Zillow is one of the most widely-used real estate resources that people use when they are interested in buying or selling a home. But even though everyone’s using it, that doesn’t make it the best resource. Yes, it is a powerful tool and a great place to start browsing if you are remotely curious as a buyer or seller. However, everything has its pros and cons, and Zillow’s cons definitely outweigh its pros.
Notes for SELLERS on Zillow (check out our previous blog post for buyers’ notes on Zillow)
When you look up your home’s address, there is a public view and an owner view tab. The following features are found on the owner view tab.
- Quick and easy access to your “Zestimate,” which is Zillow’s estimate if you were to sell or rent your home. Keywords here are quick and easy access, NOT accuracy and reliability (scroll down for cons on the Zestimate). Owners can, however, log in and update the home facts and the Zestimate will adjust accordingly.
- “Improve Your Home Value” Tool. There is a section that provides estimated cost and added value for different types of home projects (i.e. roof replacement, bathroom remodel, deck addition, etc.). This is valuable for several reasons. First, owners can get a rough (very rough) estimate of how much these projects should cost so they don’t get overcharged by a contractor. Second, owners can see whether they would recover the project cost in added value to the home.
- HOWEVER, the added value is another rough estimate and would depend a multitude of variables, including when you decide to sell, or whether or not the next buyer finds that feature valuable. Zillow provides this disclaimer: “The return values below are estimates based on the region, home facts, and past sales data. Your situation may vary based on current finish level of the room, changing style trends, depreciation, and how much of the project budget is invested in structural changes vs. functional/cosmetic improvements.”
- Owners are able to post their homes up on Zillow as “For Sale By Owner.” So you may be able sell your home off-market if you are willing to take the risk of going unrepresented by a Realtor. Obviously, this is not advisable and we hope you don’t get involved in a lawsuit. Just kidding (but not really… Seriously, use a Realtor).
- In our personal experience, the Zestimate is more often WRONG than it is right. Zillow provides this disclaimer: “Nationally, the Zestimate has a median error rate of 4.5%, which means half of the Zestimates in an area are closer than the error percentage and half are farther off.” So, basically you have a 50/50 chance that the Zestimate is accurate. In Sacramento, there are 791,000 homes on Zillow, and 686,300 of those have Zestimates. Zillow reports that 53.1% are within 5% of the sale price, 76.7% are within 10% of the sale price, and 91.0% are within 20% of the sale price. Let me translate that for you:
- 53.1% are within 5% of the sale price. This means you have about a 50/50 chance of the Zestimate being fairly accurate. Odds are not good.
- 23.6% are between 5-10% of the sale price. Just so you know, 5% of a $400,000 house is $20,000. That’s A LOT!
- 14.3% are between 10-20% of the sale price. Again, 10% of a $400,000 is $40,000, and 20% is $80,000. That’s REALLY FAR OFF.
- They don’t address the last 9% of home sales.
- Why is the Zestimate so inaccurate? Zillow uses an algorithm to pull homes that have sold nearby. But you don’t have a real human taking into account neighborhood boundaries or condition of the home. That’s why it is so important to have a Realtor take a look at your home and pull comparable homes that have sold recently to come up with the best list price.
- Zillow does not sync with the Multiple Listing Service, or MLS (in Sacramento). This poses a huge problem because:
- Not all agents are on Zillow. If the listing agent doesn’t manually post their listing to the site, you may be missing out on a good comparable. (Of course, good agents ARE on Zillow and update the site as they would the MLS, but not all agents do!)
- Zillow is not regulated like the MLS. Realtors have strict rules about updating their listings’ status in MLS. You may be looking at outdated information.
- Best Time to List Tool. Zillow provides this disclaimer: “To estimate the best month to list, Zillow analyzes seasonal patterns in sales of similar homes based on the month they were first listed on Zillow.” The best time to list is different for every individual. Maybe you want to move out first, and the best time to buy a new home is not the best time to list your old one. Every person’s situation is different, so move at your own pace. Your Realtor can help come up with a game plan and keep you on track to achieve your goals.
Your best bet:
- Zillow’s tools can be helpful, but take them with a grain of salt. Contact your Realtor to discuss the sale of your home. He/she feels the pulse of the market and will generate a pricing strategy to achieve your real estate goals.