Home buyers and sellers love to refer to the online prices suggested by real estate websites, such as Zillow Zestimates. Prospective buyers love to ask why a home is listed as more expensive than it is online, and home sellers are often puzzled and frustrated when their home doesn’t sell for the price estimated by their favorite real estate website. It presents real challenges for real estate agents and lots of room for unnecessary disappointment for buyers and sellers, as explained in the L.A. Times:
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 brokers 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 realty agent who posted on the industry blog ActiveRain, they are “the bane of my existence.” Consumers often take Zestimates “as gospel,” said Tim Freund, an agent with Dilbeck Real Estate in Westlake Village. If either the buyer or the seller won’t budge off Zillow’s estimated value, he told me, “that will kill a deal.”
So how accurate are Zillow Zestimates? According to Zillow CEO Spencer Rascoff, they are “a good starting point” but the nationwide “median error rate” is 8%.
Given the countless factors involved in calculating a home’s value, most of these websites do a pretty good job estimating the value of a property. However, there’s no substitute for having a professional realtor walk through the home, evaluate the neighborhood, and adjust the suggested price based on local market conditions.