Is My Home Value Accurate or Inaccurate on Zillow

Is My Home Value Accurate or Inaccurate on Zillow?

I would argue that there is no such thing as an accurate value for a single family home. Zillow is in the news again over its Instant Offer program. Realtors are screaming that Zillow is cutting them out. Industry pundits are claiming that Realtors are a dying breed. The whole thing is really silly.

What is the true value of a home?

Well, it is not what the appraiser says it is. It is not what the Realtor says it is. And it is definitely not what Zillow says it is. The true value of a home is what a ready, willing and able buyer is willing to pay at that moment. So, if you take that offer, did you lose money? Possibly, if you did not do your homework or did not use a Realtor.

Zillow has a feature called Zestimate. It seems everyone complains about it. Why? Zillow has gone out of its way to provide as much disclaimer as possible. Zillow has included explanations on how the homeowner can claim their address. Further, Zillow allows the homeowner to make it more accurate and control what properties it is compared to. Zillow does all of this in order to make sure the Zestimate is more “Accurate” and Realtors still complain about it.

Frankly, Realtors need to celebrate the existence of Trulia, Zillow, and other valuation websites. Why? How do you expect to have an opportunity to sell your unique skills if you don’t have something to compare to? For example, a Realtor fails if, when they approach a seller and are met with the “But Zillow says my house is worth more” and that Realtor gets upset and screams at the Gods over it.¬†If you don’t already know what Zillow and Trulia have come up with for value before you have even sat down with that prospective Seller, you fail again. There is no sale, till the customer says no or objects. Be prepared to address those objections. All home valuation websites are tools…only. Educate your client on those tools.

Can Zillow dream build with a couple that just walked into a home to look for their dream of homeownership?

Can Zillow stand next to that 7-month pregnant potential buyer and help you dream of their golden retriever running around the backyard with her twins she is expecting to have? Can Zillow create the vision of a shop in the garage to the buyer with grease-stained fingernails how he can build his next dream car in his dream home? No. Zillow can do none of these things. Zillow is based on unemotional data. Sure, it looks at what other homes have sold for and compares them. It creates an average of values. Homeowner dreams are never average!

What if the appraiser says it is worth less than Zillow?

Of course, he does. Why was the appraiser appraising the home to being with? The appraiser was appraising the home because the buyer is not paying cash for the purchase. That buyer is securing a mortgage. A mortgage represents a risk to the lender and the lender is going to want to reduce their risk. In order to reduce risk, they send an appraiser out to give them his “Opinion of Value”. It is an opinion. It is just one opinion. If that appraisal came in less than Zillow or the listing price does that mean that the home value was inaccurate? No. It is a value at a point in time. Sellers want to sell for more, Buyers want to buy for less. Only a Realtor can bridge that gap.

According to The National Association of Reators (NAR), “FSBOs accounted for 8% of home sales in 2015. The typical FSBO home sold for $185,000 compared to $240,000 for agent-assisted home sales.” That means that homes sold with a Realtor sold for more money and they sold for more because Realtors can sell the dream. No website can do that.

There is one catch, homebuyers and sellers are not looking for a Realtor. They are looking for homes. They are looking online. If you are a new Realtor, you have little to no market for referrals. How is a homeowner going to find you? They are not doing searches online for Realtors in their area. The look for homes. If they are looking for homes, where do you need to be? The Realtor needs to be where the homes are…Zillow, Trulia, Active Rain, Open Houses etc.

If you are going to be where the homes are, then you need to be on Zillow.

If you are going to be where the homes are, then you need to be on Zillow and every other website that shows homes. Many pundits are claiming that Realtors are dinosaurs. I don’t think Realtors are dinosaurs. However, to avoid becoming a dinosaur, Realtors need to change how they do business. How Realtors¬†embrace technology needs to change. How they interact and work with their industry partners needs to change. But, Zillow did not kill the Realtor. Zillow’s “horrible” way it calculates a home’s value, should be music to the ears of Realtors industrywide. Every time Zillow rolls out a new program that “threatens” to kill of the Realtor, Realtors should rejoice. Frankly, the home seller should too.

About Kevin Hardin

Kevin W. Hardin is a 22 year veteran of the Mortgage and Real Estate industries. He holds a Juris Doctor (JD) degree from Concord Law School and a CMB (Certified Mortgage Banker) from the Mortgage Bankers Association. He is a Senior Loan Officer at HomeStreet Bank. He works with Borrowers, Attorneys, Title Companies, Real Estate Agents and Mortgage Companies on mortgage law issues.

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