooms and bathrooms
  • Data from on-market listings (listing price, days on market, comps, and description)
  • Data from off-market listings (tax assessment, historical sales in the area, other records)
  • Market situation and trends (changes in the inventory and demand)

Zestimates vary per location.  By far, the largest percentage of on-market transactions which recorded a Zestimate that’s <20% of the final purchase price is 99.5% — that was in Utah.  This means that if a home’s  Zestimate was around $115,000, the actual purchase price was equal to or less than $138,000.  However, for off-market listings, about 15% of transactions had a final price of more than 20% of the Zestimate.    

zestimate accuracy
Source: Zillow (Estimates as of May 27, 2021)

Drawbacks of the Zestimate

Investopedia pointed out that “Zestimates are only as accurate as the data behind them. So if the number of bedrooms or bathrooms in a home, its square footage, or its lot size are inaccurate on Zillow, the Zestimate will be off.” Zillow itself agrees. Although they have data for more than 110 million homes around the country, they do not consider the house’s condition and all the upgrades made over time.

Zillow stated that Zestimates change multiple times a week due to their constant improvements in the algorithm. You can expect your estimated market value today may be different next week — hopefully not very far off.  

The bottom line is, when you want to determine your selling price, you shouldn’t only rely on your home’s Zestimate. If you can have your house officially appraised, the better.

Other Factors to Consider When Setting a Price

Apart from your appraised value, it is important to work with a real estate agent to help you conduct a comparative market analysis. Some agents offer partial services, and you can avail of that too, depending on your needs.

So while Zillow is a good starting place, it’s not an end-all answer. With the help of a professional, you have to consider the following factors as well:

Repairs and Upgrades

If the home is in disrepair, that’s going to lower its value. Let’s say a similar home that’s in the perfect condition sold for $100,000. If your home has got a lot of parts for repair, you can expect that no one will say yes if you sell your house at the same price point. You should consider having the house repaired first before setting a price. Anyhow, there are already plenty of home renovation programs today like Curbio that don’t require you to shell out a single penny — ask your agent!

Cleanliness

If the home is dirty and cluttered, retail buyers won’t be willing to pay as much for the home — who would want to live in a stressful home? That’s why it’s vital to declutter and organize your stuff before conducting a home show.  You’d like to make your potential buyers feel relaxed the moment they step on your curb, so go for D.I.Y tips on house prepping or let your agent take care of it.

Recently Sold Homes

By recently, we mean in the last 3-6 months. How much did homes sell for in your area in the previous 3-6 months? This is important because real estate markets fluctuate rapidly, and prices can also be seasonal. For example, there can be more demand for houses during Spring and Summer, which can drive home prices to go up compared to other times of the year.

Neighborhood Comps

Neighborhood comps are homes built similarly to yours — same number of beds and baths, same square footage, same amenities, etc.  It’s important to be familiar with your neighborhood comps, especially when they are on sale too. If in case your buyer is also shown to your neighborhood comps, you’d want to be ready in showing your competitive advantage.

Future Developments in Your Area

As a bonus, know what your county’s plans are. Although this doesn’t directly affect your current price,  you can use this to convince your buyers of your home’s future value.  

Overall, remember that if the home isn’t in the ideal area or price-point for buyers in your area, then it’ll take longer to sell, or it might sell for less. It takes more than a computer algorithm to develop the best possible strategy when selling a home, so find a professional who can work with you on this.

You can also sell your home fast for a fair cash price with us at Spire Property Solutions. No more going through the tedious process of estimating your home price because we will do that for you! We buy houses in Georgia, and we can close in as little as two weeks! Give us a call any time at (678) 318-1801, or leave us your information below, and we’ll get back to you shortly.

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